Excluding non-Americans from an exclusive Hong Kong club smacks of discrimination, says tycoon Allan Zeman

“They make a lot of people unhappy and it seems a little discriminatory.”

Zeman made the comments after club president Christopher Burgess announced the new policy in a letter to members on May 31, which requires non-US private bondholders to top up their membership by up to HK$1.5 million or leave the club.

A non-US member who wished to remain anonymous said many of those affected are very angry and unhappy about the policy.

Members must submit their declaration of intent by August 31st. Anyone who fails to do so or pays the first installment of the top-up amount will have their bond repaid at face value and their membership will end on September 1st.

The club issued bonds of varying denominations as a medium-term debt instrument to finance major development projects from 1985 to 2007. Non-Americans must pay a membership fee of between HK$1.6 million and HK$2 million by purchasing a bond.

Burgess said the policy change was the result of the club’s efforts to improve its membership profile and maintain its nonprofit status, which requires at least 50 percent of the club’s operating revenue to come from voting American members.

This move could reduce the 500-member group of non-American individual members without voting rights.

Zeman, who is not affected by the move and owns corporate bonds, said the club may want to reduce the number of non-US members in view of the exodus of American members in order to continue to benefit from tax exemptions.

“I can’t remember any other club ever doing that. They probably had no choice to maintain that tax-free status,” he said. “There should be a very strong reason to justify a change in policy.”

According to the terms of the bond available to the Post Office, the principal amount is not repayable at the request of the bondholder but may be repaid by the Club in any event upon giving at least one month’s written notice.

The Club may, by such notice, redeem a single Bond without redeeming the remaining balance.

Lawmaker Holden Chow Ho-ding of the Democratic Alliance for the Betterment and Progress of Hong Kong agreed that the change in policy would create a rather unpleasant impression about the motives behind the change.

“Although I would not try to question the motives behind such a move, it will inevitably create a public impression that the non-American members are forced to bear a huge burden. Therefore, people may doubt that this has anything to do with geopolitics,” said Chow, a lawyer by profession.

“The club needs to go public and better explain the reasons behind it.”

He said membership should be apolitical and have nothing to do with geopolitics. “If that impression is formed, I fear other clubs will follow suit,” he said.

Ronny Tong Ka-wah, a member of the executive board and also a lawyer, declined to comment on whether the move violated the racial discrimination law, saying it all depends on the provisions of the articles of association or the terms of the bonds.

The Equal Opportunities Commission said it does not comment on individual cases and, for confidentiality reasons, does not wish to disclose whether it has received complaints about a particular organisation.

“The Racial Discrimination Regulation criminalises discrimination, harassment and defamation of a person on the basis of his or her race in specified fields of activity,” the statement said. People suspected of being subjected to racial discrimination can complain to the Commission.

Founded in 1925, the American Club’s mission was to provide its members and their families with a first-class venue for social, recreational and business activities in a truly American atmosphere. Membership stood at 2,909 – 52 percent American, 19 percent Hong Kong and 10 percent British.

The Post has asked the club for comment.