HONG KONG — The standoff between Hong Kong’s government and pro-democracy protesters intensified Thursday as the democrats demanded that the city’s top official be impeached over a multimillion-dollar payment from an Australian company and the government pulled out of talks with the protesters.
The talks, which were to have begun Friday, were the only active avenue for resolving a dispute that has led to sit-in demonstrations that have closed roads and disrupted life for nearly two weeks in Asia’s most important financial center.
The cancellation of the talks came after an afternoon news conference by the protest groups and their political allies in which they pledged to continue the protests and start a new phase of civil disobedience to maintain pressure on the government.
Hours later, Carrie Lam, Hong Kong’s second-ranking official, said the talks were dead.
She said she hoped talks could still take place, but declined to predict when or to set any conditions for a resumption.
While it was unclear whether the talks ever had any chance of success, given the wide gulf between the positions of the students and the government, the cancellation, just two days after the government had agreed to participate, was the latest in a string of policy reversals by the government of Leung Chun-ying as it has grappled with a response to the protest.
Mr. Leung himself came under increasing pressure on Thursday as democratic lawmakers demanded an independent investigation into whether he was guilty of bribery and official misconduct for accepting $6.4 million from an Australian engineering company and failing to disclose it.
The protesters had already been demanding Mr. Leung’s resignation over his support of China’s plan to have nominees for his post vetted by a committee loyal to Beijing. Two weeks ago, that plan set off the protests, which drew tens of thousands of people into the streets and presented the greatest challenge yet to China’s authority here.
The payments, first reported Wednesday in The Sydney Morning Herald, were made as part of the sale of a company, DTZ Holdings, a global property consulting company for which Mr. Leung served as Asia Pacific chairman. The company is now owned by UGL, the Australian company.
Alan Leong, the chairman of the Civic Party, said in an afternoon news conference that pro-democracy lawmakers would try to impeach Mr. Leung in the city legislature.
Albert Ho, a lawyer and former leader of the Democratic Party, told reporters Thursday that there was a “strong prima facie case against” Mr. Leung on charges including breach of bribery laws and misconduct in public office. The Democratic Party called on the city’s anticorruption agency to investigate.
A second statement issued by his office described the payments as part of “a standard non-poach, noncompete arrangement.” The agreement was signed in 2011, before he took office, but the payments were made over two years while he was serving as chief executive.
On Thursday evening, the city’s justice secretary, Rimsky Yuen Kwok-keung, appointed a prosecutor, Keith Yeung, to consider whether or not to take legal action against Mr. Leung and others, “should it eventually become necessary to do so,” according to a statement from a Justice Department spokesman.
The statement said Mr. Yeung had “no connection with the people involved” in the matter.
Tensions were already rising earlier in the day when the main protest group, Occupy Central, and two allied student groups, pledged to continue their protests, whose numbers have dwindled in recent days. The protest leaders promised a new phase of civil disobedience, but were not specific about what that would be.
Mr. Leong, the Civic Party leader, spoke at the news conference on behalf of a coalition of pro-democracy parties, saying they would use their numbers on the finance committee and two of its subcommittees to block all government spending bills except “very urgent, noncontroversial, livelihood policies that require an immediate financial provision.”
The pro-democracy parties comprise a minority in the legislature but could delay government action on many issues, although Hong Kong’s mini-constitution, the Basic Law, gives considerable powers over spending directly to the executive branch.
The talks were to have focused on the main issue driving the protest, the election of Hong Kong’s chief executive. In August, China’s legislature issued guidelines requiring a nominations committee to vet candidates for the post. Critics say the committee will be stacked with Beijing loyalists, as a similar committee is now, and will screen out any candidates not to the Communist Party’s liking.
The protesters have demanded open nominations, with voters choosing the candidates.
The current government, allied with Beijing, has rejected the idea of open nominations, saying that proposal violates Hong Kong’s Basic Law, as well as the guidelines set by China’s legislature. Hong Kong, a former British colony, was returned to China in 1997, but has retained many freedoms unavailable on the mainland under an arrangement known as “one country, two systems.”
The protests, which have complicated commutes and hurt businesses in the occupied areas, have waned and recently appeared to have been losing popular support.
On Wednesday the Hong Kong Bar Association, which had criticized the government’s earlier decision to use tear gas and pepper spray on the protesters, said that the demonstrations were harming many people and that acts of civil disobedience did not shield participants from criminal liability.
Until Tuesday, the government had steadfastly refused to speak with the protesters, calling their actions illegal. But Mr. Leung decided last week that negotiations were the best strategy, siding with advisers who maintained that discussions offered the best chance of quietly persuading protesters to go home. Preliminary discussions — talks about talks — began, which led to an agreement on Tuesday to begin negotiations on Friday.
In the past week, the number of protesters has dwindled considerably, reducing pressure on the government. At the same time, Ms. Lam said that hopes had risen unrealistically among many residents that talks would resolve the dispute.
On Thursday night, the students tried to turn the government’s shift into a public-relations opportunity.
“Our door to dialogue with the government has never closed,” said Alex Chow, the leader of the Federation of Students. “If the government is willing to talk, we ask that Carrie Lam reopen the dialogues tomorrow.”