CHIEF EXECUTIVE ELECTION COMMITTEE -- ACCOUNTING

C O N F I D E N T I A L SECTION 01 OF 04 HONG KONG 004398 SIPDIS NOFORN SIPDIS DEPT FOR EAP AND EAP/CM NSC FOR WILDER E.O. 12958: DECL: 11/09/2031 TAGS: PGOV PHUM PINR PREL HK CH SUBJECT: CHIEF EXECUTIVE ELECTION COMMITTEE -- ACCOUNTING SECTOR POLITICS REF: A. HONG KONG 4356 ¶B. HONG KONG 4027 Classified By: E/P Chief Laurent Charbonnet. Reasons: 1.4 (b,d) ¶1. (C) Summary: Mandy Tam, the functional constituency legislator representing the accounting sector, told us on November 2 about the challenges of recruiting pro-democracy accountants to compete for the twenty accounting subsector seats in the Chief Executive (CE) Election Committee. Many accountants were not interested in participating in the Election Committee (EC) election because they were concerned about political pressure and feared jeopardizing their mainland business interests if they did not vote for the Beijing-approved CE candidate. Tam was not optimistic that the democratic CE candidate, Alan Leong, would gain the necessary 100 nominations to stand in the election and speculated that the majority of the accounting EC members would nominate and vote for Donald Tsang in March. In what is the first-ever break between a legislator and his or her constituency, the Hong Kong Institute of Certified Public Accountants (HKICPA) announced on October 10 that it would distance itself from Tam and would no longer distribute her newsletter to its 26,000 members. Tam, who no longer has this means of access to her constituents, told us this has seriously hampered her 2008 Legislative Council (Legco) re-election campaign. She remained hopeful that she would regain access to the mailing list and eventually retain her seat in the 2008 election. ¶2. (C) Comment: From an outsiders' perspective, the issues at stake in Hong Kong elections appear to be broad political concepts, such as universal suffrage or constitutional reform. A closer look at a microcosm such as the accounting subsector, however, reveals that elections at the subsector or functional constituency level may be won and lost based on more parochial concerns or just personal rivalries. Our contacts also make clear that Beijing continues to monitor each subsector closely and exerts quiet pressure on opposition candidates, or doles out support to its favored candidates, where necessary. End Summary and Comment. Mandy Tam: Representative for the Accounting Sector -------------- -------------- ¶3. (C) Mandy Tam, the functional constituency legislator representing the accounting sector, told us on November 2 about the challenges of recruiting pro-democracy accountants to compete in the accounting subsector elections for the Chief Executive (CE) Election Committee, as well as her own chances of re-election in the 2008 Legislative Council (Legco) election. Prior to her surprise win in the 2004 Legco election, Tam was a relative unknown in Hong Kong politics. At the time, she ran as an independent in support of democracy and beat out a crowded field of eight other candidates, including a strong pro-Government favorite, Paul Chan (3,393 votes to 3,356). Initially, Tam was cast as one of three independent "swing" voters (the others were Kwok Ka-ki, the medical sector legislator and Joseph Lee, the health services legislator) and was wooed by both democrats and the Government for her support on various issues. Last December, however, Tam unwittingly ended up playing a crucial role in defeating the Government's constitutional reform package. Her last-minute decision to side with the democrats prompted five legislators, reportedly "on the fence," to also vote against the Government's reform proposal. Since that legislative vote, Tam has alleged to us that the Hong Kong Government (HKG) seemed to blame her above all other democrats for the proposal's defeat and has sought to hinder her re-election campaign by helping her likely opponent in the 2008 Legco election, Paul Chan. In March, Tam ended her status as an independent democrat and joined Hong Kong's newest politicl party, the pro-democracy Civic Party. ElectionProcess Favors Pro-Government Supporters -------------- --- ¶4. (C Tam was not optimistic that the pan-democratic CE candidate, Civic Party legislator Alan Leong (Re A),would gain the necessary 100 nominations to tand in the March 25 CE election. The CE electin process contains several qirks that prevents a candidate -- not supported by Beijing -- from gaining the necessary nominations to run in the election, explained Tam. Using the accounting subsector to illustrate her point, Tam recounted how