Former Hong Kong leaders Tung Chee-hwa and Leung Chun-ying were named among hundreds of public officials in 91 jurisdictions around the world known to be concealing assets in a worldwide web of secret financial dealings by the global elite.
According to the Pandora Papers leak by the International Consortium of Investigative Journalists (ICIJ), Leung didn't declare his income from the sale of shares of a Japanese company while still chief executive of the Hong Kong Special Administrative Region of the People's Republic of China from 2012-2017.
Billionaire shipping magnate Tung Chee-hwa, who held the job from 1997-2005, was found to have set up offshore companies after leaving office, the papers showed.
Both remain part of the ruling Chinese Communist Party (CCP)'s political system for governing Hong Kong, which has seen a rapid and widening erosion of its promised freedoms amid a citywide crackdown on dissent and political opposition under a draconian security law imposed by Beijing.
The Pandora Papers investigation saw 600 journalists from 150 news organizations in 117 countries comb through nearly 12 million files from more than a dozen financial institutions.
They found paper trails linking world political and business leaders to trillions of dollars in offshore wealth.
"The leaked records reveal that many of the power players who could help bring an end to the offshore system instead benefit from it – stashing assets in covert companies and trusts while their governments do little to slow a global stream of illicit money that enriches criminals and impoverishes nations," the ICIJ said in an Oct. 4 report on the findings.
While offshore accounts and companies aren't illegal, and can have legitimate purposes, they have frequently been linked both to legal tax avoidance and illegal tax evasion, as well as money-laundering and the avoidance of international economic sanctions.
Leung failed to declare the 2015 sale of an estimated H.K.$2.3 million (U.S.$295,000) in shares in DTZ Japan Ltd, ICIJ found during a collaborative investigation with Hong Kong’s Stand News.
Leung held 30 percent of shares in the company through two offshore firms, Stand News said, and continued to serve as director of three offshore companies for weeks after taking office, without declaring them as interests.
Leung hit back at the news site via social media for "misleading" reporting, saying: “Possession and transactions of share in subsidiaries need not be declared."
"I activated all resignation procedures before I took office as the chief executive," Leung said.
In 2014, Leung faced allegations in the Sydney Morning Herald that he had received a multimillion dollar payout in connection with bidding for property firm DTZ that he did not declare.
Hong Kong's justice department said there was insufficient evidence to support the claim in 2018, and investigations into that allegation and two others of conflict of interest and tax evasion were dropped.
Leung and Tung were also clients of Trident Trust, an international company that manages trusts and funds, according to Stand News, which said they had set up offshore accounts and shell companies around the world to act as a tax haven for themselves and their families.
It said Tung and his family members also opened around 70 offshore company accounts.
Hong Kong chief executive Carrie Lam declined to comment on individual cases when asked about the reports on Tuesday.
"The government has a very stable declaration of interest system," Lam told reporters. But she said the government trusts its officials, and never carries out spot checks on public office-holders.
Chung Kim-wah, deputy chief executive of the Hong Kong Public Opinion Research Institute (PORI), said that the Hong Kong government's lack of response to the Pandora Papers suggests it won't be pursuing any of the ICIJ's findings, but also suggest it isn't throwing its support behind Leung, either.
"I think that the lack of response is in itself a kind of response," Chung told RFA. "I don't think there are many people in the [Hong Kong] establishment who would want Leung to be chief executive again."
"I don't think there's much chance of that given the current situation."
Offshore companies created
The Pandora Papers also revealed that Joseph Tsai, executive vice chairman of the board of directors at Alibaba, set up more than 10 offshore companies for the disposal of assets ahead of the company's listing in the United States.
Tsai, who hails from Taiwan but holds Canadian nationality, helped Alibaba set up a complex offshore business network using companies registered in the British Virgin Islands, the Cayman Islands and Bahamas, the papers show.
While the use of multiple offshore companies has often been associated with tax avoidance and secret wealth management, there are also legitimate uses for offshore companies and trusts.
"We do not intend to suggest or imply that any people, companies or other entities included in the ICIJ Offshore Leaks Database have broken the law or otherwise acted improperly," the ICIJ said in a disclaimer on the Pandora Papers website.
Meanwhile, Hong Kong media reports said that the family members of current and former CCP leaders hold an estimated U.S.$77 million in Hong Kong real estate.
Hong Kong Land Registry information revealed that the owner of a detached and heavily secured mansion in the resort district of Repulse Bay is registered to one Zhang Yannan, who holds a Hong Kong permanent identity card. The name matches that of the niece of CCP general secretary Xi Jinping.
According to the Companies Registry, a Zhang Yannan is also registered as the owner of a company called Jinyi, with a registered address in Convention Plaza Apartments in downtown Hong Kong.
A source close to a wealthy Chinese businessman said many of China's financial and political elite prefer to hold property and other assets in Hong Kong, for fear of political upheavals in mainland China.
'Paradise for corruption'
Beijing-based political commentator Zha Jianguo said Hong Kong had become a "paradise" for corrupt CCP officials to launder money and hide their wealth.
"Firstly, the financial sector is highly developed, with a lot of private ownership, and companies are run differently from mainland China," Zha told RFA. "Secondly, there are still plenty of connections with mainland China, so it's always easy to find someone to help out with money laundering or property purchases."
A visiting scholar surnamed Zhang, who studies Chinese economic activity in Hong Kong, said Chinese money continues to pour into Hong Kong, sometimes en route to somewhere else.
"More and more Chinese people have been buying property and transferring funds overseas in recent years ... even some red capitalists and corporate groups with state backing," Zhang said. "One of the reasons is the transfer of assets."
Zhang said the assets being transferred overseas are often the result of illicit gains in China, but also come from an incipient sense of insecurity among the Chinese elite.
"Everyone, the red capitalists, the princelings of revolutionary families, and ordinary people, is transferring assets overseas," he said.
"There is no certainty, either about the political situation or about the basic ability to make a living, and that applies both to regular citizens and to high-ranking officials."
Translated and edited by Luisetta Mudie.
This content originally appeared on Radio Free Asia and was authored by By Rita Cheng, Gigi Lee, Lau Siu Fung and Qiao Long.