INTRODUCTION
Fraud has always been the bane of civilization, provoking sanctions in ancient legal systems,Footnote 1 and it continues to plague societies all over the world regardless of development status.Footnote 2 With the most effective scams typically premised on exploitation of visceral factors in the circumstances of the intended victims (such as pain relief for severe physical discomfort, monetary reward for financial difficulties),Footnote 3 it is perhaps no surprise that religion is one of the favorite delivery mechanisms for fraudsters.Footnote 4 Religion can be a source of comfort and courage in times of adversity and hardship;Footnote 5 however, the very allusion to supernatural forces that potentially offers miraculous solutions to existing material, emotional, and physical hardships can easily be manipulated by con artists to swindle the faithful. The elusive nature of religion further impedes detection of fraud by both victims and law enforcement agencies.Footnote 6
The moral reprehensibility and human costs of perverting the sacred to prey on vulnerable victims renders religious fraud widely perceived as a social evil and the subject of frequent calls for more government action to address the problem.Footnote 7 Nevertheless, such state intervention to suppress religious fraud is not without controversy. The chief concerns relate to religious liberty, with regulation of religions by the state often viewed skeptically by courts (and at times, the public), which are wary of restricting religious practices and perpetuating religious discrimination.Footnote 8 There is also the reluctance of secular government to determine the veracity of religious matters.Footnote 9
I use the Chinese Temples OrdinanceFootnote 10 [the “Ordinance”] in Hong Kong as a case study of the potential pitfalls in designing a regulatory scheme to combat religious fraud. Promulgated by the British colonial government in 1928 with the primary aim of addressing the alarming growth of “pseudo-religious establishments” exploiting the ignorant masses of uneducated Chinese residents, the Ordinance imposed a wide range of regulatory controls on places of worship for Chinese religious practices.Footnote 11 The regulatory controls included mandatory registration, building restrictions, power of search and seizure without warrant, and, most starkly, the grant to a newly instituted government body of the “absolute control” over all the financial assets of all Chinese temples.Footnote 12 A public consultation exercise in 2015—Review on the Chinese Temples Ordinance Public Consultation Document [the “Review”]—proposed abolishing the onerous regulatory controls in favor of a voluntary registration scheme that was designed to facilitate informed decisions by religious donors amidst greater public awareness of the risk associated with “pseudo-religious establishments.”Footnote 13
This article offers a critical examination of both the ordinance and the review to highlight two deficiencies in Hong Kong's approach. The first deficiency is legal. The Ordinance constitutes impermissible religious discrimination by the state in singling out Chinese religions—and no other religion—for specific regulatory burdens. One might understand, if not barely excuse, this blatant prejudicial treatment of indigenous religions by a colonial regime operating under no express constitutional restraints on substantive human rights.Footnote 14 However, it is startling that this discriminatory approach continued to inform the Review in 2015. While the replacement of the onerous regulatory controls with a voluntary registration scheme can alleviate constitutional objections over unjustified restrictions on religious liberty, the proposed reform remains susceptible to an equal protection challenge given that the voluntary registration scheme applies only to Chinese religions.
The second deficiency is conceptual. The Ordinance and the Review approach religious fraud as a singular phenomenon, namely fraudulent practices by purportedly religious organizations or practitioners. However, this approach overlooks important conceptual distinctions. Depending on its nature and manifestation, religious fraud can be differentiated along two dimensions. The first dimension concerns whether the fraudulently induced transfer of wealth is more of a passive charitable donation or a transaction with an expectation of reciprocal benefit. The second concerns whether the underlying falsehood relates to a secular fact or a claim of religious truth. I argue here that state intervention (especially public enforcement and regulatory supervision) is least justified where the prevailing religious fraud is transactional in nature and premised on a false proclamation of favorable divine intervention. This is due to the questionable social and individual harm inflicted by such fraud and the sufficient incentive for and ability of potential fraud victims to detect and avoid such fraud. This argument is particularly relevant for Chinese religious practices, which are often premised on an exchange relationship between the adherents and the worshiped deity.Footnote 15
Additionally, the proposed reform fails to appreciate the unique manner in which decisions on religious offerings are made. Religious adherents inevitably want to ensure that their offerings are made to true deities. However, the inability of adherents to observe and verify the quality of divine intervention whether before or after the religious offerings are made means that the perceived credibility of the religious organizations or practitioners becomes the primary characteristic relied on during the selection process.Footnote 16 I argue that while a registration scheme operated and validated by the government as per the proposed reform is likely to enhance the perceived credibility of the registered religious organizations in the eyes of the public as intended, this gain in credibility is misleading and undeserved given that the information solicited by the registration scheme has no direct connection to the central supernatural concerns of the adherents.
The article has three main sections. The first, “Law in Context” presents the Ordinance. The second, “Constitutionality,” addresses the legality of the ordinance and proposed reform. The third, “Conceptual Pitfalls in Regulating Religious Fraud,” discusses how the conceptualization of religious fraud that underpins both the ordinance and the review is deficient, and further challenges the justifiability of the ordinance in general and the appropriateness of the registration scheme in particular.
