Hong Kong Human Rights Monitor

Corporate Voting is Highly Corrupt

The Legco election held in May 1998 is claimed to be one of an open, free and fair election by the Government. Nevertheless, what is discovered by Human Rights Monitor's recent study of the election is that, by the ridiculous system of functional constituencies, corporate vote allows an individual to actually control 7, or even as many as 41 votes. In this respect, we cannot see any fair election if the influence of each vote is not of the same weight, which is through the means of allowing only a small fraction of the electorate (in the geographical constituency) to have additional votes in functional constituencies and election committee, and to have special seats reserved for them.

As part of its study of the election, Human Rights Monitor has carried out a detailed examination of the registration of corporations in some of the functional constituencies. There are very great differences in the size of these electorates. The largest, the Education Functional Constituency, has 61,290 registered electors. The smallest, the Urban and Regional Councils, had 50 each. When the number of electorates of the two largest constituencies, which is Education (61,290) and Health Services (27,487), is added together, the sum is already over 60% of the total number of electorates in functional constituencies. As might be expected, the largest functional constituencies tend to be those with individual as opposed to corporate voters.

In contrast, the majority of the functional constituencies have electorates of less than 1500 voters, and among this group many have corporate voting. The five smallest constituencies apart from the Urban and Regional Councils are the Heung Yee Kuk rural organisation; Agriculture and Fisheries; Insurance; Transport; and Finance. Apart from the Heung Yee Kuk, these electors are all corporations. Between them, these 837 electors elect the same number of Legislative Council members as one quarter of the total registered electorate of Hong Kong - 698,843 people - in the geographical constituencies.

However, these simple figures do not convey the true picture because the real electorates of these small functional constituencies are actually even smaller than the official figures. This is because manipulation of the corporate vote enables a single organisation to have more than one vote. Thus, in the banking functional constituency many banks have two votes, one through their banking company and one through their finance company. Some do not stop at 2. The Hong Kong and Shanghai Bank, the Kincheng Tokyo Bank, the Hang Seng Bank and the Bank of East Asia each have 3 corporate votes through different subsidiaries. As the Hang Seng Bank is itself a subsidiary of the Hong Kong Bank, the Hong Kong Bank group has 6 votes in this constituency. The member elected for this constituency, Mr David Li, is the chief executive of the Bank of East Asia and so is in a position to control 3 votes for himself through organisations he controls. (In addition, Mr Li, of course, has control of a further 3 votes in the banking sub-sector of the election committee, as well as his personal vote in the geographical constituency, so he controls a total of at least 7 votes in the Legco election). If second or third votes by companies which are obviously part of the same group are discounted, the real electorate of the banking constituency drops from 207 to no more than 178.

Still, the lower figure after this reduction does not give the true figure for the number of organisations controlling votes because many commercial groups through their subsidiary companies control votes in more than one functional constituency. Thus, as indicated above, the Hong Kong and Shanghai Bank controls 6 votes in the banking constituency and a further 5 votes in the insurance constituency, giving it control of 11 votes in these two constituencies alone.

This type of multiple voting can be discerned by simply examining the electoral register. What cannot be taken into account without an encyclopedic knowledge of company ownership is the number of companies which have no connection on the surface but which are, in fact, in common ownership. It is common knowledge that the Hang Seng Bank is part of the Hong Kong Bank group. However, there must logically be a large number of other registered corporate electors which are part of a group of companies and not independent. The true number of genuinely separate entities among the registered corporate voters is, therefore, certainly considerably lower than even the lowest figures set out above. Unfortunately, the true figure can only be established by exhaustive research.

Human Rights Monitor has attempted to identify some of the more obvious examples of multiple voting by looking at the registered addresses of electors in the real estate constituency. Once these same address companies are discounted, the electorate in this constituency falls from 410 to 354. Moreover, no less than 17 companies are registered at the Salisbury Road, Tsim Sha Tsui address of the Sino-Land group of companies owned by Mr Robert Ng. Mr Ng who is also entitled to a personal vote in the same functional constituency, thus controls between 3 and 4% of the official registered electorate in this constituency, and about 5% of the real electorate after allowing for multiple registrations by persons other than himself. This would be equivalent to wielding 15,490 votes in the Hong Kong Island geographical constituency. Mr Ng additionally controls 2 votes in the Tourism constituency, through his hotel management holding company and through his ownership of the City Garden Hotel, both of which are registered voters in that constituency. Mr Ng is therefore known to control 20 votes in the functional constituencies, with their equivalent 20 votes in the election committee election, as well as his personal vote in a geographical constituency, giving him a total of 41 votes in the Legislative Council election. These instances of multiple vote controlled by very well known commercial organisations are undoubtedly merely the tip of the iceberg of multiple corporate voting. Provided that the necessary company law formalities are gone through, there is no legal barrier to an individual setting up multiple companies in order to gain votes in a functional constituency. The law does prohibit the same person from being both an individual voter and an authorised representative of a corporate voter in a constituency in which both individual and corporate voting is allowed. However, there is nothing to prevent a person from registering shelf companies, instructing others, who may be relatives or employees, to be the officers and authorised voting representatives of those companies, and then instructing those authorised representatives to cast their votes in accordance with directions given by the person who is the directing mind of the operation.

The 1998 election did reveal, for instance, the ease with which the functional constituency electorate can be manipulated. This occurred in the Information Technology functional constituency, and involved a pro-Beijing candidate, Mr John Tse Si-Yin, who is deputy director of the Hong Kong Hospital Authority. Mr Tse was the Vice-Chairman and Honorary Secretary of a society called the Hong Kong Society for Medical Informatics, an organisation whose members have voting rights in the Information Technology functional constituency. In January 1998, it cost HK$50 to join that society and unlike many professional bodies, those who joined gained immediate voting rights. In the two months deadline before the Society had to submit its list of members for inclusion in the electoral role, the membership of the society doubled from about 400 to about 800. The total electorate in the Information Technology functional constituency registered for the 1998 election was 3147. According to the chairman of the Society, Dr Wong Chun-Por, about 150 of the 400 new members were subordinates of Mr Tse at the Hospital Authority. The situation came to light after a newspaper revealed that Mr Tse, who was also the convenor of a committee of the Telecommunications Authority (OFTA) had required junior staff at OFTA to send faxes to 50 potential voters urging them to join the Society for Medical Informatics. Ironically, Mr Tse was shortly afterwards found to be ineligible to be a candidate in the Information Technology functional constituency because he held a British passport. It would be very surprising if there were not other similar instances which have not come to light.

It will be apparent that the smaller functional constituencies are not merely "rotten boroughs", as they were described by former Governor Patten, but are as rotten as the worst of the 18th century English boroughs for which this term is coined. It is contemptible that Mr Patten's predecessors should have introduced into Hong Kong in the 1980s a system which had been abolished in England in 1832 following civil unrest.

1998 (c) Hong Kong Human Rights Monitor