7 May 2007
The pseudo-election of Hong Kong's Chief Executive is over, and on the required deadline, the two candidates, incumbent Donald Tsang Yam Kuen, and legislator Alan Leong Kah Kit, have filed their returns of donations and expenses. The challenger never had a hope of winning, so we won't spend any time in this article combing over his campaign finances.
Under the Elections (Corrupt and Illegal Conduct) Ordinance (ECICO), the donor of any amount over HK$1,000 (US$128) must provide his name and address for a receipt, otherwise the donation cannot be used for election expenses. Those receipts, and a summary schedule of names, addresses and amounts donated, must then be filed with the Government within 30 days of the election using a standard return.
The ECICO entitles anyone to go down to an office in Wanchai and inspect the returns, or obtain a photocopy on payment of HK$0.50 per page. In the internet era, surely if these are available for inspection and copying, then they should be available on the web for inspection and download, but the Government has declined to do this, so in the interests of electoral transparency and convenience, Webb-site.com is publishing them. Click here to view the filings for both 2005 and 2007.
Black-out on disclosures
The purpose of these filings on donations is obviously to provide transparency by enabling everyone to see which people and companies are financing election campaigns. For that purpose to be fulfilled, it must be possible to identify the donors from the information. In a shocking development, the Government has unilaterally blacked-out the addresses of the individuals who donated, leaving only their names, which are often far from unique. We checked with Alan Leong who confirmed that the returns he submitted complied with the law, that is, the addresses were not blacked out, and we assume the same is true of the other candidate, so this censoring was done by the Government. Mr Leong also confirmed that his office did not request the black-out.
By comparison, in 2005's uncontested election, the Government did not black-out donor addresses, many of which were office addresses anyway.
The black-out makes it much harder to identify the individual donors. For example, how many people in Hong Kong are called "Richard Lee" or "Thomas Chan"? It makes a mockery of the whole exercise. Under the law, we were entitled to a photocopy of the filing, not a censored, redacted copy of the filing. We think the Government has broken the law by doing this.
Now you might be thinking that the Government will claim that the Personal Data (Privacy) Ordinance (PDPO) prevents them publishing the address. It doesn't, because the PDPO does not override other laws, such as the ECICO. We were not making a "data request" when we obtained the copy. We were exercising a statutory right to require one. Also, from a practical perspective, anyone who gives more than $1,000 to a politician's campaign knows that their donation and identity will be made public and that they are supplying the data for that purpose. The donor implicitly consents to the disclosure, and that is part of the trade-off for being able to donate money to political campaigns.
In the USA, by comparison, the names, occupations, employers and addresses of all individuals who give more than US$200 to candidates in a federal election cycle must be published. State laws are similar. Take a look at the Illinois disclosure page for example.
What's in a disclosure?
To disclose a donor's identity means to provide enough data to be able to determine with certainty which person we are talking about. Of course, a person's name and address does not uniquely identify him (two people might have the same name and work in the same office, or a father and son might have the same name and live together), but those two items of data come far closer to identifying someone than just a name alone.
We don't care where a person sleeps at night or which building they work in, but we do need enough data to identify them. The simplest way to do this would in fact be to widely use HKID numbers instead, which are unique to each person. These numbers could be published in listed company annual reports, and in any other form of disclosure. ID numbers are not really secret, but many people behave as if they are, confusing the separate objectives of identification and authentication. To identify a third party is to use publicly known information to refer to an individual, whereas to authenticate yourself means to use a secret piece of information, such as a password when logging in to a banking web site. HKID numbers should not be used as passwords, nor should dates of birth, which are widely known, particularly for celebrities.
In fact, any director of a company registered in Hong Kong is required to disclose her HKID number (or if she doesn't have one, her passport number) and residential address in a public register and to file a return of those data with the Companies Registry, where it is available for download (for a fee).
There are other examples of addresses being publicly available. The name and address of every candidate for any election in Hong Kong (Village, District Council, Legislative Council or Election Committee) has been published in the Gazette, which is freely available online (since 1-Apr-00) or in public libraries for older editions.