LAW IN CONTEXT
Below I provide the historical background of the ordinance, specifics of the regulations, the state of enforcement, and proposed reforms to the ordinance.
Historical Background
Hong Kong was a British colony from 1842 until the resumption of Chinese sovereignty in 1997.Footnote 17 The acquisition of Hong Kong—a combined landmass of only 1,100 square kilometers and devoid of natural resourcesFootnote 18—was motivated more by expansion of trade than traditional territorial conquest.Footnote 19 This desire to maintain an environment relatively conducive to commerce served as a pragmatic restraint on the exercise of legal power by the colonial government, notwithstanding the lack of institutional or democratic checks and balances.Footnote 20 This desire also accounted for the limited state involvement in the welfare and affairs of the resident population, the overwhelming majority of which was Chinese.Footnote 21
These circumstances rendered curious the Ordinance's heavy intervention in a practice not engaged in beyond the Chinese community and that did not directly affect the foreign expatriate community.Footnote 22 The Long Title of the Ordinance states that the Ordinance is meant to “suppress and prevent abuses in the management of Chinese temples and in the administration of the funds of Chinese temples.”Footnote 23 As explained in the Explanatory Note of the bill introducing the Ordinance, the Ordinance is necessary “to prevent the exploitation of the ignorant by charlatans,” given that “[t]here has been an alarming growth of pseudo-religious establishments in recent years. Many of the keepers are simply fortune tellers of an unrecognized and objectionable kind. Some of these temples occupy a single floor for a few months at a time until they have dealt with all the dupes of the district, when they move elsewhere.”Footnote 24 Additionally, recovery “for the benefit of the community the control over public temples which have been slipping into private hands” and preventing “establishment of temple as purely business speculations” are stated as legislative objectives in the Explanatory Note.Footnote 25
A notable aspect of the Ordinance is that the promoters of the bill leading to the Ordinance were the two appointed Chinese members of the Legislative Council of Hong Kong.Footnote 26 Indeed, during a 1961 radio broadcast series aimed at educating the public on the functions and operations of the colonial government, the secretary of Chinese Affairs stated that the Ordinance was enacted after the then secretary of Chinese Affairs was approached by “responsible Chinese leaders [who] became alarmed” at the abuses in Chinese temples.Footnote 27 Given the sensitivity of the British colonial government to the demands of the Chinese local elites, it is certainly plausible that the Ordinance was less an example of colonial oppression of indigenous religion and more an attempt by the local elites to regulate (or suppress) religious competitors.Footnote 28 Nevertheless, it is worth noting that criminalization of fortune telling, despite being an “accepted part of the way of life in Chinese communities,” was specifically enhanced in 1933 under influence of Christian exhortation against the practice.Footnote 29 Additionally, it is apparent that this entrenchment, or favoring, of Chinese temples that were acceptable or friendly to the colonial power was conducive to the colonial government's maintenance of political dominance and control over the colony, especially because Chinese temples are the focal point of the Chinese community, serving functions beyond religious worship to include governance and dispute resolution.Footnote 30
In any event, given the composition of the colonial legislative council in 1928,Footnote 31 there was unsurprisingly little objection or even discussion regarding the enactment of the Ordinance.Footnote 32 An amendment that granted discretionary power to the government to exempt Chinese temples from the requirements under the Ordinance was adopted in the final version upon petitions by keepers of To Yuen (places where Chinese religious ceremonies are performed but that are primarily the residences of members of religious orders).Footnote 33
Regulatory Burdens and Control
Scope of Legislation
The Ordinance applies to all Chinese temples. “Chinese temples” are defined to cover “all Miu (廟, temples), Tsz (寺, Buddhist monasteries), Kun and To Yuen (觀 及 道 院, Taoist monasteries), and Om (庵, nunneries).”Footnote 34 This broad definition reflects the syncretic nature of Chinese religious practices, where there is a subtle dynamic of accommodation among Confucianism, Taoism, and Buddhism that allows the possibility of simultaneous religious identities.Footnote 35
Additionally, given the explicit concern over fraud by self-professed fortune tellers, a functional definition of Chinese temples is included in the Ordinance.Footnote 36 Chinese temples include
every place where—(i) in accordance with the religious principles governing Miu, Tsz, Kun, To Yuen or Om, worship of gods or communication with spirits or fortune-telling is practised or is intended to be practised; and where (ii) fees, payments or rewards of any kind whatsoever are charged to or are accepted from any member of the public for the purpose of worship or communication with spirits or fortune-telling or any similar purpose, or in return for joss candles or incense sticks, or on any other account whatsoever.Footnote 37
There has been some confusion as to whether the Ordinance targets only “public” Chinese temples, such as a large monastery containing a large number of monks that is deemed to be owned by all the people of the relevant faith.Footnote 38 The Court of Final Appeal in 2000 confirmed that the Ordinance applied even to private temples owned by an individual, clan, family, or t'ong.Footnote 39
Regulatory Control
