Two former leaders of Hong Kong have been named in the Pandora Papers leak, the most extensive global data drop detailing secretive financial dealings by the world’s wealthiest people that aim to conceal their assets.
Leung Chun-ying, or CY Leung, reportedly did not declare his income from the sale of shares of a Japanese company while still serving as the Chinese territory’s chief executive. Tung Chee-hwa, a billionaire, allegedly set up offshore companies after he retired from office.
CY Leung was Hong Kong’s leader between 2012 and 2017, while Tung was the city’s first chief executive after Hong Kong’s handover to China in 1997. He remained in charge until 2005.
Both men are now serving as senior members of an advisory committee for the Chinese government and there are reports that CY Leung could seek a political comeback as the term of the current Hong Kong chief executive, Carrie Lam, comes to an end.
The landmark investigation involved 600 journalists from 150 news organisations in 117 countries, sorting through about 11.9 million files from more than a dozen financial institutions. It is estimated that the world leaders in business and politics are linked to offshore wealth amounting to trillions of dollars.
The opening of offshore accounts is not prohibited by law. But if the purpose of those accounts is to avoid taxes in their respective countries, then that could be deemed illegal.
Aside from CY Leung and Tung, some 35 current and former world leaders, including the Russian President Vladimir Putin and King Abdullah II of Jordan, were also named.
According to the International Consortium of Investigative Journalists (ICIJ), CY Leung failed to declare the sale in 2015 of an estimated 2.3m Hong Kong dollars ($295,000) worth of shares of the company DTZ Japan Ltd. ICIJ collaborated with Hong Kong’s Stand News in the investigation.
Stand News said CY Leung reportedly held 30 percent of shares in the company through two offshore firms.
The report also said that even after he took office as Hong Kong’s chief executive on July 1, 2012, Leung continued to serve as director of three offshore companies and only quit his posts in August that same year.
Leung never publicly acknowledged his role and duties in the three companies, according to the report.
Leung characterised the Stand News report as misleading and warned against fanning the “flames of irresponsible journalism” in a series of posts on social media.
Writing on Facebook, he said he was only required to declare shares he owned directly owned, and not those in subsidiaries of companies.
“Possession and transactions of share in subsidiaries need not be declared,” he said, adding that he did not exercise decision-making rights in the companies mentioned, including DTZ Japan.
He also justified his continued presence as director of the three companies into his term as Hong Kong leader, saying there were different procedures in contracts, and in some instances, resignations did not take effect immediately.
“I activated all resignation procedures before I took office as the chief executive,” he said.
Leung came under investigation following allegations published in the Sydney Morning Herald in 2014 that he had received 50m Hong Kong dollars ($6.4m) in connection with bidding for property firm DTZ that he did not declare.
The report said that Leung was paid the sum to stop him from taking a position with DTZ’s competitor. The complaint against him was dropped in 2018, with the justice department citing insufficient evidence.
He was also investigated for alleged potential conflict of interest and tax evasion, but those cases were dropped in 2020.
The Stand News report also said that both CY Leung and Tung were clients of Trident Trust, an international company that manages trusts and funds. The paper alleged both men used intermediaries to register offshore accounts and shell companies around the world for themselves and family members to shelter them from taxes.
Meanwhile, Tung also reportedly set up at least seven offshore companies after he left office. Using one of those companies, an account was opened with HSBC with an estimated $1m (7.8m Hong Kong dollars) in assets.
Tung and his family members also opened up to 72 offshore company accounts.
According to Forbes Magazine, which charts the fortunes of the world’s richest people, Tung’s wealth is estimated at $2.6bn.
Tung and his family have yet to respond to the report.