Opinion | Hong Kong must work towards a ‘Panama Papers Ordinance’ to end automatic recognition of offshore firms
Companies should no longer be accepted as being from the British Virgin Islands without having a significant share of their revenue and assets actually produced there
Hong Kong serves as a hub for the operations of Mossack Fonseca, the law firm at the centre of the Panama Papers leaks that revealed how the world’s wealthy store their money in secretive offshore investments. Almost 25 per cent of the firm’s clients originate from or through Hong Kong-based affiliates. HSBC alone has created more than 2,000 shell companies.
The leaks unearthed the Panamanian firm’s connections to tycoons Li Ka-shing and the Kwok brothers, and even to Polytechnic University. Our city manages more than HK$15 trillion from around the world, with close to HK$3 trillion of that in private banking assets. Almost 160 out of every million people in Hong Kong have a net worth of more than HK$230 million.
So what can Hong Kong’s legislators do to stop Hong Kong appearing on future blacklists of tax havens along with Panama?
Some of the work simply involves speeding up initiatives already under way. The government has already required corporate directors to know exactly what their companies do or answer personally for those companies. The entire Hong Kong financial and professional services industry has spent years and about US$11 billion a year to comply with the ever-growing anti-money-laundering laws coming out of Tamar.
Depressingly, however, these represent only baby steps on a longer road.