The Ordinance imposes various regulatory requirements on Chinese temples. First, there is the requirement of registration.Footnote 40 Detailed information must be disclosed in the registration process, most notably the governance structure of the temple and the particulars of all its financial assets.Footnote 41 The court confirmed that the various regulatory controls over Chinese temples under the Ordinance remained fully applicable for unregistered Chinese temples.Footnote 42 There is one benefit for Chinese temples that duly register: fortune-telling, which was criminalized under the Summary Offences Ordinance until 1980,Footnote 43 is legal if conducted in registered Chinese temples.Footnote 44
There is a restriction on where Chinese temples may be sited. Unless an exemption is granted, not only must a Chinese temple be housed in a complete and separate building but that building must also be erected and used solely for the purpose of the Chinese temple.Footnote 45 This requirement is particularly onerous in the densely populated urban area of Hong Kong, where land is expensive and multi-story buildings were the norm even in the 1930s.Footnote 46
The Ordinance also grants the power of search and seizure to the executive branch. Without needing to seek a court order, the relevant Secretary may authorize a search—with “such force as may be necessary”—of registered Chinese temples or places suspected to contain Chinese temples and seize any book, document, or object that appears to contain evidence of contravention of the Ordinance.Footnote 47 This is in fact an unusual grant of warrantless search and seizure authority. In Hong Kong, such power tends to be restricted to the better-recognized contexts of drugs, corruption, and immigration and customs control.Footnote 48
Violation of these requirements constitutes a criminal offense punishable by a fine. The fine was initially set at HKD 500Footnote 49—a substantial sum in 1928Footnote 50—and was raised to HKD 1,000 in 1948.Footnote 51 There has been no further revision, resulting in the current insignificance of the sanctions. As a matter of comparison, the fine for food consumption on the Mass Transit Railway is HKD 2,000.Footnote 52
However, the Ordinance remains far from toothless. The most intrusive and direct intervention by the Ordinance is the control of financial affairs. All “revenues, funds, investments and properties” of Chinese temples are “under the absolute control” of the Chinese Temples Committee. The committee comprises government officials and government-appointed individuals.Footnote 53 This “absolute control” is accompanied by the corresponding power of the committee to compel the transfer of properties and assets that are held on behalf of or for the purposes of any Chinese temple to the government.Footnote 54 The Ordinance further spells out the substantive rules relating to use of revenues by Chinese temples. The revenues shall be first applied to “due observance of the customary ceremonies and the maintenance of temple buildings and temple properties,” and any remaining surplus “may be transferred” to a charitable fund for Chinese people.Footnote 55 Furthermore, it is at the discretion of the committee to determine the amount of expenditure and charitable transfer, and even what customary ceremonies should be observed.Footnote 56 Finally, the power to intervene in the financial affairs of Chinese temples is completed by the committee's power to close any Chinese temples deemed falling into disuse or having insufficient revenues for maintenance and transfer the assets of those closed Chinese temples to the charitable fund.Footnote 57
Enforcement, or Lack Thereof
Given such extensive and draconian regulatory control over indigenous religious practices by a foreign colonial power, it is surprising that there has been barely any outcry about the Ordinance, whether during the democratization process in the 1980s or post-Handover.Footnote 58 The key reason is perhaps that the Ordinance has never been vigorously enforced, or at least not in recent timesFootnote 59 Unregistered Chinese temples continue to flourish unaffected by the Ordinance's purported registration requirement. Legislative records since 1997 report that enforcement of the Ordinance against unregistered Chinese temples has been limited despite official recognition of the need for registration.Footnote 60 Indeed, the secretary of Home Affairs acknowledged on record in 2012 that the government had not enforced the Ordinance against unregistered Chinese temples for the past 5 years despite receiving complaints from members of the public regarding unregistered temples.Footnote 61
Perhaps the best example to illustrate the limited enforcement of the Ordinance is the Tsing Wan Kun Chinese temple. This prominent temple, with a history of over one hundred years and assets in the hundreds of millions, registered belatedly amidst litigation against the government over the temple's ownership.Footnote 62 Tellingly, the Chinese Temples Committee had full notice of the existence of the temple by 1963 due to protests over the sale of temple property but chose not to take any action.Footnote 63
At present, according to a 2015 official account, there are 600 Chinese temples in Hong Kong, with only 350 duly registered in accordance with the Ordinance.Footnote 64 Moreover, despite the Ordinance, the vast majority of registered temples are neither managed by the Chinese Temples Committee nor have their revenue monitored for transfer to the fund.Footnote 65 According to official government statements, the nonenforcement is due to respect of the autonomy of religious organizationsFootnote 66 and “prevailing community expectations of protecting private property rights.”Footnote 67
Reform Proposal
There has been renewed public interest in the Ordinance since the 2010s. Spurred by residents’ complaints over environmental nuisances and land use conflicts arising from Chinese temples in urban areas and also public scrutiny of the highly lucrative but illegal—potentially fraudulent—sale of columbarium niches by Chinese temples, there have been a series of queries by legislators to the secretary for Home Affairs over the management of Chinese temples and the enforcement of the Ordinance.Footnote 68 It was revealed in the responses from the secretary for Home Affairs that the government had undertaken a comprehensive review of the Ordinance. This culminated in the Review in March 2015.
