HONG KONG's embattled leader Leung Chun Ying was hit by a corruption scandal on Wednesday, as Occupy Central protesters pledged to stay on the streets in a bid to keep pressure on the government ahead of already fraught talks on political reform.
Mr Leung allegedly pocketed four million pounds (S$8.2 million) in secret fees from UGL, a listed Australian engineering company, in return for supporting its Asian business ambitions, The Age reported on Wednesday.
The Australian newspaper said the payouts were made in two instalments, in 2012 and 2013, after Mr Leung took office as Hong Kong's top official. It said the funds were related to UGL's takeover bid of DTZ holdings, an insolvent property services company where Mr Leung was a director until late 2011.
Mr Leung, who has been battling unprecedented pro-democracy protests, did not comment on the report, but his spokesman Michael Yu said the payments were related to his resignation from DTZ, not for any future service, according to The Age.
Numbers at demonstration sites around the city have dwindled to a few hundred after days of mass rallies to demand fully free elections and police said on Wednesday they were employing negotiators to try to persuade protesters to leave the barricades.
But student leader Lester Shum insisted they would stay.
"We have reached the stage of dialogue and we will be persistent in our civil disobedience campaign and stay on the streets," he said.
Leader of the pro-democracy Occupy movement, Chan Kin Man, added: "Only if the government quickly take action and give a concrete response to students' demands (for democracy) will the problem be resolved."
Formal talks are set for Friday between students and Chief Secretary Carrie Lam - the deputy to Mr Leung. Yet the first dialogue is likely to be shrouded with acrimony and uncertainty.
Student leaders say they are walking into the talks on Friday with "anger and disappointment" and will walk away from the negotiating table if the government does not directly address their demands.
While the students want to discuss their main goal, unfettered direct elections of Hong Kong's Chief Executive, Hong Kong Undersecretary for Constitutional and Mainland Affairs Lau Kong Wah said on Tuesday night that the talks would be on two topics: "the constitutional basis of constitutional development", and "the legal requirement of the constitutional development".
Mr Shum said on Tuesday night that the government was insincere in resorting to legal arguments rather than facing Hong Kong's central political problem: a government answerable to Beijing rather than its own citizens.
Mr Shum told reporters that the students had agreed to Friday's talks despite this limited scope in a bid to put pressure on officials.
"If they do not try to face our demands or propose ways to solve the political problems directly, we may end the dialogue," he said.
Despite dwindling numbers on the street, he insisted that "people are ready to come out again (to protest) if the government fails to demonstrate sincerity in solving the political crisis."
The talks, which will be headed by Ms Lam on the government side, have been planned since the early days of the protest, but were abandoned by students in anger last weekend after they said that police failed to protect them from violent "anti-protest" protesters.
Scheduled for Friday at 4pm in the Wanchai area, the talks will be open to the media but not the public.
Besides Ms Lam, Secretary of Justice Rimsky Yuen Kwok Keung and Secretary of Constitutional and Mainland Affairs Raymond Tam Chi Yuen will represent the government, while the pro-democracy movement can send up to five representatives.
Protesters are clocking their eleventh day on the streets in opposition to a plan by Beijing to vet candidates for Hong Kong's Chief Executive elections, one they call a false fulfillment of a promise for universal suffrage.
While primary and secondary schools have reopened, main thoroughfares in the city centre and Mongkok remain sealed off, frustrating local businesses and residents, keeping the city's roads in gridlocked traffic all day, and overloading the underground subway system.
This has led to fading support from average Hong Kongers for the pro-democracy movement, which put pressure on student leaders to move forward with talks despite the dissatisfactory agenda.
"We know we have caused some inconvenience but we have our reasons," said Mr Ronald Chan, a recent university graduate who was one of several protesters manning a barricade in the Central business district, but allowing delivery vans and garbage trucks in and out. "We hope that other people understand."
But pro-democracy protesters said on Wednesday they were sceptical over what the negotiations would achieve.
Those who remain at the barricades say they will not give ground.
"This is an important spot - we should hold on to this regardless of how many people we have," said Helix Kwok, an 18-year-old student who was among a dozen protesters camping outside the Chief Executive's office on Wednesday. "If we withdraw, the government will then ignore us. With us here, we can react to anything that happens."
Those on the streets on Wednesday were reticent over the government's intentions. "I'm not very hopeful about the outcome," said Timothy Sun, 17, who has spent 10 days at the main Admiralty protest site. "I think the government is going to repeat the same thing as before - instead of accepting our requests such as civil nomination, they say that we'll have free elections step-by-step, that sort of thing.
"I am going to stay on. I don't want this protest to be a failure."
Retail authorities have warned that a quick solution is needed before the former British colony suffers a fall in October sales, an important shopping month that encompasses the Golden Week holiday period, for the first time since 2003.
The Hong Kong Retail Management Association said late on Monday that sales at chain stores had dropped between 30 per cent and 45 per cent from Oct 1 to Oct 5 in Admiralty and Central, as well as in the nearby shopping district of Causeway Bay.
Sales fell just as sharply across the harbour in Kowloon's working class district of Mong Kok, scene of some of the most violent clashes between protesters and police and pro-Beijing groups.
Many Hong Kong businesses were already struggling before the latest demonstrations, a monthly survey by HSBC and Markit Group showed on Tuesday. New business fell for the fifth-straight month in September, while firms reduced staffing levels for the sixth consecutive month. The rate of job shedding was the quickest in four months.
The protests have ebbed and flowed over the past week, with people leaving the streets overnight to return later. Police have taken a hands-off approach since Sept 28, when they fired tear gas and pepper spray at protesters.
In one incident on Tuesday, around 40 anti-Occupy Central protesters emerged at the Admiralty underground station near the main demonstration site, but demonstrators heckled them until they left.
The protests have helped wipe close to US$50 billion off the value of shares on the Hong Kong stock exchange. The World Bank has said the protests were hurting Hong Kong's economy, although the impact on China was limited.
The Occupy Central protests, an idea conceived over a year ago referring to the Central business district, have presented Beijing with one of its biggest political challenges since it crushed pro-democracy demonstrations in and around Tiananmen Square in the Chinese capital in 1989.
Beijing fears that calls for democracy in Hong Kong could spread to mainland China. The Communist Party leadership has dismissed the Hong Kong protests as illegal and has left the city's Beijing-appointed leader Leung to find a solution.
The protesters have demanded that the city's Chief Executive Leung Chun Ying step down and that China allow Hong Kong people the right to vote for a leader of their choice in 2017 elections.
China wants to select candidates for the election and Mr Leung, appointed by China, has ignored calls to step down.
With input from Reuters and AFP