Panama Papers

Hong Kong taxpayers have a right to know all the details about Polytechnic University’s secretive offshore ventures

Stuart Lau says management at the publicly funded university, which had already come under fire previously for its financial dealings, must come clean about its two joint ventures with BVI registrations, following the Panama Papers revelations

PUBLISHED : Monday, 02 May, 2016, 5:05pm
UPDATED : Monday, 02 May, 2016, 11:20pm

“There is more info.” A few weeks ago, within an hour of hearing those four words, I found myself sitting across from two people who were about to divulge reams of data that would link the explosive “Panama Papers” to the rich and powerful in Hong Kong.

Before the meeting ended, I had thousands of files transferred to a memory stick, the best part of which was to end up in the South China Morning Post.

The two sources connected to the International Consortium of Investigative Journalists and I sat that morning drinking coffee at a top-floor restaurant overlooking Victoria Harbour. As I surveyed the citadels of commerce that define our city’s iconic skyline, I wondered what kind of people behind those gleaming windows in this affluent city would try so hard to hide in far-flung tax havens.

Were they some businessmen with money to hide or even a few politicians, perhaps? The revelation, however, was more startling.

Revealed: the shell company, the minister, Polytechnic University and the millions of shares transferred to the pro-Beijing tycoon

The so-called Panama Papers are leaked documents detailing the secretive financial dealing of the world’s rich and powerful. Hong Kong’s Polytechnic University, as the documents showed, was found to be the ultimate owner of two firms registered in the British Virgin Islands. The evidence: a signature of Secretary for Innovation and Technology Nicholas Yang Wei-hsiung, who was PolyU’s executive vice-president when the firms were set up in 2012 and 2013.

Taxpayers have a right to know what their tax money is being spent on, and where

PolyU was advised in 2010 to close down its tangled web of companies that was not just losing money, but was slipping past the oversight of management and risked all manner of issues involving conflict of interest.

Yet, the publicly funded institution went on to set up two joint ventures with BVI registrations – known for their opacity – adding to the absurdity of the situation it pledged to clean up.

PolyU explained that the move was a “last alternative” to carry out the “exit strategy” – in an oblique reference presumably to the business partners’ unwillingness to wind up the companies so that they could continue to make use of the university’s brand name for their own commercial purposes.

Transparency is a concern for all public institutions. Taxpayers have a right to know what their tax money is being spent on, and where. Even if PolyU insisted it did not inject a cent of its public funding into these BVI firms, legitimate questions are being asked about whether it is appropriate at all for it to venture into tax havens and deal with the kind of business partners it has taken on.

PolyU has indicated that it has nothing to hide – indeed, no one is alleging illegal wrongdoing. But the way it has conducted itself has been less than reassuring.

Panama Papers: Hong Kong’s universities must be transparent about their offshore companies

While the University of Hong Kong and the Chinese University were later found to have also opened BVI firms, they at least disclosed their existence one way or another – as opposed to PolyU, which upheld complete secrecy. Its defence that its accounting mechanism complied with professional standards – by meeting just the bare minimum requirements – has been criticised as complacency.

The public relations teams of the different institutions involved also exhibited different attitudes. An HKU public relations officer called the Panama Papers reports a “timely reminder”. “I think it’s good for us in the sense that we are now aware of the problem and the need to clear up those offshore companies that are already dormant,” she told me. Her PolyU counterpart, on the other hand, reminded me to produce “balanced” reporting, and issued its response close to our printing deadline.

Her former boss was even less subtle. When approached by a fellow Post reporter about the issue, Yang declined outright to engage, questioning why he should face media questions when PolyU had already given a statement.

His press secretary was similarly blunt. After saying three times that it was a matter for PolyU rather than the bureau, she simply hung up the phone.

Hong Kong Polytechnic University move to set up two offshore firms ‘contravened guidelines of institution and funding body’

Shutting out the media is not the answer to fair questions. Why would Yang, the one in charge of the BVI deals, choose not to report them in PolyU’s annual reports? Is there no obligation for universities to disclose secret dealings of this sort to the University Grants Committee? Is the Education Bureau at all happy that it was uninformed about these offshore moves intended not just for ease of business, but for potential tax avoidance?

If things that happened before one comes to office are no public matter, Britain’s Prime Minister David Cameron wouldn’t have been busy addressing questions about an offshore fund created by his late father and sold before he walked into 10 Downing Street.

“There is more info” – it’s now the turn of the universities, and Yang, to reveal it.

Stuart Lau is a political reporter and the only journalist in the English-language media in Hong Kong to be given access to the “Panama Papers” database of the International Consortium of Investigative Journalists