A prominent member of Hong Kong's expatriate community who runs a tax advisory business has been found to have acted dishonestly by a British professional organisation.
Deborah Annells, the founder and managing director of AzureTax, was found to have committed six instances of dishonesty by the disciplinary tribunal of the Chartered Institute of Taxation (CIOT), and has expelled her.
Annells is a former president of the Rotary Club of Hong Kong and a Fellow of the Hong Kong Institute of Certified Public Accountants. She has also sat on the general committee of the British Chamber of Commerce in Hong Kong.
In a statement, the CIOT's disciplinary tribunal said Annells had "committed six separate breaches of the fundamental principles of integrity" as set out in the institute's rules and guidelines. It found that:
She had dishonestly used trust funds entrusted to the care of AzureTrustees to make payments of HK$5.2 million that were not for the benefit of any of the beneficiaries of the trust, although no trust moneys were ultimately lost;
She had failed to separate and maintain bank accounts belonging to the AzureTax Group and its associated companies, all of which she controlled, from client funds held by or on behalf of the group or its associated companies;
She sought to deceive a lawyer acting for one of the trusts managed by one of her companies by relying on a bank statement which she knew or ought to have known was forged;
She dishonestly withdrew US$10,000 from a Singapore company which was part of AzureTax Group and put it into an account operated by one of the Azure Hong Kong firms;
- She dishonestly submitted two applications to add an Azure service company as a bank signatory to a client company's bank account without the knowledge of their owners.
According to the tribunal, Annells denied all the charges except for the second one "which was broadly admitted and while she had expressed regret about the whole matter and in particular any distress caused to the one client who complained, she had never acknowledged that she had been guilty of any kind of wrongdoing nor given any indication that she had any insight into the seriousness of the charges found against her".
In addition to being expelled, Annells was also ordered to pay the costs of the hearing which totalled £62,375. The disciplinary proceedings were triggered by complaints from a client, a former colleague and a former joint-venture partner and related to events that occurred between May and August 2011.
Annells confirmed police initiated an investigation into her company in December 2011 and she herself is on police bail.
"We are not expecting any charges to come out of that," she told Lai See. "There was a period when some mistakes were made." They related to the company secretarial business, which was sold last year, and to its trustee operations, of which she says a "substantial portion" has been disposed of.
"We have reviewed and overhauled all our internal procedures to ensure similar situations will not reoccur," said a statement on the company website.
Annells says the tribunal's criticism will not affect her business. "We will carry on our tax practice as usual."
AzureTax has been in operation for 10 years. Before that, Annells was a director of Citigroup Private Bank North Asia and had worked with HSBC and Grant Thornton.
AzureTax occupies 6,000 square feet in Lippo Centre, has 20 staff and "thousands of customers", according to Annells.
Being thrown out of CIOT does not mean she is obliged to stop acting as a tax adviser. While expulsion implies a high level of displeasure with her professional conduct, the CIOT has no power to prevent her continuing her business. There are no special qualifications required to act as tax adviser or to administer trusts, and there is no regulator of the industry in Hong Kong or Britain, even though administering trusts can involve handling millions of dollars of client money.
One of the disturbing features of the industry in Hong Kong is that administrators are not required to hold the different trusts under their care in separate accounts. Beneficiaries of one trust can be paid with proceeds from other trusts.