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We look into the Bauhinia Foundation, a tycoon-funded lobby group with an increasingly cosy relationship with Government, and the people behind it. BF refuses to disclose who funds it, or publish its accounts, claiming to be both private and a tax-exempt "trust of public character" at the same time. Who is making policy for HK - the Government, or a secretly-funded lobby group?

Who is the Bauhinia Foundation?
13th June 2008

The Bauhinia Foundation (BF) has been popping up increasingly often since its launch in early 2006, lobbying for a range of big business-friendly proposals, and is often referred to as "close to" Donald Tsang, the Chief Executive of Hong Kong, yet there is no formal connection. Exactly what is it, who funds it, and who runs it? Webb-site.com digs deeper.

What is BF?

BF is a charitable trust exempt from tax. The Protector of the trust is Charles Ho Tsu Kwok, who controls Sing Tao News Corp Ltd (1105), publisher of the Sing Tao and Hong Kong Standard newspapers. The web page also mentions his "family business" - but doesn't say what it is, so we'll remind you. His inherited family fortune is Hong Kong Tobacco Co Ltd, founded by his late grandfather Ho Ying Chie, who brought lung cancer to generations of Hong Kongers. The company understandably keeps a low profile - you won't find a web site.

Who funds BF?

To qualify for its tax exemption, (and hence to make donations to it tax-deductible), BF must be a "charitable institution or trust of a public character" under Section 88 of the Inland Revenue Ordinance. As such, you might expect that BF would be transparent about who funds it. Not so. There is no list of donations or donors on its web site, and it doesn't publish its financial statements. Perhaps this was just an oversight, we thought, so Webb-site.com wrote to BF's Secretary-General and asked for a list of donors. Head of External Affairs Anna Ngai replied:

"we are not at liberty to disclose the names of our donors without their prior consent"

So your editor asked:

"can I assume that they have all refused to consent to disclosure, or have you not asked any of them?"

and at the same time, we asked for aggregate data (if donors really refused to be named) disclosing the total amount of donations each year, the total amount donated by the top 10 donors since inception, and the amount of the largest single donation. We also asked whether and when the foundation would be publishing its accounts. To all of this, Ms Ngai replied:

"Bauhinia Foundation is a private trust. We've said in our previous reply that we are not at liberty to disclose details regarding our donors. On this point, I am afraid that we have nothing further to add."

So there you have it - BF is a "trust of public character" for tax purposes, but it is a "private trust" when it comes to disclosure. So you cannot know who is funding the proposals and wish-lists which seem to be taken forward by the Government increasingly frequently.

BF is tycoon-funded

However, what we can tell you is that on 5-Mar-06, soon after the BF launch, SCMP ran a story quoting the ever-helpful Macau casino tycoon Stanley Ho Hung Sun as having pledged HK$3m to the lobby group and as saying:

"Charles Ho has approached many tycoons, including Lee Shau-kee [chairman of Henderson Land Development], Cheng Yu-tung [chairman of New World Development] and me....Each of us were asked to give [HK]$3 million."

Readers may recall that New World and Henderson-related persons were also some of the biggest donors to Donald Tsang's election campaigns. In our article Don's Donations (7-May-07) we analysed the 2007 election returns and concluded that subsidiaries and associates of New World were the biggest donors in the 2007 campaign, giving a total of $1.5m, while people related to Henderson Land gave a total of $800k (at the request of the campaign, donations were broken into individual amounts of $50k). Stanley Ho Hung Sun, his family, and directors of his company Shun Tak Holdings Ltd (0242), gave a total of $300k. In 2005 they gave $900k.

There are almost certainly more large donors to BF, judging by the scale of BF's operations, and it would not be surprising if the list of donors closely matched the major donors of Donald Tsang's election campaigns, given that Norman Chan was involved in both, as we explain below.

Norman Chan Tak Lam

Another key player in establishing BF was Norman Chan Tak Lam (Norman Chan), who resigned as deputy chief executive of the HK Monetary Authority "to pursue other interests" on 12-Apr-05, a month after Tung Chee Hwa's resignation as Chief Executive of HK. He emerged the next month as the Secretary-General of Donald Tsang's first "election office", alongside Chairman David Li Kwok Po (David Li), the consummate insider who runs family firm The Bank of East Asia, Limited (BEA, 0023), and together they passed the hat around for that campaign. David Li was appointed to the Executive Council, HK's cabinet, on 1-Nov-05 and given HK's highest award, the Grand Bauhinia Medal, on 1-Jul-07 after Donald Tsang's second election. As readers will know, he resigned from ExCo on 16-Feb-08 over his alleged role in the Dow Jones insider dealing affair.

