Just the perfect and frustrating example of globalization......

Last time we mentioned about how children were dying from hunger in Zimbabwe, a country where infections diseases were widespread, inflation rates were the highest in the world, and an important hub for the trade of blood diamonds from war-torn central African countries...Western countries were helpless in dealing with the notoriously corrupted president, Mugabe, and took a controversial measure to cut food aids to Zimbabwe......

And now, Mugabe has comfortably bought a new house in Hong Kong, a place in Tai Po with an independent house and swimming pool, actually just a 15-minutes walk from my home...

His wife, known as a shopaholic, was reported to have enjoyed herself in our shopping paradise city, shopping crazily for jewelry, clothes and handbags,

His daughter, who were allowed to register in a Hong Kong university under disguised name and identity, could have been taking the same courses as some of you, or walked by you one day in the university campus...

In a liberal society, there's nothing wrong at all to the above actions if it was not because of their obvious links to global money laundering...Imagine these products being consumed in the cost of blood and lives of poor children and peasants in Africa...Then you wonder whether our government/ universities or business companies in Hong Kong could have done more for global citizenship. (Note that Mugabe is prohibited from entering most EU or North American countries for his misdeeds back at home)

(For a more detailed coverage of the news from abroad, please see: http://asiasentinel.com/index.php?option=com_content&task=view&id=1691&Itemid=367 )

Ironically, Mugabe was not the only one...

The most corrupted president in world history, Suharto from Indonesia in the 1990s, also used registered proxy companies in HK to redirect dirty money from Indonesia into investment in his home country.

(http://www.businessweek.com/1999/99_30/b3639012.htm

http://news.bbc.co.uk/2/hi/business/3567745.stm)

Or a more recent case, Thaksin from Thailand, who was ousted in a military coup in 2006 and convicted for corruption, was also known to be residing legally in HK for months, making plans for buying a house, and hosting reception parties at the Hong Kong Peninsula… (known from some journalists and academics from Thailand who wish to keep their names anonymous for safety reasons)

http://www.phnompenhpost.com/index.php/2009021624232/National-news/SRP-calls-for-Thaksin-investigation.html  

Doesn't this make us wonder--- What is it about Hong Kong that attracts so many sensitive politicians famous for corruption from abroad to make our home a safe haven for them????

I talked a bit with a friend who conducts research on corruption in Asia and I also found some interesting information from the net last night...

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Global money laundering and Hong Kong

Hong Kong is an obvious target for money launderers, particularly for the washing of proceeds from the sale of illegal drugs. A variety of factors contributes towards the importance of Hong Kong as a money laundering target:

●        the strength and high level of infiltration of Chinese organized crime groups;

●        a low tax system;

●        acting for China as its offshore banking centre;

●        sophisticated financial environment and infrastructure;

●        the absence of any currency and exchange controls;

●        the presence of various offshore company structures that can be used by non-residents.

Money laundering in Hong Kong extends to all serious crime. All banking and financial institutions must take customer identifications, and report suspicious transactions to a central unit. However, because of the size and complexity of Hong Kong's financial world there still remain problems – exhibited by:

●        the relatively low level of suspicious reports – the vast majority of which come from banks, with very few coming from insurers or professional advisors like solicitors and accountants;

●        the opening of accounts with forged documents;

●        the operation of cash cleansing through bureaux de change and money remitters.

(Source: http://www.dirtydealing.org/IMAGES/money_laundering_risk_index/Country%20Index%203.pdf )

Blood diamonds and Hong Kong

Recently, India's Directorate of Revenue Intelligence..started investigations over allegations of the over-invoicing of diamonds... for laundering nearly $20 million abroad. Allegedly, unscrupulous Indian traders exported rough diamonds to Dubai and Hong Kong and re-directed these to India at inflated prices...

(Asia Times Online: http://www.atimes.com/atimes/South_Asia/FB19Df04.html )

Hong Kong as an offshore financial and secrecy haven?

The existence of offshore banks in tax and secrecy havens has allowed drug traffickers to develop complex international networks. The IMF applies the term "major offshore centres" to the following countries: the Bahamas, Bahrain, the Cayman Islands, Hong Kong, the Netherlands Antilles, Panama and Singapore.

(UN, World Drug Problem, June 1998 http://www.un.org/ga/20special/featur/launder.htm )

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It's frustrating reading about these as I used to think about Hong Kong as a very 'clean' city with good regulations on anti-corruption and money laundering. But I start hearing that things might not be as optimistic when we look at global money laundering or transnational corruption, in where HK tries to intervene little...

I'm not familiar at all about the legal/ finance/ auditing perspectives of this issue, so do correct me if I'm wrong or share with us your viewpoints!

I personally find this a very interesting topic on Global Citizenship, very much related to our lives in HK, isn’t it? :p

Wendy

HIF Consultant