British Virgin Islands leaks

Chinaleaks: Hong Kong anti-poverty duo 'failed to declare ties to tax haven'

Leaked papers reveal tycoon and union leader, who sit on commission to help poor, have links to companies in secretive British Virgin Islands

PUBLISHED : Thursday, 23 January, 2014, 12:01am
UPDATED : Tuesday, 05 April, 2016, 3:01pm

Two members of the government's Commission on Poverty failed to declare ties to companies registered in the secretive tax haven of the British Virgin Islands (BVI), leaked documents show.

Research by the South China Morning Post into a trove of 2.5 million documents passed to the International Consortium of Investigative Journalists (ICIJ) revealed that tycoon Henry Cheng Kar-shun and Federation of Trade Unions president Lam Shuk-yee were among 12,600 Hongkongers with interests in the BVI. Neither of them could be reached for comment last night.

While there are no legal consequences for commission members who fail to declare an interest, a fellow member says the pair's use of the notorious tax haven could shake public faith in the poverty-fighting body.

A spokesman for the Office of the Chief Secretary, which oversees the commission, said members had to disclose "general pecuniary interests" and update the information annually, while reporting conflicts of interest.

Cheng, chairman of New World Development, did disclose he was a director of 14 offshore companies when joining the commission on its revival in 2012. The ICIJ data revealed directorships of at least 110 BVI firms.

A New World spokesman said Cheng "joined the commission in a personal capacity".

Lam said in her December 2012 disclosure that she held no substantial shareholding in any company. The ICIJ papers, dated 2010, reveal stakes in two BVI-registered companies, Duty Win and Core China Series Two. The latter is linked to a New York- listed education enterprise based on the mainland. The ICIJ files contain the ID numbers and addresses of Cheng and Lam, which match with those in Hong Kong's Companies Registry.

Lam's husband, lawmaker Wong Ting-kwong, said he had "no knowledge" of Lam's offshore holdings. "My wife's business is unrelated to me," said Wong, of the Democratic Alliance for the Betterment and Progress of Hong Kong.

Labour Party lawmaker and commission member Peter Cheung Kwok-che said of Cheng and Lam: "They should declare if these company ownerships would affect any decision they make. The omission has raised doubts from the public."

The commission's secretariat is collating members' latest declarations of interest.

Leaks to the ICIJ have put the spotlight on links between China and the BVI, long favoured by the world's rich to hide assets.

The BVI is the second-biggest source of foreign direct investment in China after Hong Kong. British charity Oxfam said last year that the annual tax due on assets hidden in tax havens like the BVI would be enough to end extreme poverty worldwide.