According to a Bloomberg article
It seems that someone, somehow, and somewhere proposed
legislation in Hong Kong to amend the current laws and regulations to obscure
the residential addresses and full identification numbers of company’s
director. This legislation would also
block this information an any and all historical filings. This was proposed back in November 2012, but
it is just now seeing the light of day.
The various agencies and governmental departments are
silent, as I expect them to be, and it would not be too much of a stretch for
them to remain so, after all they know who butters their toast.
In the past this information has been used by member of the
media and hedge funds to either show how the many and various off springs
(Children, Grand Children and even Great Grand Children) of the “Immortals”
have prospered and grown to become the uber rich of the Peoples Republic of
China, or to show how various individual with less than sterling character are
connected to various business with questionable reporting practices.
In both cases it has cause a great deal of embarrassment for
these individuals as they have been asked to explain how they have achieved so
much success. Additionally it has caused
much embarrassment to various government officials, as they have had to explain
how such a thing could have happen on their watch.
The parties involved, the Communist Party and the uber rich
want the spotlight turned off, and they want it turned off quickly.
Corruption has been an ongoing and increasing issue in China,
especially as the stakes have become greater.
It has reached the point where it was even reported as a main topic of
discussion at the recent 10-year party meetings. Part of the party faithful are so concern
that this issue may be the one item that will end their control of the country,
and they are bring pressure on the party leadership to address the issue before
the issue address them.
For at some point, at some time, Horton will hear a Who, and
then there will be some significant portion of the 1.6 Billion Chinese’s that
will be pissed off enough to change the system.
The Communist Party via the government should be able to keep a lid on
this problem for a few years, but in the end I suspect that this will be one of
the main issues that will tear the country apart, eventually the toothpaste
will find the weak spot in the container.
Mean while all of this should give significant pause to any
and all investors in China. Yes it is
true that there is a potential for great profits to be made in this
country. The question is does any body
really believe that Mrs. McGillicutty of Sandusky Ohio, or for that matter Mrs.
Feng Shui of Lijiang will make it. It
will be made by individuals on the inside, and not by some Laowai. (For those
more familiar with Japanese the term is Gaijin, or those familiar with German it
is Ausländer)
There have been several instances where the accounting
practices in some of their companies has at best been or is questionable, at
worst criminal, and the shareholders, at least those unlucky enough not to get
out early have been financially wiped out, strange the Directors of the
companies never seem to be in this group.
I guess the directors are a lucky lot.
With this proposed rule, now it will be even more difficult
to track the various questionable players through their various companies.
It has been obvious that the Communist Party, and the
Government of the Peoples Republic of China, would like to hide the problem,
rather than deal with it in the light of day.
Why else would they even entertain such a change to the registration of
Company Directors?
So as they say Caveat emptor. Invest/Risk some money in China, but please
do not bet the farm. Invest only what
you can afford to lose. Take profits
early and often.