Your editor has himself been the subject of mistaken identity - Chinese newspapers have reported, without checking, that he bought and sold a house in Mount Kellett Road - when in fact they got the wrong "David Webb" - there are at least two in Hong Kong.
As for the separate matter of authentication, it's beyond the scope of this article, but we would say that the Government missed an opportunity with its Smart ID Card rollout by failing to mandate that each ID card should carry a digital certificate and to hand out free card-readers. Instead, the e-Cert was made free but voluntary, and most people failed to take it up. The e-Cert allows people to digitally sign documents and authenticate themselves. We've used it to renew vehicle licenses and file tax returns online.
So who are the FoD (Friends of Donald)?
Despite the Government's efforts to censor the disclosures, we have attempted to analyse, in the public interest, who made donations to the Chief Executive's election campaign, manually searching our own database of companies, listed company directors, annual reports, government statutory and advisory bodies and known relatives, as well as the web. We should warn you that what follows are our best estimates, but we may have missed some individual donors whose connection to the companies is unknown, and we may have mistaken identities.
Also, we discovered that the filing by Donald Tsang's office is defective - the summary omits 18 donations numbered 541 to 558 and repeats 20 others (601-620). He should amend the filing in order to disclose the missing 18 donations.
Candidates in Chief Executive elections are limited by the ECICO to expenses of HK$9.5m, and any unspent donations must be given to "charitable institution(s) or trust(s) of a public character chosen by the candidates". Mr Tsang's offering was about 2.6x oversubscribed, raising a total of $22.09m and spending $8.36m, so $13.73m went to charity.
|Amount per donation HK$||Number of donations||Total $||Average $|
Notable among the 409 donations of $1,000 each were 30 people who appended their names with "of Hang Fung Gold Technology Group" - famed for its gold shops catering to mainland tourists. Although there appear to be 778 donations over $1,000, the number of real donors is far smaller, because many of them represent the same companies through subsidiaries.
The decency limit
In a begging letter dated 1-Feb-07 obtained by Webb-site.com, Mr Tsang's campaign office, run by David Li Kwok Po and Adolf H Hsu, wrote:
"While it is for individual donors to decide on an appropriate amount for their donations, we would prefer that any single donation not exceed HK$50,000".
This is down from the request in 2005 which suggested a decency limit of $100,000. Probably something to do with the obscene and indecent articles ordinance.
As we will show, the tycoons were largely undeterred by this attempt to make the whole thing more modest. While the never-so-subtle Cecil Chao Sze Tsung of Cheuk Nang (Holdings) Ltd just hit the ball out of the park with a cheque for $300,000, tripling his donation of 2005, and Liu Yong Ling, probably of Elite Industrial Holdings Ltd, gave $100,000, everyone else broke up their subscriptions up into quanta of $50,000. Still, as any physicist will tell you, if enough quanta come along in a row, the resulting pattern starts to look like a wave. The mass media, under pressure to analyse the opaque and fragmented donations before press deadlines on 24-Apr, did not report what we are about to tell you.
New World order
Webb-site.com has discovered that the biggest donor this year was Cheng Yu Tung's New World group of companies. 19 wholly-owned subsidiaries of New World Development Co Ltd (0017), most of them owning property, each gave $50,000, as did 64%-owned New World Hotels (Holdings) Ltd, of which the other 36% is held by unlisted Chow Tai Fook Enterprises Ltd (CTF), which is controlled by Mr Cheng. A listed NWD subsidiary, NWS Holdings Ltd (NWSH, 0659) gave $350k through 7 wholly-owned subsidiaries, while NWS Transport Services Ltd, jointly owned by CTF and NWSH, gave $100k through 2 companies it owns which have the franchised bus monopoly on Hong Kong Island. Meanwhile Taifook Securities Group Ltd, 45% controlled by Mr Cheng, gave $50k, as did New World PCS Ltd, the phone business which is now an associate of New World Mobile Holdings Ltd (0862).
Overall then, we estimate that 30 New World-related companies each gave $50k for a total of $1.5m. In each case, a different individual was named alongside the subsidiary, but it seems unlikely that they each financed the donations.