On 1-Dec-05, Norman Chan became Vice-Chairman for Asia of Standard Chartered PLC where, coincidentally, Donald Tsang's sister Katherine Tsang King Suen is CEO for China. Bauhinia Foundation Research Centre Ltd was quietly incorporated on 5-Dec-05 and its sibling Bauhinia Foundation Ltd, the trustee of BF, was incorporated on 16-Dec-05. On 20-Feb-06, BF was publicly launched, with Norman Chan as its chairman. After Donald Tsang's second-term election campaign, Mr Chan returned to the Government on 1-Jul-07 as director of the Chief Executive's office. He is now widely-tipped to succeed Joseph Yam Chi Kwong as Chief Executive of the HK Monetary Authority, which manages the Government's quasi-sovereign wealth fund, hoarding money for the people.

Who runs BF?

The initial three directors of BF were Norman Chan (chairman), Anthony Wu Ting Yuk (Mr Wu) and Lawrence Lee Kam Hung (Mr Lee). At the launch on 20-Feb-06, seven advisers to BF were also announced, including Donald Li Kwok Tung (Donald Li) and Professor Ceajer Chan Ka Keung (K C Chan). When Norman Chan returned to Government on 1-Jul-07, K C Chan went too, as Secretary for Financial Services and the Treasury. Mr Wu then became chairman of BF, and Donald Li became a director. The other current director is Winnie J Ng (Ms Ng).

Mr Wu is former Chairman of Ernst & Young in HK. He is also Chairman of the Hospital Authority since 7-Oct-04, and a member since 1-Dec-99. He is also Deputy Chairman of the Hong Kong General Chamber of Commerce, which has its own seat in the Legislative Council representing big business.

Mr Lee is Hong Kong chairman of global law firm Baker & McKenzie. He is a member of the Hospital Authority since 1-Apr-05.

Donald Li, a medical doctor, is a member of the Hospital Authority since 1-Dec-06. He is former President of the Hong Kong College of Family Physicians (CFP), which was co-founded by his father, Dr Henry Li Fook Kuen, who was a director of family firm BEA from 1970 until his death in 1993. BEA was co-founded by Donald Li's grandfather, one of the brothers Li Koon Chun or Li Tse Fong (we haven't figured out which). David Li's grandfather was Li Koon Chun, so David Li and Donald Li are either first or second cousins. Donald Li is also a Steward of the HK Jockey Club.

Ms Ng is an Executive Director of Transport International Holdings Ltd (TIH, 00062), which owns Kowloon Motor Bus, one half of our bus duopoly. She is a Governing Committee member of Queen Elizabeth Hospital. The committee is appointed by the Hospital Authority. She is also a director of Hong Kong Cyberport Management Co Ltd, and a member of the Town Planning Appeal Board Panel. Her father, Ng Siu Chan, has been a non-executive director of TIH since 1983 and was Chairman of Kowloon Development Co Ltd from 1974 to 2002. The Ng family still owns about 5.2% of ITH.

The Secretary-General of BF is Gregory Leung Wing Lup, 62, who joined in Nov-07. He was a career civil servant whose last post was Director of Food and Environmental Hygiene.

Political appointments

Of the eight Undersecretaries and nine Political Assistants appointed in May-08 as part of the Government's plan to "groom political talents", seven were reportedly close to BF, which reportedly held a dinner at the end of May attended by Norman Chan to welcome a new batch of associate members, including some of the political assistants (SCMP, 4-Jun-08).

The new Undersecretary for Home Affairs, Florence Hui Hiu Fai, was Head of Business Planning and Development for Northeast Asia at Standard Chartered, where Norman Chan worked as Vice Chairman for Asia before returning to the Government. She also served on the BF's Health Care Study Group. The Political Assistant to the Secretary for Home Affairs, Ms Zandra Mok Yee Tuen, was a senior manager of BF.

Who's in charge here?

The separation between the Government and this supposedly external and secretly tycoon-funded lobby group is becoming increasingly blurred. Hong Kong citizens should be asking - who is making policy for Hong Kong - is it the Government, led by the Chief Executive, or is it a lobby group funded by anonymous big business interests?

Copyright Webb-site.com, 2008


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