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Hong Kong called off talks with protesting students on Thursday, dealing a heavy blow to attempts to defuse a political crisis that has seen tens of thousands take to the streets to demand free elections and calling for leader Leung Chun-ying to resign.
The government's decision came as democratic lawmakers demanded anti-graft officers investigate a US$6.4 million business payout to Mr Leung while in office, as political fallout grows from the mass protests in the Chinese-controlled city.
It was not immediately clear what the students' next move would be - whether to ramp up the street protests or make plans to fight another day. "Students' call for an expansion of an uncooperative movement has shaken the trust of the basis of our talks and it will be impossible to have a constructive dialogue," Chief Secretary Carrie Lam said on the eve of the planned dialogue.
She blamed the pull-out on students' unswerving demands for universal suffrage, which she said was not in accordance with the Asian financial centre's mini-constitution, the Basic Law, and what she described as their illegal occupation of parts of the city.
Hours earlier, Hong Kong's Justice Department handed to prosecutors the investigation of the business payout to Mr Leung by an Australian engineering company.
Part of the brief includes "considering and deciding whether prosecution action is warranted" against Mr Leung, who has refused to stand down in recent weeks over protesters' calls for Beijing to keep its promise of universal suffrage.
The department said its decision was aimed at avoiding "any possible perception of bias, partiality or improper influence".
The campaign against the former property surveyor and son of a policeman has extended from the streets to the city's legislative chambers where democrats have threatened to veto major decisions and potentially cause policy paralysis.
Democratic lawmakers on Thursday threatened to veto some government funding applications, although none that affect people's daily lives, as they step up their civil disobedience campaign and try to paralyse government operations.
Protest numbers have dwindled to just a few hundred people at various sites around the city, but activists have managed to keep up their blockade of some major roads.