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Panama Papers

Hong Kong’s innovation minister and PolyU in new Panama Papers revelations: shares funnelled to pro-Beijing tycoon’s company

Post investigation uncovers a shell company used to funnel shares from a PolyU joint venture to a company run by a delegate to the Chinese People’s Political Consultative Conference

PUBLISHED : Sunday, 24 April, 2016, 8:25am
UPDATED : Sunday, 24 April, 2016, 8:44am

Polytechnic University is facing new questions to over its secretive offshore operations under the watch of an executive who later became Hong Kong’s innovation and technology minister.

New information uncovered by the Sunday Morning Post also calls into question the university’s compliance with financial standards and exposes the involvement of a pro-Beijing tycoon in Hong Kong.

The Post found that one of the two British Virgin Islands (BVI) firms created a few years ago, exposed by the Panama Papers, played a pivotal role in transferring nearly all the shares in a joint venture held by PolyU Enterprises – a subsidiary wholly owned by university – to a company run by Jonathan Choi Koon-shum, a delegate to the Chinese People’s Political Consultative Conference.

The firms, created when the now secretary for innovation and technology, Nicholas Yang Wei-hsiung , was vice president of the university, have never been mentioned in university financial reports. PolyU’s annual statements since 2011 did not mention the firms, of which it has ultimate ownership, but did contain information about PolyU Enterprises.

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“For best practice, the name of the BVI firms should be mentioned [even if] the university may still be presenting the financial statements accurately,” said Kevin Lam, of the Chinese University’s school of accountancy.

All I can say is that the arrangement was part of my work as the then executive vice-president of the university to manage its administration, which involves nothing improper

The omission means the university “may have violated financial reporting standards”, accounting lawmaker Kenneth Leung said. Under Hong Kong Financial Reporting Standard 12, an entity is required to disclose information about the “nature of, and risks associated with” its interests in other entities. A PolyU spokesman dismissed the need for such reporting.

PolyU is no stranger to accusations of financial violations. An independent review panel advised it to establish effective governance of all its companies in 2010, a year after its subsidiaries reported deficits of HK$904 million.

In the space of two-and-a-half years it set up two BVI firms, describing them as a cost-effective way of dealing with the investments of inactive businesses. They were set up by PolyU Enterprises, whose CEO was Yang.

Yang said the decision to set up the firms was proper: “All I can say is that the arrangement was part of my work as the then executive vice-president of the university to manage its administration, which involves nothing improper.”

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But whether anything improper was involved depended on whether PolyU made disclosures with the University Grant Committee, a major source of funding for local universities, argued education lawmaker Ip Kin-yuen. It is understood there are no guidelines on unis setting up offshore companies. The committee did not reply to the Post’s inquiries.