A Hong Kong security company sanctioned by the United States for allegedly supporting Russia has disappeared from a list of government-licensed security firms, only to be replaced by a start-up company that has directors and government contracts in common with its predecessor or its parent company, RFA Cantonese has learned.
VPOWER Finance Security (Hong Kong) Ltd. had been in the business of cash counting, management and the transportation of valuables under armed escort until it was sanctioned on June 12 by the United States for allegedly providing armed gold escort services to Russia.
The company held a Category 2 Armed Escort License that is granted by Hong Kong’s Security Bureau to a select and highly experienced group of security firms including Brink’s Cash Solutions, Loomis International and Guardforce International.
Hong Kong is gaining a reputation as a safe haven for companies wishing to skirt the restrictions imposed by U.S. sanctions on Russia.
The Russian private military company Wagner Group, which made headlines last year by starting to march on Moscow amid an apparent dispute with Russian President Vladimir Putin, has longstanding ties to Hong Kong.
The city was named in a U.S. Treasury Department investment ban aimed at curbing China’s military-linked high-tech ambitions in artificial intelligence, advanced computer chips and quantum computing, amid growing evidence that the ruling Chinese Communist Party is leveraging Hong Kong universities and private companies for research funding, expertise and links to global supply chains.
Iran’s sanctioned shipping line IRISL was found in 2020 to be running a network of Hong Kong-based companies.
A U.S.-based security expert told RFA Cantonese that the Hong Kong authorities don’t seem bothered by the evasion of sanctions on their watch, because Beijing likely isn’t either.
NATO has referred to China as “a decisive enabler” of Russian President Vladimir Putin and his war in Ukraine.
VPOWER Finance Security (Hong Kong)‘s mainland China-based parent company Shenzhen VPOWER lists the Hong Kong government, major banks and financial institutions in Hong Kong among its “regular customers,” and provides armed escort and personal protection services.
While the Security Bureau removed VPOWER Finance Security (Hong Kong) from the list of Category 2 licensees after sanctions were imposed, it soon granted another license to newcomer Horsemart Services Ltd, which was set up in March 2022, not long after the Russia-Ukraine war started.
A security industry insider who asked to remain anonymous for fear of reprisals told RFA Cantonese that the criteria for a Category 2 license are pretty stringent, requiring companies to have plenty of capital, public liability insurance, high-spec equipment including bulletproof vehicles and arms storage protocols, and to use only highly trained personnel.
Horsemart’s registered capital is just HK$11,000 (US$1,415), according to the Hong Kong Companies Register.
“The review process is quite onerous and takes more than a year,” the person said. “I don’t understand how a start-up company could get on the list that quickly.”
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Public tender records searched by RFA Cantonese revealed that Horsemart has close ties to the sanctioned company’s Chinese parent, Shenzhen VPOWER Finance Security.
The name of its director Wang Jiang, who holds a mainland Chinese ID card, also appears on the lists of senior officers at several Shenzhen VPOWER affiliates. Wang and fellow mainland Chinese ID card-holder Fan Deyu replaced two Hong Kong ID card-holders as directors at Horsemart in July.
The company has been awarded a HK$40 million (US$5 million) tender by the Civil Engineering and Development Department to provide security at the government’s explosives depot on Hong Kong’s outlying Lantau Island, very similar to the HK$53 million (US$6.8 million) contract awarded previously to its sanctioned predecessor, VPOWER Finance Security (Hong Kong).
That contract was for three years, and also for security services at a government explosives depot.
And Horsemart has been hiring, according to recent recruitment ads posted in Hong Kong. The company is looking for armed security guards to provide security and escort services on Lantau Island.
According to photos uploaded by concerned citizens to Facebook, the company’s armored vans have very similar livery to those used by VPOWER Finance Security (Hong Kong).
Neither VPOWER Finance Security (Hong Kong) nor Horsemart Services had responded to a request from RFA Cantonese for comment by the time of writing.
Hong Kong’s Security Bureau said: “The Special Administrative Region government does not comment on the situation of individual security companies.”
Sunny Cheung, a strategic analyst and associate researcher at the Jamestown Foundation, said the Hong Kong government seems to be turning a blind eye to Hong Kong’s role in the evasion of U.S. sanctions.
“The Hong Kong government is completely bound up with the interests of the Chinese government,” Cheung said. “They fully understand that [China] wants to use Hong Kong as a safe haven or a free port to achieve their aims.”
“I don’t think the Hong Kong government is unaware of it ... it claims it won’t allow Russia to use it as a transit camp, but it has no intention of solving the problem,” Cheung said.
Translated by Luisetta Mudie.