Acknowledging that “some provisions in the Ordinance appear to be outdated in the present day context,”Footnote 69 the main thrust of the Review is an intention to dismantle the existing onerous regulatory controls over Chinese temples. The Review recommends removing the absolute control that the Chinese Temples Committee can exercise over the financial matters of the temples, recognizing that if the powers were indeed exercised, “it may arouse concern over the protection of property rights.”Footnote 70 In conjunction, the Review also recommends removal of the “complete and separate building” land use stipulation and the power of warrantless search and seizure without further explanation beyond the “outdated” nature of these restrictions.Footnote 71 In terms of registration, the Review recommends replacing the existing mandatory requirement with a voluntary registration scheme that is backed by the power of the committee to conduct random checks to verify the information. The purported purpose of the proposed registration scheme is to inform the public, enhance transparency, and enable Chinese temples to gain public confidence.Footnote 72
Nevertheless, the recommended changes are not all one-sided in the direction of reducing regulatory control. The aforementioned liberalization is counterbalanced by a recommendation to empower the secretary of Home Affairs to be a party to any legal proceedings involving Chinese temples to “defend the interest of the general public where necessary and justified.” Notably, this will “provide an additional safeguard on top of … the role of the [secretary of Justice] as the protector of charities.”Footnote 73
The Review received underwhelming public attention. There were very few responses submitted, all of which were generally supportive of the attempt to “update” the law.Footnote 74
CONSTITUTIONALITY
Hints of constitutional concerns emanate from the proposed Review and the official explanations of forbearance in enforcing the Ordinance. Concerns about the autonomy of religious organizations and protection of property rights echo provisions of the Basic Law (Hong Kong's de facto constitution). Article 141(1) of the Basic Law provides that “[t]he Government of the Hong Kong Special Administrative Region shall not restrict the freedom of religious belief, interfere in the internal affairs of religious organizations or restrict religious activities which do not contravene the laws of the Region.” Property rights are not only generally protected by Article 105Footnote 75 but also given specific mention vis-à-vis religious organizations.Footnote 76
This raises the question—which has surprisingly received no academic attention thus far—as to whether the Ordinance is even constitutional to begin with.
Unconstitutional Takings?
The issue of whether the Chinese Temples Ordinance contravenes Article 105 of the Basic Law was in fact addressed by the Court of Final Appeal (the highest appellate court in Hong Kong) in Secretary for Justice v. To Kan Chi.Footnote 77 The case involved a dispute over the ownership of the Chinese temple Tsing Wan Kun, with private entities (a tso Footnote 78 and a clan) seeking to claim full ownership of and control rights over the temple (and its substantial assets in property and cash) against the government's objection to the transfer of certain cash funds to those private entities. The government's position was premised on a charitable trust, and in the alternative, the regulatory controls under the Ordinance. Rejecting the charitable trust argument and upholding the constitutionality of the Ordinance, the court granted a temporary stay of the transfer to give the Chinese Temples Committee an opportunity to object to or take appropriate action pursuant to its control over the funds under section 7(1) of the Ordinance.Footnote 79
The court approached the constitutional issue with an inquiry as to whether the Ordinance was deemed “confiscatory” or “regulatory.” Noting the “leading principle of statutory construction that, unless compelled to do so by clear words, the courts do not construe a statue as confiscatory,”Footnote 80 the court held that the Ordinance was in fact regulatory because it primarily addressed the management and administration of Chinese temples without purporting to address ownership.Footnote 81 In reaching this conclusion, the court observed that “[i]f the Ordinance operated to take away the [owner of Chinese temple]’s Chinese law and custom right at any time to alter the purpose to which all or any part of the property of the [Chinese temple] is devoted, it would not be regulatory but confiscatory.”Footnote 82 Thus, to salvage the constitutionality of the Ordinance, the court chose to construe the control of revenue and property under the Ordinance to apply only to assets that are “for the time being devoted to the due observance of the temple's customary ceremonies and the maintenance of its temple buildings and temple properties.”Footnote 83
This holding preceded the seminal Hong Kong decision on regulatory takings, which potentially provides an alternative avenue for constitutional challenges to property deprivation that otherwise falls short of formal confiscation. Regulatory takings were first given explicit judicial recognition in Fine Tower Associates Ltd v Town Planning Board.Footnote 84 There, the Court of Appeal surveyed the U.K./European approach of “de facto deprivation” in Sporrong and Lönnroth v. Sweden Footnote 85 and Grape Bay Ltd v. A-G of Bermuda Footnote 86 in addition to the U.S. regulatory takings jurisprudence from Lucas v. South Carolina Coastal Council Footnote 87 and Penn Central Transportation Co. v. City of New York Footnote 88 and held that the legal test of unconstitutional regulatory takings is whether there is “de facto deprivation” in which there is “the removal of any meaningful use, or all economically viable use.”Footnote 89
The Ordinance is also likely to survive this test of regulatory takings. The Chinese Temples Committee's control over the assets of the temples is meant to facilitate the continued operation of the temples. While there may be restrictions as to the types of religious ceremonies that may be carried out on the premises and how funds may be utilized, they do not amount to a deprivation of all meaningful use or economic value of those assets. One may still operate a Chinese temple as a Chinese temple under the Ordinance.
