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HK tycoons start moving assets offshore as fears rise over new extradition law

Police standing guard near the Legislative Council Complex in Hong Kong on Friday following the June 12 protests against the controversial extradition law proposal.

Hong Kong

SOME Hong Kong tycoons have started moving personal wealth offshore as concern deepens over a local government plan to allow extraditions of suspects to face trial in China for the first time, according to financial advisers, bankers and lawyers familiar with such transactions.

One tycoon, who considers himself potentially politically exposed, has started shifting more than US$100 million from a local Citibank account to a Citibank account in Singapore, according to an adviser involved in the transactions.

"It's started. We're hearing others are doing it, too, but no one is going to go on parade that they are leaving," the adviser said. "The fear is that the bar is coming right down on Beijing's ability to get your assets in Hong Kong. Singapore is the favoured destination."

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Hong Kong and Singapore compete fiercely to be considered Asia's premier financial centre. The riches held by Hong Kong's tycoons have until now made the city the larger base for private wealth, boasting 853 individuals worth more than US$100 million - just over double the number in Singapore - according to a 2018 report from Credit Suisse.

The head of the private banking operations of an international bank in Hong Kong, who declined to be named, said clients have been moving money out of Hong Kong to Singapore. "These aren't mainland Chinese clients who might be politically exposed, but wealthy Hong Kong clients," the banker explained. "The situation in Hong Kong is out of control. They can't believe that (Chief Executive of Hong Kong) Carrie Lam or Beijing leaders are so stupid that they don't realise the economic damage from this."

Prominent commercial lawyer Kevin Yam said he was aware of high net-worth Hong Kong figures taking steps to move assets to Singapore as they matured or market conditions proved favourable. "At this point I would say it is a steady trickle rather than stampede but is most definitely happening," he added.

Mr Yam said few expected the bill to be widely exploited by Beijing overnight if passed, but it was creating a climate of deep unease, with the fear it could be used more liberally in coming years. "It is great for Singapore," he noted. "And such an own goal for Hong Kong."

The extradition bill, which will cover Hong Kong residents and foreign and Chinese nationals living or travelling through the city, has sparked unusually broad concern it may threaten the rule of law that underpins Hong Kong's international financial status.

Ms Lam, has stood by the bill, saying it is necessary to plug loopholes that allow criminals wanted on the mainland to use the city as a haven. She has said the courts would safeguard human rights.

Protests and violence forced an initial legislative debate to be shelved last Wednesday and it is unclear when they would resume to pass the bill.

Professor Simon Young, of the University of Hong Kong's law school, told Reuters that it was understandable that some Hong Kong residents might be considering moving assets out of the city given the little-noticed financial reach of the bill.

If the bill becomes law, it will be possible for mainland Chinese courts to request Hong Kong courts to freeze and confiscate assets related to crimes committed on the mainland, beyond an existing provision covering the proceeds of drug offences.

"This has been largely overlooked in the public debate but it is really a significant part of the proposed amendments," Prof Young added. "It may not have been overlooked, of course, by the tycoons and those giving them legal advice." REUTERS

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