Hong Kong Massage

[Cav]

Interesting article in the FT’s “Big Read” the other day detailing how the HKJC massages it charitable donation figures to justify and maintain its monopoly in the territory, as well as curry favour with the mainland government in Beijing.

Its behind the paywall and 12 pages long but this bit gives a decent overview…

https://www.ft.com/content/5ca456c0-6fb6-11e8-92d3-6c13e5c92914

In the year to June 2017 that monopoly generated revenues of nearly HK$34bn ($4.3bn) on record
betting turnover of more than HK$216bn — that is almost HK$30,000 gambled for every man,
woman and child in the city. The monopoly is justified on the grounds that the club’s charity arm
redistributes some of its profits to good causes — part of a deal dating back to 1952.
But a Financial Times analysis shows the club exaggerates its donations, paying out only a sliver of
the charity funds that serve to justify its lucrative monopoly. For instance last year a press release
from the club detailing its annual results recorded “total charity donations” of HK$7.6bn but that
counted money “allocated” to charitable organisations and community projects and thus
earmarked for potential payment. The annual donations — defined by Hong Kong law as payments
made, not just pledged — were just HK$2bn, according to the annual report of the Jockey Club
Charities Trust.

The gap between the two figures has the potential to become a flashpoint in a city where one in five
people live below the poverty line — defined as half the median income of HK$8,000 per month
for a single person. And income inequality has risen to a record level as real estate prices have
soared.
“The charities trust is a fig leaf to justify having the monopoly rather than having competition in
that space,” says David Webb, a corporate governance expert and longtime critic of the Jockey
Club. “If they simply paid an extra 1 per cent of their revenue to the government instead and let the
government do it, they wouldn’t have that moral high ground.”
Critics have been especially animated by the 2016 decision by the charity arm to bankroll a local
branch of Beijing’s Palace Museum with a HK$3.5bn grant at the request of club patron and
member Carrie Lam, now Hong Kong’s chief executive. The move, say critics, highlights the trust’s
role as a piggy bank for pet projects that would struggle to win legislative support.

It also provides an insight into how the Hong Kong elite is managing its relationship with Beijing.
Coming after the tumultuous “Umbrella revolution” that saw thousands of protesters take to the
streets to oppose moves by China to extend its influence in Hong Kong, the Palace Museum
donation was seen by pro-democracy campaigners as an attempt by the Jockey Club to curry
favour with the central government.

[wit]

Cav,

Interesting that an FT commentary on the 2016/17 finances gets published just days before the 2017/18 report is released.

Wonder if that is because any other year their story would be an even bigger nothing-burger?

What your FT extract seems to present as some kind of investigative discovery is in fact addressed in a very up-front way throughout the 2016/17 report as an exceptional additional item:

in the financial section:
>>>>>>>>>
Betting duty and profits tax for the financial year were HK$21.7 billion,
including HK$13.0 billion in horse race betting duty, HK$6.2 billion in football
betting duty and HK$2.0 billion in lottery duty.

Charity and community donations by the Charities Trust also set a new record, with HK$4.1 billion
donated to 215 charitable and community projects and a special donation
of HK$3.5 billion for the construction of the Hong Kong Palace Museum
in celebration of the 20th Anniversary of the Hong Kong SAR.

Total charity donations were HK$7.6 billion.

Lotteries Fund contributions were HK$1.2 billion.

In total, the Club’s community return in 2016/17 was a record HK$30.5 billion.
<<<<<<<<<<<<<<<<

in the charities narrative:

>>>>>>>>>>>>>>>>
In 2016/17, the Trust approved HK$4.1 billion to support 215
charitable and community projects. To mark the 20th Anniversary
of the Hong Kong Special Administrative Region it also made a
special donation of HK$3.5 billion towards the construction of the
Hong Kong Palace Museum. In all, total Trust donations in 2016/17
were HK$7.6 billion to 216 charitable and community projects.
<<<<<<<<<<<<<<<

http://corporate.hkjc.com/corporate/english/history-and-reports/annual-16-17.aspx

Personally, I gave up years ago on the FT editorial contents, which are pure champagne socialism.

The message of the extract seems to be “ how dare the HKJC have a charities arm – everything should go in tax to the government which will spend it much more wisely.”.

As to the HKJC “currying favour with Beijing”, the new Conghua training facility on the mainland essential to HKJC’s future was not achieved by waving umbrellas and shouting through megaphones.

[Author]

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