Scandal hits Hong Kong's exclusive Jockey Club

HONG KONG - for decades, the Hong Kong Jockey Club was at the height of politics, economy and society in one of the richest cities in the world. But scandalous allegations that some were prepared to bribe their way into the Club is a convert unflattering light on the prestigious institution.

Clubs are obsessed in this city status in the middle of the high society. But the Jockey Club, founded in 1884 under British rule, stands out from the Pack as a money machine. By a Government granted monopoly on horse racing and lotteries, the Club is a non-profit organization, Hong Kong's single largest taxpayers, accounting for around 8% of the revenue the Government according to the Organization annual report.

At least officially, no amount of money, open the Jockey Club goals and special elevators leading to the exclusive Champagne and fine dining just for members room away from the crowds below. The only way in is an implementation and coordination of a group of 200 members.

But last month, anti-corruption authorities announced that sell operation, code-named "Pilot," a sting to the arrests of 29 individuals suspected of involvement in an influence peddling ring led access to the Club. No charges filed were and all 29 people who were not identified, were released. According to Hong Kong independent Commission against corruption, a government agency was a Jockey Club member suspected, establishing a network of distributors and voting members vote in favour of people paid rig that bribes to join him.

Collect EPE/AFP/Getty Images Viewer on the Happy Valley Racecourse, during the final in Hong Kong.

The November 17 arrests were the talk of the town, although only a few are willing to speak publicly about.

The Association is "very powerful." It is definitely more than just horse racing, ", said Emily LAU, a legislator and Hong Kong Democratic Party. "It makes a lot of charity work, its members are the most influential people."

In a statement, the Jockey Club said it "will not tolerate dishonest people be." The Club turned an opinion more beyond their original statement.

In the year, bet ended customer March 2010 total 116.9 billion Hong Kong dollars, about 15 billion US dollars. About 82% returned weather than winning dividends and payment. The club earned over $ 2.7 billion of their betting and lottery revenue, 64%, or HK$ 1.75 billion to pay the Government.

This is one who say the highest tax rates for the industry observers and struck part of the bargain decades ago, if the Government legalized. The Organization says it spent more US$ 193 million for charity and employed 26,291 full - and part-time - employees what it one of the largest private companies in the territory.

Comparison, wore the entire U.S. horse industry includes more than just race, $ 1.9 billion in taxes at all levels of Government in 2005, according to the American Horse Council, a U.S. lobby group.

Almost stream every Wednesday night, thousands in Hong Kong's famous Happy Valley Racecourse, swamp, 1841 constructed on a patch drained malaria areas, soon after the British arrived first. The most punters get the cheap seats and the amount to the track clutching forms, beer and stir fry, betting while Club members enjoy Champagne from exclusive rooms on the stands.

$9.7 Billion last year which was volume of betting from 767 race on two tracks - almost as much as the $12.97 billion turnover from all 49,368 races in the United States, says the Horse Council.

This is not the first members have accused time Club, abusing their power. In 1998 US$ 51,700 in exchange for an application for membership were strained a Club member and businessman, with taking bribes the approval. And in June 2009, another Club member was sentenced to two years in prison for accepting US$ 58,064 in bribes from applicants.

Not every club in Hong Kong is as exclusive as the Jockey Club. Some allow to transfer membership or be sold. A flourishing market has created own broker and speculators buy memberships in the hope that prices will rise.

Some forms of membership can be rented for the year, makes almost like property Act. Louis TAM, founder of Garway membership services and a part-time electronics dealer says fine wine like everything is in limited supply hot demand in Hong Kong - apartments, stocks - club memberships have become a form of investment.

A wave of rich, pushed from the mainland Chinese has prices 30% in the past two years membership as a rule, says Edward Mok, a former stock trader, which led him to China Dragon membership services to establish another Club broker interested in golf.

For Hong Kong buyers rich for a while have been, tends to be a club's amenities matter anymore. But "for Chinese, prestige is a very important factor," said Mr. Mok. "You want to know the people you rich or famous, or powerful."

The other option is to wait. For a hot topic as the Hong Kong Golf Club there a 20-year waiting list, say brokers.

Some observers say that the Jockey Club's admission policy opportunities for corruption created. It costs $ 250,000 Hong Kong join and monthly fees are HK$ 1, 300. This is a bargain that compared to the millions paid for other club memberships that legally traded. Discrepancy in price creates an opportunity for corruption, because applicants for far more than the actual prices, are ready to pay, argues David Webb, Hong Kong-based shareholder activist and Social commentator.

Competition from the gambling mecca of the nearby Macau, is a short ferry ride, the Jockey club's some business print on. Club members have the Government complained that their high roller in efforts you lure way have aligned some Macau company. In a 2009 letter to the Government, Paul Wrobel, Vice President of the Hong Kong said racehorse Owners Association competition had urged the Jockey Club its first operating loss on horse racing business of Macau and illegal gambling.

Still, there are more people lining up to join as new rooms. "Over the last few years we have seen an increase in interest rates." But things can only as soon as you go, turn around, "said Mr LI." "It's just like the stock market."

Write toShai Oster at Shai.Oster@wsj.com

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