• Tue
  • Sep 30, 2014
  • Updated: 2:51pm
NewsHong Kong
FINANCIAL SERVICES

British Virgin Islands’ new law threatens press freedom in Hong Kong, analysts warn

British Virgin Islands' new legislation could boost business in Hong Kong but threatens the press and risks corruption, observers warn

PUBLISHED : Wednesday, 12 February, 2014, 10:43pm
UPDATED : Thursday, 13 February, 2014, 3:49am

A proposed law in the British Virgin Islands will boost Hong Kong's role as an offshore centre serving China, but threatens the freedom of journalists to report on companies in the secretive tax haven, say analysts.

The Computer and Cybercrime Act was introduced into the BVI legislature last week, said the International Consortium of Investigative Journalists. The legislation comes after a series of leaks over the past year by the ICIJ, revealing sensitive information on offshore companies.

According to the act, a person who publishes in any media unauthorised information on BVI companies may be fined up to US$1 million or jailed for up to 20 years. A document of the act seen by the South China Morning Post said it applies to any person of any citizenship within or outside the BVI.

The act requires two more readings in the legislature and approval from the BVI governor before it is passed, said ICIJ.

"There will be concern among journalists, because they may get into trouble revealing secret information. If a Hong Kong reporter gets information on BVI in Hong Kong, the reporter may be subject to BVI laws," said Raymond So Wai-man, dean of the business school of Hang Seng Management College.

But John Bruce, Macau director of Hill & Associates, a Hong Kong risk consultancy, said the act would be unenforceable in places outside the BVI, including Hong Kong.

"Even a country with an extradition treaty would not render a citizen [to the BVI]. The only danger would be if the journalist was on BVI soil," Bruce said.

The law aimed to reassure clients who had been disturbed by the leaks, Bruce added.

"The BVI government obviously hopes it will go some way to restoring confidence in the jurisdiction. They are on a public relations drive. The law is very much part of that drive."

In the wake of the ICIJ's revelations, the number of companies being set up in the tax haven tumbled 21 per cent year-on-year in the third quarter last year. The ICIJ's revelations have linked the relatives of Chinese leaders and partners of European politicians to offshore holdings.

However, this law would boost Hong Kong's role as an offshore centre, said So, because BVI companies based in the city would be covered by the proposed new law.

"It gives comfort to people who open BVI companies in Hong Kong. There will be more business flowing to Hong Kong," he said.

BVI opened its Asia financial services headquarters in Hong Kong last year. More than 40 per cent of BVI financial services business comes from Asia-Pacific, according to the BVI government.

Last month, the BVI signed a memorandum of understanding with Qianhai , the special economic zone in Shenzhen. The MOU aims to boost financial co-operation between BVI and Qianhai.

To financial markets, the act would be welcome because many businesses prefer to use BVI companies for their secrecy, So said. "But in terms of corporate governance, it is not good. There will be risks of money laundering, corruption and improper transfer of assets," he added.

BVI officials did not respond to the South China Morning Post before it went to press..

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caractacus
The BVI is trying to recover its lost money laundering revenue by advertising to the whole world:
"you can safely bring your dirty money here because we have made it a crime for anyone to expose your crimes."
 
 
 
 
 

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