Incidentally, Donald Tsang's brother and former Police Commissioner Tsang Yam Pui is an Executive Director of NWSH. He gave $10k, but we'll count that as brotherly love.
Lee Shau Kee, the tycoon controller of the Henderson group, took a different strategy. We did not find any Henderson-related company in the list, but we did find the names of Mr Lee and his sons and daughters (in Chinese text), each giving $50k. In the election return, all donations are listed in order of sequential receipt numbers, which are presumably roughly chronological. The interesting thing about the Lee family is that each member's receipt number was sandwiched between the donations of two New World subsidiaries. Either the donations of the two groups were somehow co-ordinated, or someone in Donald Tsang's accounting team has a wicked sense of humour.
We also found the names of several executive directors of Henderson Land Development Ltd (0012), Henderson Investment Ltd (0097) and The Hong Kong and China Gas Co Ltd (0003), and the brother of one such director.
Overall, we estimate that Henderson-related people gave 16 donations of $50k each for a total of $800k.
We found the names of Li Ka Shing, his son Victor Li Tzar Kuoi, and 8 senior staff at Cheung Kong (Holdings) Ltd (0001), each giving $50k. These names were not limited to directors but reached down to the company secretary, the corporate spokesperson and an obscure admin manager who once made a bid in a land auction. Meanwhile at 49.9% associated company Hutchison Whampoa Ltd (0013), we found the names of 4 more directors, a notary, a company secretary and a deputy CFO. There were two names from subsidiary Hutchison Telecommunications International Ltd (2332), and two from Hutchison Harbour Ring Ltd (0715). Overall then, we found 21 donations of $50k each from names affiliated to the Cheung Kong and Hutchison group, for a total of $1.05m. By comparison, in 2005 we found donations totalling $900k.
We found a "Robert Ng", probably of Sino Land Co Ltd (0083), along with the names of his wife, son and daughter, 3 executive directors and an associate director of sales, for a total of 8 donations of $50k each. We also found the names of 3 former executive directors of sister company Sino Hotels (Holdings) Ltd (1221) and the General Manager of one of its hotels, each giving $50k. Overall then, we estimate that people related to Sino group made 12 donations of $50k each for a total of $600k. This is double the figure for 2005, when we found 3 names giving $100k each for a total of $300k.
Incidentally, David Li's son Adrian sits as an INED on the board of 3 companies in the Sino group, alongside Executive Councillor Ronald Arculli, although he has been reclassified as an NED because his law firm provides services to the group.
Yangtzekiang Garment / YGM Trading
We found the names of 10 members of the Chan clan which controls Yangtzekiang Garment Ltd (0294) and YGM Trading Ltd (0375), along with one executive director, making 11 donations totalling $550k. Chan Wing Kee, Chairman of Yangtzekiang Garment Ltd, is a Standing Committee member of the CPPCC.
We found names connected to Lai Sun Development Co Ltd (0488) including that of Chairman Peter Lam Kin Ngok, the CEO, two executive directors, the qualified accountant and a former financial controller, for a total of 6 donations of $50k each. We also found the name of Peter's son Lester, who is CEO of affiliate Lai Fung Holdings Ltd (1125), and the name of its qualified accountant. Overall, we estimate Lai Sun-related people made 8 donations totalling $400k.
CITIC group adopted a two-pronged strategy, with individual and corporate donations. CITIC Pacific Ltd (CP, 0267) Chairman Larry Yung Chi Kin and MD Henry Fan Hung Ling each gave $50k. Mr Fan is a member of Donald Tsang's Executive Council. PRC Government-owned shareholder CITIC Hong Kong (Holdings) Ltd also chipped in $50k. CITIC Pacific itself gave $50k, as did newly-listed subsidiary CITIC 1616 Holdings Ltd (1883). Digging deep, 70.8% subsidiary New Hong Kong Tunnel Co Ltd, which runs the Eastern Harbour Crossing, gave $50k. Wholly-owned CP subsidiaries CPCNet and Dah Chong Hong each gave $50k, and 10 other wholly-owned subsidiaries, many of them vehicle distributors, each gave $10k.
