30 March 2013

HK Directors

The New York Times reports that the Hong Kong government has deferred plans by the Financial Services and Treasury Bureau to block public access to residential address information and the identity card numbers or passport numbers of company directors.

Those plans have been criticised as potentially facilitating money laundering and eroding Hong Kong’s profile as a regional financial cenre. They also, of course, erode corporate transparency that is of interest to observers of increasing corruption by party officials and 'elite families' in other parts of China.

The NYT comments that
Hong Kong makes it extremely easy to set up companies, so many individuals create them, even simply to own their residences. Extensive data are available only from the Companies Registry, which has long been open to the public, including online, although fees are charged for documents.
Many wealthy mainland Chinese, including from prominent Communist Party families, own companies in Hong Kong and have provided personal information to the Companies Registry. Banks, law firms and accounting firms routinely check the registry and gather data on mainland Chinese citizens to verify identities and detect fraud in initial public offerings and other transactions.
The Financial Services and Treasury Bureau said it would proceed this year with a long-planned rewrite of the city’s Companies Ordinance, but the rewrite would not include the contested provision to limit public access.
“Given the complexity of the issues involved and very diverse views of different stakeholders, we believe that the community should be given more time to build consensus on the issue” of public access, the bureau said in a statement sent to the Foreign Correspondents’ Club of Hong Kong, which was one of the groups that had protested the proposed curbs on public access.
Bloomberg reports -
Trade unions have used the database to track down runaway employers who owed wages, and small businesses use the information to conduct background checks on trading partners.
“In the 14 years in which I was the Registrar of Companies, I never received any complaints about these provisions or suggestions that they infringed directors’ privacy,” Gordon Jones, Hong Kong’s registrar of companies from 1993 to 2007, said in an e-mail. “I would hope, however, that these misconceived and bad legislative proposals are not only deferred but also repealed.”
Hong Kong, a part of China with its own legal system, makes company filings available online. There were 3.5 million company searches done in 2012 in the database of more than 1 million directors. ...
Bloomberg News last year relied on Hong Kong and Chinese identity card numbers found in filings to chart the business ties and assets of the families of Chinese President Xi Jinping, ousted Politburo member Bo Xilai, and the descendants of veteran revolutionaries, known as the Eight Immortals, who ran China after the death of Mao Zedong in 1976.
Six companies controlled by Li Ka-shing, Hong Kong’s richest man, backed restricting access to the information and asked that details contained in old records also be expunged when the government held public consultations in 2009 and 2010.