Religious Autonomy and Religious Freedom
While the To Kan Chi case arguably reached the right conclusion vis-à-vis Article 105 of the Basic Law, it is surprising that no challenges were raised with respect to Article 141 of the Basic Law, which concerns religious liberty. It is difficult to imagine a more clear-cut example of a statute that “interfere[s] in the internal affairs of religious organizations” than the extensive and “absolute” controls over financial affairs, including the Chinese Temples Committee's power to dictate the specific types of customary rites that Chinese temples are allowed to perform.Footnote 90 The constitutionality of the Ordinance should also be pertinent to the parties, given how the Hong Kong government (as the second defendant) relied on the Ordinance from the beginning in the trial court to dispute the claims of the plaintiff.Footnote 91 That the initial litigation took place prior to the Handover in July 1997 (i.e., the corresponding effective start date of the Basic Law) does not excuse the omission during the appeal process, whose entirety took place post-Handover.Footnote 92 This omission is unfortunate, whether vis-à-vis the adverse outcome for the private litigants or as a missed opportunity to assess colonial legal relics against the new constitutional protections.Footnote 93
The key consideration of the Hong Kong courts in evaluating the constitutionality of a particular legislative restriction on religious freedom is the requirement of proportionality.Footnote 94 This approach echoes the jurisprudence of the European Court of Human RightsFootnote 95 and examines whether the purpose of the legislation is legitimate and whether the restrictions are no more than necessary to accomplish the legitimate purpose.
The courts have generally taken an expansive view as to purposes that the state can legitimately pursue, preferring instead to strike down laws and regulations on the grounds that the restrictions have gone too far.Footnote 96 The primary legislative objectives of the Ordinance—namely preventing abuses in management of Chinese temples and fraud by pseudo-religious establishmentsFootnote 97—appear to fit into conventional categories of legitimate purposes, such as public order and public morals.Footnote 98 The key issue is thus whether the restrictions are excessive.
Notably, the point is arguably conceded in the Review. In the Review, the Home Affairs Bureau recommends the repeal of all the mandatory controls and restrictions on the revenues of Chinese temples on the grounds that there is “now various legislation providing protection and remedies against fraud, malpractices and misuses of funds, as well as environmental and safety problems that associated with organizations.”Footnote 99 In these circumstances, the indiscriminate imposition of control over all Chinese temples without regard to actual or potential wrongdoing is likely to be deemed excessive by the courts even with a wide margin of appreciation.
Religious Discrimination
The above constitutional analysis reveals that the forbearance of the executive government toward vigorously enforcing the Ordinance is politically prudent to avoid a potentially embarrassing judicial nullification of the Ordinance. While it has survived an Article 105 property rights challenge in the highest court, the Ordinance is at risk of an Article 141 challenge for disproportionate interference in the internal affairs of religious organizations.
However, the Ordinance has a more severe constitutional deficiency that has been inexplicably omitted in the official discourse over the nonenforcement and reform of the Ordinance. This deficiency is religious discrimination. The most striking feature of the Ordinance is not the extensive regulatory controls imposed on religious organizations but that those regulatory controls are specifically imposed on Chinese temples only. There are no corresponding regulations for any other religious organizations or places of worship.Footnote 100 Indeed, even the modest requirement of registration is peculiar to Chinese temples.
While this blatant discriminatory treatment of Chinese temples understandably reflects the then-hostility (or at the very least indifference) of the British colonial government toward non-Christian religions,Footnote 101 the negative association of Chinese temples with “pseudo-religious establishments” eerily continues to pervade the Review. The proposed dismantling of regulatory control over Chinese temples was not due to a less adverse conceptualization of Chinese religious practices. Rather, it was because “members of the public are now much more aware of the risks associated with ‘pseudo-religious establishments’”Footnote 102 and there is now various generally applicable legislation that targets fraud and malpractice.Footnote 103 In the same vein, the proposed voluntary registration scheme that is designed to inform the public and allow “Chinese temples [to] gain public confidence”Footnote 104 applies only to Chinese temples without any counterpart or perceived need for other religious organizations. Finally, while all religious organizations with charitable or significant public interests are already subject to intervention by the secretary of Justice, the Review sees a need to provide an additional safeguard—in the form of the power to intervene by the Secretary of Home Affairs—for Chinese temples.