Overall, we estimate that the CITIC-related donation was $500k, of which $350k was from CP and 14 of its subsidiaries, and the rest from its substantial shareholders and directors. In 2005, CP (including Dah Chong Hong) gave $200k while Mr Yung gave $100k, for a total of $300k.
Asia Financial/Bangkok Bank
Another of Donald Tsang's Executive Councillors is Bernard Chan Chi Sze, also known by his Thai name of Charnwut Sophonpanich, grandson of the late founder of Bangkok Bank. Bernard is President of family-controlled Asia Financial Holdings Ltd (AFH, 0662), where his father, Robin Chan Yau Hing, is Chairman. We found the father's name and another son, Stephen Tan, each giving $50k, while AFH and its wholly-owned subsidiary, Asia Insurance Co Ltd, each gave $50k. We also found 5 companies related to the Sophonpanich family, including Bangkok Bank (which is Chaired by Bernard's uncle), each giving $50k. Overall then, we estimate that companies and individuals related to Mr Chan gave $450k.
We found the name of casino tycoon Stanley Ho Hung Sun, two of his daughters and 3 others, all of whom are executive directors of Shun Tak Holdings Ltd (0242) each giving $50k for a total of $300k. This was a sharp reduction to 2005, when 9 names each gave $100k for a total of $900k.
The donation list includes the names of Chairman Dickson Poon, his wife, 3 executive directors and the company secretary all of Dickson Concepts (International) Ltd (0113), each giving $50k for a total of $300k. In 2005, Mr & Mrs Poon gave $200k. One of our sweetest memories from the dotcom bubble of 2000 was gullible Hong Kong leader Tung Chee Hwa opening the Dickson CyberExpress clothes shop at MTR Kowloon Station, which later became a warehouse outlet for clothes they couldn't sell elsewhere. The company even hoped at one stage to spin this thing off onto the GEM as Dickson Cyber Concepts Ltd - thankfully that's one IPO which did not see the light of day.
Over at Chinese Estates Holdings Ltd (0127) we find the names of former Chairman Thomas Lau Luen Hung, who recently had to resign on the order of the Insider Dealing Tribunal, giving $50k, as did the names of his brother, sister, mother and nephew, for a family total of $250k. Retailer Lifestyle International Holdings Ltd (Lifestyle, 1212), through its 100% subsidiary Sogo Hong Kong Co Ltd, gave $50k, raising the total for this group to $300k. Lifestyle is majority owned by Real Reward Ltd, which is half-owned by the Lau brothers and half by Cheng Yu Tung's CTF, but we'll count it with the Lau-related donations.
Another of Donald Tsang's Executive Councillors is David Li Kwok Po, Chairman of The Bank of East Asia, Ltd (0023). Mr Li, his wife and two sons each gave $50k. Meanwhile, the bank gave $50k and two wholly-owned subsidiaries, Credit Gain Finance Co Ltd and Blue Cross (Asia Pacific) Insurance Ltd, each gave $10k, as did 75.6% subsidiary Tricor Services Ltd, one half of the share registrar duopoly in Hong Kong. The other 24.4% of Tricor is owned by NWSH. Overall then, we estimate the BEA group gave $80k while Mr Li and his family gave $200k for a BEA total of $280k.
Construction-cum-casino tycoon Lui Che Woo's name was on the list, along with his wife, son and two daughters, each giving $50k for a total of $250k, up from $200k in 2005.
Wheelock ducks out
One notable absence from this year's subscription list was the Wheelock and Wharf group chaired by Peter Woo Kwong Ching, who is married to one of the four daughters of late shipping tycoon Pao Yue Kong. In 2005, Mr Woo, his wife, his daughter and 6 company executives each gave $100k, for a total of $900k, matching the donations of names linked to Cheung Kong/Hutchison and of the Shun Tak people. It appears that the Woos decided to sit this one out, so we'll mark him out of the FoD club.
However, we did find the names of another Pao daughter, Cissy Pao Watari Pui Lai, and her husband Shinichiro Watari, chipping in a combined $50k.