she had had a difficult time recruiting pro-democracy accountants to run as candidates in the subsector's EC election, and had only convinced three HONG KONG 00004398 002 OF 004 candidates to join her list in contesting the twenty seats allocated to the subsector. (Note: As a member of Legco, Tam is automatically a member of the CE Election Committee. End Note.) The problem with the election process, said Tam, was that there was no such thing as an independent nomination in the CE Election Committee, because nominations were public knowledge. Accountants who might vote for the democratic CE candidate generally were not interested in participating in the EC election, due to concerns about possible political pressure and reluctance to jeopardize their mainland business interests. Despite her best efforts to encourage like-minded democracy supporters to run in the EC election, Tam said she expected the majority of the twenty accounting subsector EC members to nominate and vote for Donald Tsang in March. Beijing Bars Democracy Accountant from Annual Trip -------------- -------------- ¶5. (C) Tam also explained how Beijing had recently pressured two democratic CE Election Committee candidates against running in the accounting subsector election. Amy Yung, a founding member of the Civic Party, also has organized a list of candidates to run in the EC accounting subsector, according to Tam. Each year, the Hong Kong Institute of Certified Public Accountants (HKICPA) is invited by PRC authorities to visit Beijing; Yung made the trip last year. This year, however, Yung -- who is a member of the 23-member council of the HKICPA -- was noticeably missing from the delegation list prepared by the Central Government Liaison Office (CGLO). Tam told us that Yung's exclusion from the delegation was in response to her intention to organize a list of candidates to run against conservatives in the accounting subsector EC elections. Yung told the "South China Morning Post" (SCMP) on November 2, "I hope this is a short-term arrangement only intended for this sensitive period...Elections are a very normal activity and I wasn't breaking any laws or doing anything unpatriotic." She told the SCMP on November 3 that "my understanding is that since I have a valid home-return permit, I can return to the mainland in my personal capacity in the future as I have done in the past without problems." ¶6. (C) In another instance, Tam related how an EC candidate running on Tam's list had experienced indirect pressure, possibly from Beijing. This democratic candidate had made all of the arrangements for an accounting association conference but, rather unusually, was asked by his supervisors not to take the stage on the day of the conference to receive acknowledgement or recognition of his work. Tam was told that PRC intermediaries had exerted pressure on his supervisors to prevent him from going on stage. Accounting Institute Severs Ties with Tam -------------- ¶7. (C) The HKICPA announced on October 10 that it would distance itself from Tam and would no longer distribute her newsletter to its 26,000 members; this apparently is the first-ever such break between a legislator and his or her constituency. The HKICPA is the licensing authority for all accountants in Hong Kong; its membership includes 20,000 registered voters and an additional 6,000 accountants who are not registered to vote. Tam suggested that the HKICPA's recent action, which essentially has cut off her communication with her constituents and seriously damaged her re-election campaign, might be retribution for her part in the defeat of the Government's constitutional reform proposals last December. In announcing the HKICPA's decision, HKICPA Chief Executive Winnie Cheung reportedly said that Tam had adopted an increasingly "political" stance on many issues, and had made unsubstantiated accusations against the HKICPA in her weekly "Oriental Daily News" columns and newsletters to HKICPA members. Tam countered in the media by saying that the HKICPA had taken a unilateral step in denying her access to the Institute's mailing list, and also stressed that she had only reflected the opinions of the accounting sector in her columns. (Note: Paul Chan, whom Tam defeated during the 2004 Legco election by a slim margin, is currently the President of HKICPA. Chan, along with Civic Party member Amy Yung (see paragraph 4),abstained from the vote to sever ties with Tam; the remaining 21 council members of the HKICPA voted to end relations with Tam. End Note.) Tam's Election Rival Looms Large in the Accounting Sector -------------- -------------- HONG