In a sense, this guarded skepticism towards Chinese temples may be understood given the perceived prevalence of fraud associated with Chinese religions and related superstitious practices. A common form of fraud in “street deception cases” involved the fraudster—working alone or with partners—approaching the victim and claiming that the victim (or the victim's loved ones) would suffer grave misfortunes (such as illness or accident) in the near future unless some form of Chinese religious rituals involving valuables or hefty “donations” were performed. These fraud are common despite targeted enforcement, with hundreds of reported cases each year and typically constituted 25 percent to 50 percent of total reported “street deception” cases.Footnote 105 Where the fraudsters were apprehended, they were typically charged either under section 17 of the Theft Ordinance (“obtaining property by deception”)Footnote 106 or on conspiracy to defraud, contrary to Common Law and punishable under section 159C(6) of the Crimes Ordinance.Footnote 107 Once convicted, they were typically sentenced to several years of imprisonment.Footnote 108 In a similar vein, sale and operation of private columbarium niches by Chinese temples have provoked public concerns both for the negative externalities to surrounding neighborhood (e.g., air pollution, traffic) and potential fraud of selling niches which contravenes land use regulations (i.e., illegal and liable to be demolished).Footnote 109 There have also been high profile legal disputes within the management team of Chinese temples over alleged misappropriation of temple fund and other malpractices.Footnote 110
However, these unscrupulous practices could and should have been tackled through religious-neutral laws. The prosecutions and convictions of the religious “street deception cases” under general criminal law provisions on fraud are not per se unconstitutional, notwithstanding potential evidentiary complications as will be discussed below.Footnote 111 Similarly, the recent enactment of the Private Columbaria OrdinanceFootnote 112 that imposes a licensing scheme for all private columbaria regardless of religious affiliation (or for that matter, non-religious columbaria) is the proper approach—at least from the legal perspective—to address the public concerns over private columbaria. Likewise, any deficiencies in governance structure of Chinese temples are by no means unique to Chinese temples. The 2013 Law Commission report on reforming charities law in Hong Kong noted the lack of transparency and accountability in the management and running of many charitiesFootnote 113 and recommended various measures (such as registry, public disclosure, financial reporting) to promote public trust and confidence in the entire charitable or nonprofit sector.Footnote 114
More fundamentally, even if Chinese religions are indeed more prone to these unscrupulous practices as a matter of fact,Footnote 115 it is still a clear constitutional violation. The Basic Law sets forth the standard right of equality without specifying the prohibition of discrimination on the grounds of religion or other usual suspect classes.Footnote 116 However, state action may also be challenged under the Hong Kong Bill of Rights Ordinance, a statute enacted in 1991 to incorporate the International Covenant on Civil and Political Rights in Hong Kong.Footnote 117 While the precise relationship among the Basic Law, Bill of Rights Ordinance, and the International Covenant on Civil and Political Rights can be controversial for courts determining the substantive content of constitutional rights or assessing the legality of restrictions on rights,Footnote 118 the general consensus is that either the Basic Law or the Hong Kong Bill of Rights Ordinance will suffice in providing grounds for a constitutional challenge.Footnote 119 In this regard, article 22 of the Hong Kong Bill of Rights Ordinance, echoing article 26 of the International Covenant on Civil and Political Rights, explicitly prohibits discrimination on the grounds of religion.Footnote 120
Given how the international jurisprudence on religious equality is dominated by difficult issues, such as how facially neutral and generally applicable laws can have discriminatory effects (whether inadvertent or insidiously intentional) on religious minoritiesFootnote 121 and whether affirmative action toward or specific benefits to certain religions constitute impermissible religious discrimination,Footnote 122 it is almost refreshing to have a much simpler case of laws that explicitly target religious practices of a particular faith for unique regulatory burdens. Indeed, it is telling that while publicly touting the intention of implementing a “Muslim ban,” the actual wordings of the travel restrictions issued by the Trump administration explicitly targeted only nationality without any mention of religion.Footnote 123 With the intense judicial scrutiny triggered by differential treatment of a protected class such as religion,Footnote 124 it is difficult to imagine how the current government can plausibly justify singling out only places of worship involving Chinese religions to the exclusion of other religions, especially when the malpractices perceived to be associated with Chinese religions could (and should be) tackled by existing or new laws that are religiously neutral.
