Government has no place in the laundry
NOW HERE IS one that could offend some people's sensibilities and I shall just have to be a little cautious in how I express it. The topic is whether it really makes sense for us to have stringent laws against money laundering.
I am far from sure that it does and not just because of the news that a big money-laundering case seems to have collapsed in the courts. Four men portrayed by the prosecution as key figures in what was billed as the biggest money-laundering operation ever uncovered here were acquitted on Wednesday and two others will face a retrial. They allegedly laundered more than $92 million a day, yes, a day, for more than five years.
This only tells us that it is obviously very difficult and costly to prosecute suspected money launderers, which may be good reason in itself to reconsider these laws. The bill we pay may be greater than the benefit we derive.
But my big question is whether there is much benefit to our society anyway. Take note here that we are not really talking of a crime against the person or against property. No one loses a drop of blood or picks up even the slightest bruise from money laundering and no one is robbed.
Prohibitions against it serve rather to enforce other laws. If you cannot catch the drug trafficker with his drugs, then see if you can catch him with the proceeds of his drug trade.
I shall admit that I am definitely in a minority on this drug business. I favour legalisation. Stringent laws against drugs are only really of 20th century origin, they have generally proved ineffective in stopping the illegal use of drugs and they are as likely to encourage as deter violent crime when distressed addicts face high prices and short supply.
For the avoidance of doubt, let me stress that I do not advocate the use of dangerous drugs. I only say that outright prohibition is not effective and should be reconsidered.
But if few people yet share my views on this, more are likely to do so on the other traditional sources of laundered money - gambling and prostitution. Legalise them and the money they generate is no longer dirty. Living off the proceeds of prostitution may be a sin but that is between the pimp and God. Why need it be a crime unless we can definitively show that it disturbs the social order?
Then we get to some more modern sources of laundered money - breach of copyright, corruption and, more significantly, terrorist financing.
On copyright laws I have always had a firm view in this column. They serve mostly to protect monopoly interests in developed countries at the expense of consumers in undeveloped countries and little of their benefit goes to the original artists, supposedly the people they were meant to benefit. Why should our tax money be used to enforce laws that foreign corporations use to overcharge us?
On corruption, the operative rule of thumb is that it exists in any industry in rough proportion to government involvement in that industry. Corruption thrives in public works projects but is little to be seen in private manufacturing ventures. If government wants to stamp out corruption, then it should look first at its own contracting arrangements. Mirror, mirror on the wall, who's the dirtiest of us all?
In any case most of the corruption we see here is mainland-related and I will even argue that its proceeds in some ways benefit the mainland economy more when dirty than when clean. It is at least invested on free-market principles when it must be hidden from the authorities and thus represents more efficient use of capital.
On terrorist financing, we are easily accused of it abroad but we have yet to see a single proven case here and our authorities are on full alert for it. Hong Kong is not a natural centre for this sort of thing. People in the terrorist centres of the world have their own good ways of transferring large sums of money out of sight of government. We can do it no more effectively than they can.
The fact of the matter is that any government's biggest objection to money laundering is that it cannot get its hands on the money. The threat to social order, the only valid reason for legislating against it, is made subsidiary to the threat to fiscal revenue.
But it is no big threat to the Hong Kong government. Leaving aside that we have a very large cushion of fiscal comfort in our reserves, laundered money specifically evades only personal income taxes and we do not rely heavily on our salaries tax for fiscal revenue. Most of it would in any case be due to foreign governments as what money we may launder is mostly of foreign origin. It certainly seems to have been the case in this latest money-laundering trial.
Meanwhile, we threaten the convenience of Hong Kong as a financial centre to people whose business is entirely legitimate but who may fall suspect because someone in government does not understand their capital flows. This should be no small concern to us. It is our livelihood.
If other governments want to inflict extraordinary financial righteousness on their citizens, let that be their business. It is not ours.