HONG KONG: At a time when opposition to its affiliated drug-rehab school's relocation plans is making headlines, the Christian Zheng Sheng Association has to face its own new problem: allegations of mismanagement. Yesterday, the chairman of Heung Yee Kuk, Lau Wong Fat, expressed shock over the allegations of financial mismanagement made against the association, which operates Christian Zheng Sheng College, saying the relocation of the city's only drug rehabilitation school will be delayed as a result.

The Kuk chairman made the comment after the Christian Zheng Sheng Association was reported in the Wednesday issue of Next Magazine, a local news and entertainment magazine, to have various controversial investment projects on the mainland and in Japan.

The allegations include the claim that the association, a charitable institution which is exempt from tax under section 88 of the Inland Revenue Ordinance, has invested millions of dollars in various projects, including farm land in Fujian and in Japan.

It is further alleged that the registered address of a tourism company in Fujian opened by the association is being used as a karaoke bar providing questionable services.

In swift response, the association issued a statement last night, saying it is consulting solicitors and barristers for follow-up advice.

The statement said the association is preparing related documents, and will hold a news conference within a few days to address the matter. These allegations come on the heels of a recent, additional controversy regarding the college's plan to relocate to a currently vacant school site in Mui Wo - a proposal that has generated vocal opposition from a number of Mui Wo residents, who are opposing the plan, in part on the grounds that they believe the site should be used to serve the education needs of local residents. Despite its preference for the Mui Wo site, the Kuk has proposed many alternative locations for the government and college to consider.

Lau remarked that he now believes that the relocation issue cannot be settled before September, as he previously expected.

As for the association's tax-exempt status, Section 88 of the pertinent ordinance stipulates that the business carried on by a registered institution and the profits derived from the business shall be exempt from tax only if the profits are applied solely for charitable purposes and are not substantially disbursed or invested outside Hong Kong.

But, according to the Law Reform Commission, there is neither any statutory definition of what constitutes a charity or a charitable purpose nor any statutory requirement that charitable organizations submit annual reports or accounts reporting their finances.

China Daily

(HK Edition 08/14/2009 page1)