Thus, from an outsider's perspective, it is bewildering as to how the committee working on the Review failed to pick up this constitutional issue, especially when the committee was aware of the fact that “[a]t present, other than Chinese temples, other religious facilities in Hong Kong are not subject to similar restraints as imposed by the relevant provisions in the Ordinance.”Footnote 125 It is also both ironic and telling that pro-democracy legislatorsFootnote 126 have expressed disapprovals for the proposed reform. Notwithstanding their political parties’ purported ardent commitment of promoting human rights and civil liberties,Footnote 127 Kenneth Chan opined that the “Administration should not relax its control over Chinese temples under the pretext of upholding religious freedom,”Footnote 128 while Helena Wong “strongly objected” to the voluntary registrations scheme on account that the scheme “might affect or lessen the protection afforded to members of the public against unlawful activities of deceitful pseudo-religious establishments.”Footnote 129 These legislators may well be simply advocating the opinions and wishes of their constituents. Yet one would imagine that they would have channeled those concerns into proposals that are consistent with constitutional rights (e.g., proposing laws and regulations generally applicable to all religious organizations) rather than so wholeheartedly endorse a colonial-era legislation that explicitly discriminates against a particular religion.
More research will be necessary to unpack the sociopolitical dynamics between religious organizations and political institutions. As a preliminary conjecture, the common and proud proclamations of perceived religious freedom in Hong Kong that stood in sharp contrast with the heavy state intervention and repression of religion in mainland ChinaFootnote 130 might have rendered it impossible for many to imagine that there is an existing statute in Hong Kong whose disregard of religious liberty and religious equality would not pale in comparison with the actual regime in China.Footnote 131
In any event, while the recommended changes in the Review undeniably represent a substantial relaxation of the regulatory controls that will alleviate constitutional concerns over disproportionate restrictions on religious autonomy, they are still driven by the notion that Chinese religious practices are a peculiarly potent source of religious fraud. Given the continued imposition of regulatory measures only on Chinese temples and no other religious organizations, the amended Ordinance—as and when it is enacted amidst much more urgent legislative priorities—remains at risk of a challenge on the basis of religious discrimination.
CONCEPTUAL PITFALLS IN REGULATING RELIGIOUS FRAUD
The unconstitutionality of the Ordinance and the proposed reform does not negate the possibility of legally permissible state regulations on religious fraud. For example, a voluntary registration scheme applicable to all religious organizations is likely to survive both religious freedom and equality challenges. A closer look at the normative considerations implicated is thus warranted. Below I identify the two conceptual deficiencies inherent in the regulatory approaches toward religious fraud adopted in the Ordinance and the Review and highlight how these deficiencies compromise the desirability of state intervention in general and of a voluntary registration scheme in particular.
Harm of Pseudo-Religious Establishments: The Different Types of Religious Fraud
Deceitful practices by “pseudo-religious establishments” are a pertinent concern of the Ordinance, both at its inception and during the recent reform. This is unsurprising. Fraud is commonly perceived as an unqualified harm—it is not only morally repulsive but also disrupts the proper operations of the market.Footnote 132 Fraud thus frequently leads to severe criminal sanctions against the perpetratorFootnote 133 and generous civil remedies for the victims.Footnote 134 Statutes and regulations designed to combat fraud are common in a whole host of settings ranging from commerceFootnote 135 to marriage.Footnote 136
However, there are important conceptual distinctions among the different fraudulent practices that are commonly associated with purported religious entities. It is fraud when a temple solicits religious donations from the public under the proclaimed objective of temple renovation but applies the funds to sustain the lavish lifestyle of its leaders. It is also fraud when a temple solicits religious donations from its adherents under a false promise of divine reward. Close examination reveals that the two scenarios differ in terms of (1) the interaction between the fraudster and victim and (2) the nature of the falsehood.
Transaction versus Charity
The first conceptual distinction is whether the provision of funds is transactional or charitable. This conceptual distinction echoes the evolution in how the harm of religious fraud is perceived in Hong Kong. The Review approaches the issues of religious fraud and pseudo-religious establishments mainly from the perspective of regulating charitable organizations. The proposed voluntary registration scheme is designed to provide information to the public with the view of facilitating more informed decisions when donating to Chinese temples. Indeed, “public concerns over the transparency of charity donations” was an explicit rationale underpinning the proposal.Footnote 137 This aim can be contrasted with the legislative objectives when the Ordinance was first introduced. At that time, the activities associated with Chinese temples were perceived as more transactional in nature. Laws are necessary to prevent “charlatans”—many of whom are “simply fortune tellers of an unrecognized and objectionable kind”—from duping ignorant individuals. Additionally, there is explicit concern over the “establishment of temples as purely business speculations.”Footnote 138
Admittedly, there is no clear-cut definitional boundary between transaction and charity,Footnote 139 and individuals making religious donations often do so with overlapping motivations. Indeed, a hybrid conception—giving to charity for divine reward—is a common religious doctrine.Footnote 140 However, this conceptual distinction remains useful because it highlights the different dynamics between fraudster and victim, in particular the incentive or the ability of the potential victims to detect fraud and the impact of prevalent fraud on the activity levels of the victims.
