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The official academic funding body has confirmed there is no requirement for Polytechnic University to report its secretive British Virgin Islands-based subsidiaries, calling into question the level of supervision over business activities carried out by institutions set up primarily for educational purposes.
Amid criticism that PolyU omitted the two BVI firms from its financial reports over the years, the University Grants Committee said it followed “generally accepted accounting standards.”
It added that the two firms set up under the watch of former PolyU executive vice-president Nicholas Yang Wei-hsiung – now Hong Kong’s secretary for innovation and technology – did not involve taxpayers’ money.
The committee broke its silence two days after thePostreported on PolyU’s offshore companies set up in 2012 and 2013 that came to light in the so-called Panama Papers leaks.
“PolyU ... is not required to report to the UGC on its activities in relation to establishment of other corporate bodies, such as the two mentioned companies,” the committee said.
Labour Party legislator and PolyU academic Dr Fernando Cheung Chiu-hung criticised the statement, saying it effectively meant allowing the university to turn itself into an “independent kingdom”.
“As a publicly funded institution, PolyU is supposed to provide higher education to young people in Hong Kong,” said Cheung.
“But under such loose requirements, the senior management staff are allowed to start businesses to make money through offshore firms which they do not have to disclose.”
PolyU said in an updated reply last night that it was President Timothy Tong Wai-cheung’s decision to approve the use of BVI companies as the “last alternative” of an exit strategy for the problematic, loss-making subsidiaries it owned at that time.
It added it had made regular reports to the governing council’s executive committee on the BVI companies, and dismissed the need to disclose them on financial statements due to the “insignificant value of the investments”.
But accountancy sector lawmaker Kenneth Leung said the accounting standard adopted at the institution was “minimum” and would not help the public to have a fully informed view on the school’s financial situation.
Companies in the UK are required to disclose all their subsidiaries including the ones located offshore, Leung said, adding Hong Kong, as an international financial centre, should uphold the best practice instead of settling for less.
Dr Rodney Chu Wai-chi, chairman of the Polytechnic University Staff Association, said a responsible institution should disclose offshore firms for public scrutiny.
And Chinese University accountancy academic Simon Lee said universities should still disclose companies of insignificant value for transparency’s sake.
PolyU denied accusations that it flouted UGC financial guidelines on disclosing subsidiaries.
The committee said that, according to the university’s information, “no public funding” was involved in the setting up of the subsidiaries, and there were “proper cost-charging mechanisms” for those government resources allocated to privately funded activities.
“Based on the external auditor’s opinion, the audited consolidated financial statements of PolyU as at 30 June 2015 give a true and fair view of the state of affairs of the university,” the committee concluded.
（SCMP）