KONG 00004398 003 OF 004 ¶8. (C) Tam speculated that Paul Chan had received indirect assistance from the HKG and Beijing in his bid to win the accounting functional constituency seat in 2008 and, despite his abstention, suspected him of initiating the recent HKICPA vote to sever ties with her. She noted that in addition to his presidency of the HKICPA, Chan also had been appointed to numerous Government advisory committees including the Transport Advisory Committee, the Copyright Tribunal, the Governing Committee of the Beat Drugs Fund Association, and the Commission on Strategic Development's Committee on Economic Development and Economic cooperation with the Mainland. Tam suggested these appointments were intended to raise Chan's public profile for the 2008 Legco election. ¶9. (C) Tam opined that three of Chan's actions in the past two years may have turned off some voters in the accounting functional constituency. First, immediately after losing the 2004 Legco election, Chan explored the idea of filing a judicial review of the election, but eventually decided against it. Many accountants criticized Chan for being a sore loser and feared that his actions might further politicize the accounting sector, said Tam. Second, Chan criticized Tam's vote in Legco against the constitutional reform package and claimed she had ignored the majority opinion of the accountants. Tam told us, however, that an internal poll initiated and conducted by the Institute in early December -- which she criticized as asking poll respondents biased questions -- showed that the accountants were almost evenly split between those who wanted her to support the reforms (54%) and those opposed to the reforms (46%). Since the difference between the two views was statistically insignificant and the poll was not binding, Tam had decided to make up her own mind on how to vote. Third, Tam believed most accountants did not want their sector politicized, and many also criticized Chan for supporting the Government's controversial and unpopular proposal to introduce a goods and services tax (GST). Tam Hopeful On Winning 2008 Legco Election -------------- ¶10. (C) Despite being formally cut off from her constituency, Tam remained optimistic about winning re-election in 2008, although she also said she had considered various legal options to regain access to the HKICPA mailing list. Although the Civic Party included many lawyers, Tam said the party was focused on Alan Leong's CE campaign, so she did not expect much assistance from her colleagues until after the CE election. For the sake of her re-election campaign, however, she said it was crucial that she take action relatively soon, so she had enlisted the help of Democratic Party founder and barrister Martin Lee to build her case. ¶11. (C) Tam cited a demographic change in the accounting sector that likely would work in her favor. Acknowledging that HKICPA members traditionally were considered conservative, Tam was hopeful that an influx of approximately 5,000 young, overseas-educated and more independent-minded accountants into the HKICPA since the last Legco election would dilute the proportion of conservatives. Moreover, since the legislator vote was conducted by sec-ret ballot, it would be more difficult for Beijing to pressure the voters. Tam concluded that she stood a good chance of winning in ¶2008. Civic Party Funding -------------- ¶12. (C) Tam, who serves as Treasurer of the Civic Party (CP), said the party had run into some fundraising problems. Many of the local tycoons have told the party that Beijing had asked them to withhold donations to the CP until after the March CE election. (Note: Many Hong Kong tycoons tend to hedge their bets by donating to both pro-Government and pro-democracy political parties. End Note.) While the July 1 pro-democracy march has traditionally been a good time to raise funds, the CP's current fundraising efforts have been below expectations. CE's Policy Address a Disappointment -------------- ¶13. (C) CE Tsang's policy address (Ref B) had been disappointing but not necessarily unexpected, said Tam. She did not find it unusual that Tsang, a lifelong civil servant, would be very good at listening to directions and implementing policies, but perhaps not as gifted at HONG KONG 00004398 004 OF 004 articulating a vision for Hong Kong's future. Tam said Tsang had relied far too heavily on economic integration with the mainland rather than considering other options for Hong Kong's economic future, such as making Hong Kong a stronger regional financial center along the lines of a Singapore model. Cunningham