Hong Kong's Secretary for Security, Regina Ip, resigned this afternoon. Tonight, the Financial Secretary also resigned.

1. 25 June: According to the press release put out by the Chief Executive's (CE) office, the SoS resigned 3 weeks ago on 25 June for "personal reasons". The CE had been persuading her to stay or take leave but failed to change her mind. He accepted her resignation today and has informed Beijing.

2. The run up: In the run-up to 25/6, what happened that may have caused the SoS to resign?

(a) "Personal reasons" - The SoS was seen taking exams [which students take to study in the US] a while ago which caused the media to speculate whether she was leaving the government.

(b) Unpopularity pains - Despite a brief popularity flourish in 2002, the SoS has been one of the least popular officials. The short-lived popularity took place at a time when she appeared to be the only official who spoke her mind even if some of her thoughts were disagreeable or laughable. Her momentary rise in popularity spoke more about the other ministers than her genuine appeal.

(c) Protest estimate - While there have been recent media reports saying that the government may only have expected 30,000-50,000 protesters on 1 July, the SoS may have felt that the numbers would be much greater since by then her careless remarks equating the protest as a "social gathering" was already showing signs to be causing more people to go. On 1 July, 500,000 people turned out to protest against Article 23 legislation.

(d) Competence questioned The government's strategy has been to ram the unpopular legislation through LegCo with the help of pro-government legislators. The SoS may have relied too heavily on this and never anticipated that things could unravel so badly. Her competence has therefore been in serious question post-1 July:

(i) From the right: A law conference about Article 23 national security legislation on 14-15/6 showed up how much has not been thought through in relation to the government's draft Bill, especially how the Bill might impact on China's need to pass laws to establish a procedure for the "proscription mechanism" (see Newsletter 23/6/03).

(ii) From the left: Pro-government parties had also been complaining about her offensive style, which made life more difficult for them because it made them unpopular in the eyes of the public for supporting the legislation.

(iii) From top: Beijing cannot be happy at how the whole affair has turned out. The SoS is the policy minister in-charged. Thus, despite the CE's urging her to stay, if she believed that Beijing was far from happy, it may be easier to go.

1. ICAC report: The government confirmed today that it has received the corruption agency's report on the Financial Secretary, Antony Leung's involvement in "Lexus-gate" where he bought a car prior to his announcing a vehicle tax hike during the Budget in March 2003. The ICAC investigated whether there was criminal intention to avoid tax (see Newsletters 11/3 and 19/3).

2. No comment: The Secretary for Justice (SoJ) was asked today about the report. She did not say the report contained no evidence of culpability so the guessing game is on. The guessing would likely be damaging as it will deal another blow to the credibility of the CE's cabinet. The FS resigned late in the evening.

3. Memories: The CE decided to refuse the FS's resignation in March even though he stated that what the FS did was "grossly negligent" and breached the ministerial code. Now that the FS had to go, whatever the ICAC report said, it did nothing to instill confidence in the CE's administration.

Cabinet reshuffle expedited: The SoS and FS departures will force a major cabinet reshuffle sooner rather than later. Who will serve in the cabinet with the CE at the helm?