Other Exco members
We've mentioned the efforts of unofficial Executive Councillors Henry Fan (CITIC group), David Li (BEA) and Bernard Chan (Asia Financial/Bangkok Bank). What about the others? We found personal donations from Laura Cha Shih May Lun and Charles Lee Yeh Kwong of $50k each. Mr Lee's fellow co-founder of law firm Woo, Kwan, Lee & Lo, Woo Po Shing, also gave $50k. Meanwhile Gold Peak Industries (Holdings) Ltd (0040) controlled by perhaps the least visible Executive Councillor Victor Lo Chung Wing, gave a modest $30k.
Liberal Party members were pretty absent from this subscription, not surprisingly given their umbrage at the GST proposal, the proposed law against anti-competitive practices, and empty talk from Chairman James Tien Pei Chun about possibly casting blank votes in the election. No sign of him or ExCo member Selina Chow Liang Shuk Yee on the list, but we did find his brother Michael Tien Puk Sun, who chairs the KCRC and his private garment firm G2000, personally giving $50k, which saves the good family name. Textiles tycoon Vincent Fang Kang gave a mildly insulting $3,800 - was he trying to make a point? We also found nothing from everyone's favourite valuer and Exco convener Leung Chun Ying.
Due to the Government black-out, we are unable to reach a view on who the following people are, each of whom gave $50k with only incomplete names (no Chinese name) or names which belong to more than one well-known person in our database. In no particular order: Albert Yeung, Richard Lee, Jeanne Ng, James Lai, Eleanor Wong, George Wu, Albert Ho, Michelle Ong, Thomas Chan, Yeung Kwok Keung and Ginny Man. There are others in the list but we gave up at this point.
There were numerous other donations, mostly of $50k each, from listed companies or their controlling shareholders. For example, the Wu family of Hopewell gave $150k in total, and "The Swire Group" (which obfuscates the identity of its corporate donors - it could be Swire Pacific Ltd or perhaps the private arm) gave $100k in two donations. The Kwok brothers of Sun Hung Kai Properties Ltd each gave $50k. But you get the big picture from the list above, and you weren't really scoring unless you gave at least $250k. Here's a round-up, with a reminder that these are our best estimates:
|Rank||Persons related to||Donations HK$000|
|2||Cheung Kong / Hutchison||1,050|
|5||Yangtzekiang / YGM||550|
|7||Asia Financial / Bangkok Bank||450|
|Total of these donors||7,880|
As you can see, these top-15 groups on their own could have almost covered Mr Tsang's election expenses of $8.4m, and as noted above, we may have missed some members in each group.
In many countries, corporate donations to politicians are either frowned upon or illegal. That's not the case in Hong Kong, but it does beg the following question. Directors of any company have a fiduciary duty to protect and maximise shareholder value. If they spend corporate funds, whether on politicians or anything else, then they can only do so if they reasonably expect the company to benefit in return. So for all those listed companies who made donations, either the directors expect the company to benefit from the donation, or they are breaching their fiduciary duties to shareholders. Which is it? Clearly, from a shareholder point of view, one would hope that they expect to benefit in return, but from a public citizen's point of view, this is exactly why we should pass legislation banning corporate political donations.
It wouldn't be enough to stop there though. If companies are banned from making donations, then their controlling shareholders, for whom the amounts involved are often just a day's dividends, would continue to finance politicians. As we have shown above, in many cases, no corporate names were used, but it is extremely unlikely that so many individuals at each firm each decided to give exactly the same amount and did not, or will not, receive any reimbursement from either the company or its controlling shareholders. It would be impossible to prove any connection if the money is just embedded in this year's pay packet.
This is why some countries, such as the USA, have limited donations by any person to a sensible amount. In the case of the USA it is US$2,300 per candidate or committee, per election. This, plus the required disclosure of donors' employers, forces any companies which are going to donate via an army of employees to face the transparency of disclosure.
Somewhere along the twisted and tortuous path to democracy, Hong Kong must address campaign finance reform, or continue being hostage to corporate funding and special interest groups, as politicians in so many countries are. We should cap individual donations at modest amounts, ban corporate donations, and provide Government campaign funding for any candidate that has passed the nomination threshold, to facilitate candidates' campaigning on an equal footing. It is in the public interest that the public should be offered meaningful choice.
© Webb-site.com, 2007