Hong Kong police said on August 18 that two people had been arrested in connection with a suspected scam involving a government bottled water contract worth nearly US$7 million (S$8.6 million).

The case centres on Xin Ding Xin, a company that in June secured a 36-month deal to supply 1.88 million bottles of water to government offices. It was the first time such a contract had gone to a Chinese brand, according to local media.

Investigators allege the company used false documents in the bidding process, claiming to source its water from another mainland supplier despite having no actual business ties.

On August 17, police arrested a 61-year-old man and a 57-year-old woman on suspicion of fraud. About 2,600 bottles of water, along with documents and electronic devices, were seized from a warehouse. Authorities said one mainland Chinese man linked to the case remains at large.

The investigation has sparked questions over how officials approved the contract, which was valued at HK$52.9 million (S$8.6 million), without detecting irregularities. Police said payments for deliveries made so far had not yet been processed.

In response, the Government Logistics Department announced on August 18 that it had terminated Xin Ding Xin’s bottled water contract, as well as three other supply contracts linked to the company’s owner.

Financial Services and Treasury Secretary Christopher Hui convened an urgent meeting on August 17 and set up a task force to review the matter. He also asked the Audit Commission to scrutinise the tendering process.

“The incident has brought up concerns among government colleagues and drawn extensive attention from the public,” Hui said in a statement.