‘Toothless’ government failing to check charity finances

PUBLISHED : Sunday, 28 May, 2017, 3:07am
UPDATED : Sunday, 28 May, 2017, 3:07am

The government is “toothless” when monitoring the financial records of charities, lawmakers have said, after an audit report revealed loopholes in handling tax-exempt status and free land.

In a hearing of the Legislative Council’s public accounts committee yesterday, examining the use of land granted to charities, the Director of Lands Bernadette Linn Hon-ho admitted past monitoring had been unsatisfactory.

In one case, the department had only requested the financial records of facilities, on a site granted to a charity for a premium of HK$1,000, 22 years later – when responding to a complaint.

Some 14 cases were discussed, which had hotels operating on sites granted to charities for either a concessionary or nil premium.

“The lease condition of asking for these records was only ‘if so required’,” pro-establishment legislator Paul Tse Wai-chun said. “No reports were submitted in 22 years. Did no departments ask?”

Tse said the department’s regulation seemed to have “teeth, but with holes” and questioned its ambiguous work division with the Social Welfare Department.

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Civic Party lawmaker Tanya Chan asked how the government made sure any revenue generated from sites granted to charities was used in a non-profit-making manner if finance records were not checked. Linn admitted there were “grey areas” if a charity site involved the operation of a dormitory, hostel or hotel.

“In these cases, it was not clear which government department should monitor it,” said Linn.

She explained that as such sites could involve welfare or educational use, the department would only ask for statements when they were requested.

She said guidelines were released in 2014 to give clearer instructions to departments for stricter regulations.

Democratic Party lawmaker Lam Cheuk-ting asked whether the Lands Department had any statutory rights in requesting charities submit records. Linn said they could issue verbal or written warnings, or withdraw land in the most serious cases.