Hong Kong chief executive Leung Chun-ying has found himself in hot water after it was revealed he received a £4 million secret payout from Australian firm UGL in exchange for backing its Asian ventures.

The deal, outlined in a contract dated December 2, 2011, relates to UGL's purchase of insolvent British firm DTZ Holdings where Leung served as director and chairman for Asia operations two months before he resigned in October, according to Fairfax Media.

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Under the arrangement, Leung was to ensure the Asian expansion of DTZ and UGL and provide assistance in promoting them as the latter required. He also agreed to a non-compete clause and to act as consultant from time to time.

In return, Leung would receive £4 million (US$6.4 million) to be paid in two installments. The payments were made in 2012 and 2013 after his appointment as chief executive of Hong Kong, the Sydney Morning Herald relayed.

He was also promised an additional £1.5 million as part of UGL's guarantee, which is equivalent to the amount insolvent firm DTZ owed him.

The revelation comes at a time when Leung faces pressure from Hong Kong pro-democracy protesters to resign after they accused him of compromising on the region's suffrage and democracy.

Leung sought to allay public furor and explained that the payments were in exchange for services rendered in the past and that the arrangement was made at a time before he was elected as Hong Kong's chief executive.

Under the current rules of disclosure, Leung was not obligated to declare the fees, Leung's spokesperson Michael Yu said, adding that he had already resigned from DTZ before the deal was made.

UGL asserts that payment for such undertakings is standard business practice since the other party would be required to perform certain obligations and forgo opportunities.

The company maintains that the contract was signed primarily to ensure Leung would not compete with DTZ thereby preserving the company's value after acquisition.

UGL claimed the contract did not cover the invalidation of Leung's payment should he win as chief executive because they thought he wouldn't win.

In response to the allegations, the Hong Kong Democratic Party has requested the Independent Commission against Corruption to launch an investigation, Reuters relayed.

Australian authorities are likewise looking into the matter to determine whether the arrangement has breached any foreign bribery regulations.

TagsHong Kong, Bribery, Business Finance, DTZ