* High charges make HK corporate registry global laggard
* New data privacy restrictions put users, reporters at
* Other countries, UK, France, Japan move towards open data
* Poor corporate disclosure damaging HK companies, say
HONG KONG, March 10 (Reuters) - Hong Kong is beefing up
corporate disclosure laws following the Panama Papers scandal,
but unlike many other financial centres it is not making it any
easier to access the information, transparency campaigners and
private investigators say.
Instead it charges high fees to access the territory's
corporate registry, a tool transparency activists say is vital
to prevent white-collar crime and promote a fair business
environment as it contains information on company directors,
shareholders and financial holdings.
The future of private company registries has been in the
spotlight this week at the Corporate Registers Forum in Hong
Kong, which gathers representatives of company registers
globally, along with the World Bank and the United Nations.
Since the Panama Papers exposed how opaque shell companies
can be used to conceal ill-gotten gains or avoid tax, several
countries including Japan, Israel, Bulgaria and France have
largely made their company databases freely available, while
Britain became the first country globally to provide free access
to data showing real company owners, rather than their nominees.
However, critics say Hong Kong is dragging its feet.
"At a time when an ever-increasing number of countries are
making their company registers available as free, open data,
it's saddening to see Hong Kong go against the direction of
travel and undermines confidence in Hong Kong companies around
the world," said Chris Taggart, chief executive of
OpenCorporates, an online database of corporate registries that
has been campaigning for company data transparency.
It scores Hong Kong 25 out of 100 in its global registry
rankings, placing the territory well behind rival financial hubs
London and New York, and even the likes of Russia, Niger, Samoa,
The Panama Papers showed Hong Kong was the most active
centre in the world for the creation of shell companies. In
response, Hong Kong quietly pushed through proposals on
anti-money laundering laws and company disclosure legislation,
including a requirement that companies reveal the identity of
their true owners.
But in Hong Kong, home to more than 1.3 million private
companies, access to the information comes at a cost.
Private investigators said the corporate registry fees make
it increasingly expensive to conduct investigations into
potential crimes amid increasingly complex corporate structures.
"The pay wall is cumbersome and expensive. For larger
investigations where a company may have hundreds of subsidiaries
or associated companies, the process can be prohibitively
expensive," said Jane Moir, director at Princedale Advisory, a
Hong Kong corporate investigations firm.
An investigation into a large company could easily rack up
fees of HK$100,000 ($13,333), a Reuters analysis shows.
A spokeswoman for the registry though said fees are
"minimal" and do not constitute a pay wall deterring the public
from conducting searches.
She said the fees are set on the basis that they can be
recovered as a business cost but David Webb, a corporate
governance activist, said there is no justification for
recovering costs for information searches.
In fact, the Hong Kong government could stop charging fees
for searching the registry and still make HK$166 million in
profit from fees it charges new companies to incorporate as
legal entities and make annual filings, his analysis shows.
Last Friday alone, 855 companies were incorporated in Hong
Kong, according to his eponymous Webb-site.com which tracks the
public part of the registry data.
Last year, the government also required users to declare a
reason for searching the registry - a move to protect the
privacy of company directors and shareholders.
However, the box-ticking declaration does not explicitly
include news gathering or publishing, making it legally risky
for some users such as journalists or others that publish
reports based on the information.
The move to protect privacy was seen by rights groups as
another example of creeping censorship in the former British
colony, under the influence of Beijing.
The aim of the privacy law though was to strike a balance
between upholding the freedom of the press and protecting
personal information, Hong Kong's privacy commissioner for
personal data, Stephen Kai-yi Wong, said in a statement.
Exemptions for news outlets may apply in certain
circumstances, he said.
Still, some see the move as an attempt by Hong Kong's rich
and powerful to suppress information on their affairs.
"There was nothing to suggest that privacy was a major
concern," said Moir. "The requirement did, however, seem to
coincide with a number of reports by investigative journalists
into the financial affairs of the political elite."
(Reporting by Michelle Price; Editing by Neil Fullick)