Hong Kong’s zealous anti-doxxing campaign could make it even easier to hide dirty money in the city
20 Apr 2021

Beachfront property owned by China’s political elite. Washington-accused drug lords and gun runners operating blocks apart. Companies enabling North Korea’s purported sanctions-busting fleet.

All the above exist in Hong Kong and were exposed, in part, by investigations using Hong Kong’s Companies Registry, a public database that has become the subject of a fierce debate between the city’s government and a coalition of investors, lawyers, journalists and advocates for transparent governance.

Though the registry’s online search engine looks and operates like it was created 20 years ago, it is a crucial tool for a smattering of industries because it contains identifying information for the nearly 1.4 million active companies in Hong Kong — and the people in charge of them.

Investors use the registry to research the business connections of potential partners. Lawyers use it to find the addresses of businesses they want to sue. Labor unions use the registry to issue complaints against management. And journalists use it to investigate possible wrongdoing. The Hong Kong government, however, alleges that the registry’s data has been “weaponized” by people looking to bully their political opponents. It says people are procuring the home addresses or identification numbers, available on the database for a small fee, of others and then sharing them widely online. That tactic is known as doxxing and spiked during the city’s political unrest in 2019.

To prevent people from misusing the registry, the Financial Services and Treasury Bureau wants to remove the need for directors to provide a home address, and partially mask their identity cards or passport numbers.

The government said this proposal strikes a “reasonable balance” between privacy and the public’s right to information.

“Overseas countries also have similar measures to prevent doxxing or weaponizing personal information, the government is only addressing the same problem they are also facing,” said the city’s leader, Carrie Lam, said at a news conference last month.

The government has said its proposal would be in line with places like Australia and the United Kingdom. However, those countries operate registries that are much easier to navigate, and the British one is free. The global trend is tilting toward transparency, not obfuscation, experts say.

It’s unclear exactly how often the Companies Registry is used for doxxing. Hong Kong’s Office of the Privacy Commissioner for Personal Data received 1,036 doxxing complaints in 2020, but did not specify whether any of those cases used information from the public registry. Doxxing cases fell by 76% last year, compared to the year prior, the privacy watchdog said.

Critics say the move will have serious consequences for Hong Kong’s free press and its reputation as an easy place to do business. Many are concerned it adds to the perception that Hong Kong is becoming what’s known as a “secrecy jurisdiction,” a place where it’s easy to evade taxes and hide dirty money.

The Tax Justice Network, a non-governmental organization that monitors and studies tax havens around the world, ranks Hong Kong fourth on its Financial Secrecy Index. The group claims Hong Kong’s “classic see-no-evil approach to financial regulation” is “designed to attract offshore business, dirty and clean, with few questions asked.”

In a letter to lawmakers who debated the issue on April 9, JP Lee, the chairman of the International Chamber of Commerce’s Hong Kong, said the organization did not understand why authorities were so eager “to push through the measures with seeming disregard to the adverse consequences.”

The Hong Kong Foreign Correspondents club urged the government to reconsider based on the belief that the proposal “will be harmful to press freedom and transparency in the city.”

And Jane Moir of the Asian Corporate Governance Association said on Bloomberg TV this month that “the only people who are going to benefit are companies and individuals who want to keep their affairs secret.”

“This is a system that has served Hong Kong well for decades, without any problems,” she added.

A unique identifier

In Hong Kong and greater China, where 1.2 billion people share the same 100 surnames, it can be hard to ascertain who owns a company from their name alone. Government-issued ID numbers, however, are unique to each individual.

David Webb, a former investment banker turned campaigner for transparency in corporate governance and financial markets, says obscuring these ID numbers will limit the ability to identify company directors with common names, like a “John Smith” in English. Complicating matters is the fact that the Companies Registry does not require directors to use their exact legal name, meaning people can use nicknames or a combination of English and Chinese names that do not match their identity cards.

The government put forward a similar proposal more than a decade ago.

But Hong Kong’s Standing Committee on Company Law Reform — the body tasked with advising the city’s Financial Secretary on matters relating to company law — came to a similar conclusion as Webb when it addressed the issue in 2009. It found “the option of masking 3 or 4 digits of an identification number” wouldn’t work as many people have “similar identity card numbers.”

By 2013, the government backed off. But it is now trying to push through the proposal again.

John Scott, who finished his six year run as chair of the standing committee in January, said the proposal to mask directors did not come up during his tenure. He worries the government’s sudden decision to push ahead with these changes will make it harder for corporate lawyers to investigate who is behind complex, interlocking corporate structures.

“I’m genuinely concerned about losing an area of information that would otherwise be available to litigators like myself,” said Scott, who is now senior counsel at Des Voeux Chambers.

A spokesman for the US State Department said Washington is concerned the steps would “erode a longstanding history of transparent business practices” in Hong Kong.

A CNN investigation last year found that Hong Kong was home to more than 120 people and companies sanctioned by the US government.

By Joshua Berlinger, CNN Business, 19 April 2021

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