HONG KONG -- Hong Kong's former top housing official stepped down from his new post as an executive at one of the city's most prominent property developers, as the company acknowledged accusations of a conflict of interest had taken a political toll.

Getty Images Leung Chin-man's appointment at New World became a target for accusations that Hong Kong's government is too cozy with big property developers.

Leung Chin-man, Hong Kong's former buildings director, said Saturday that he would step down as executive director and vice chairman of New World China, the mainland Chinese arm of Hong Kong developer New World Development Co. Mr. Leung, 62 years old, had taken the job earlier this month.

His postretirement appointment at New World became a target for accusations that Hong Kong's government is too cozy with big property developers, a source of much of Hong Kong's wealth. Hong Kong's South China Morning Post newspaper said in an editorial that allowing him to take the position showed a "glaring lack of political sense" on the part of the government. The city government has the ability to veto postretirement job positions for civil servants.

Mr. Leung, who has denied any conflict of interest, said in a statement Saturday that he had asked New World to terminate his employment contract and would "seek new challenges" outside the industry.

New World China acknowledged that the incident had "had a large impact on public stability and harmony," calling its decision to terminate Mr. Leung's contract an attempt to dispel further public concern.

Hong Kong Chief Executive Donald Tsang, the city's top administrative official, said he would form a committee to scrutinize postgovernment employment for retired senior civil servants.

Denise Yue, the secretary for the civil service who had signed off on Mr. Leung's application to work for New World, apologized, saying she had underestimated how heated the public response would be.

Mr. Leung drew fire from lawmakers and the public in 2004 over the terms of a sale of land to New World at below the government's asking price. In his statement Saturday, Mr. Leung described the 2004 sale of the estate to New World as the collective decision of an interbureau committee that he simply agreed to.

In 2005, a government audit commission said Mr. Leung was responsible for a rezoning decision that enriched a separate big developer. Hong Kong's Legislative Council censured him, but Mr. Leung denied the allegations and an independent inquiry exonerated him. He had filed for a judicial review of the commission's findings, but dropped it after the government decided not to pursue any further action against him.

Write to Jonathan Cheng at jonathan.cheng@wsj.com

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