Where religious offerings are primarily charitable, there is a more distant and passive relationship between the giver and recipient. The giver will naturally want to be judicious when selecting a recipient of charitable giving. However, in the relative absence of expectations as to a commensurate reward in return for the contribution,Footnote 141 the giver often devotes much less scrutiny to the actual usage of the donated funds.Footnote 142 Echoing this expectation of the individual donor, there are limited private remedies available for charitable fraud. Deceit is a basis for revoking a charitable gift.Footnote 143 However, once the funds have been handed over to the recipient in the absence of fraudulent solicitation, there is generally no legal recourse available to the donor for any dissatisfaction or discrepancies as to how the recipient utilized the funds.Footnote 144 In any event, the difficulty as to detection and evidence, coupled with the generally small amount contributed by each individual donor, makes it unrealistic to expect vigorous private enforcement against fraudulent practices among charities even if private remedies are available.Footnote 145 In such circumstances, there is a strong case for aggressive state or regulatory supervision over the activities of religious organizations. If the fraudulent practices are perceived to be unchecked by the public, there may be a paralyzing distrust that severely and indiscriminately curtails public donations to all purported charitable organizations, whether legitimate or otherwise.Footnote 146
In comparison, religious offerings that are akin to transactions imply a more intimate and active dynamic between the giver and recipient. The expectation of a promised reward or the deliverable in this transactional context means that the giver is much more particular as to the recipient's actions, even after the transfer of funds. A potential recipient must also engage with the giver more closely to ascertain the particular expectation of the giver and assure the giver that that expectation will be met.Footnote 147 The size of the gift—whether in absolute terms or relative to the overall wealth of the giver—also tends to be significantly larger than in a charitable setting, providing more incentive for the giver to be informed and careful in the selection. Thus, even if contractual remedies may not be readily available due to ambiguity as to whether religious giving under promises of divine intervention should be deemed a contract between the giver and recipientFootnote 148 and the reluctance of judges to adjudicate matters involving religious elements,Footnote 149 the necessity for default state or regulatory oversight remains less compelling because the giver is in a much better position to detect and avoid fraud. Additionally, the fact that the giver is motivated less by altruistic motives and more by expected gains from the “transaction” means that the prevalence of fraudulent practices will inflict a more muted reduction of activities compared to the charity scenario. The giver will be more circumspect in selection, but is likely to still take calculated risks of being defrauded where the desired benefit outweighs the perceived risk.Footnote 150
Secular Facts versus Religious Truth
Another dimension in which religious fraud may be differentiated is the nature of falsehood. In the above examples, both the proclaimed objective of temple renovation and the promise of divine intervention are false; however, the former is a secular factual claim that can be readily verified.Footnote 151 Bank statements, receipts, and other financial documents will easily prove or disprove whether funds have indeed been used for temple renovation or for some other purpose. It must be noted that even where secular factual claims are involved, an important distinction must be made between a false representation as to a fact in existence and a false claim as to intention of future performance. Depending on the manner in which the purpose of temple renovation is articulated by the recipient, the falsehood may only be a false claim of intention that is subjected to a more difficult evidential inquiry into subjective intention.Footnote 152 Nevertheless, even if a false claim of intention cannot be established, any discrepancy between the stated purpose and the actual use of the funds can still be identified and verified, whether to sustain a civil claim of breach (perhaps in contract or trust), a criminal charge of embezzlement, or—at the very least—public discrediting of the recipient.Footnote 153
It is different for religious claims. For the promise of divine intervention, the veracity of the representation depends on the existence of the relevant divine entity(s) and the manner in which divine interventions are made. While it is possible—although extremely complicated and highly controversial—for secular courts or states to determine the correct religious doctrine for a given religion,Footnote 154 it is impossible to objectively verify whether the attributed divine entity actually exists. The recognition of the limitation on states’ ability to assess the spiritual realm underpins the modern discourse over religious freedom,Footnote 155 including the aversion to consciously shaping religious practices and doctrines via state instruments.Footnote 156 However, this poses particular problems for litigation where the falsity of religious claims is a required element of the criminal offense or cause of action.
Unless the court declines to adjudicate the issue altogether (such as invoking the doctrine of nonjusticiability),Footnote 157 courts confronted with this issue tend to resolve it via sincerity. In the classic U.S. Supreme Court case on religious fraud, U.S. v. Ballard, the court held that where there are no objectively demonstrable falsehoods in the alleged religious fraud (such as representation of religious credentials from specified religious institutions), the factual finding of falsehood could be premised on whether the alleged fraudsters sincerely believed their religious claims.Footnote 158 A similar approach was adopted in Hong Kong, where the credibility of the defendant in articulating a religious basis for sexual intercourse (in particular, any internal inconsistencies in the account) was the key determinant of whether the offense of sexual intercourse by false pretenses was established.Footnote 159 Academic commenters have endorsed this approach, albeit with cautions as to the dangers of bias against unconventional or minority religious practicesFootnote 160 and evidentiary issues.Footnote 161
That the victims of religious fraud are typically naïve and emotionally, financially, or physically vulnerable has been used to justify public enforcement and regulatory supervision by academicsFootnote 162 and the courts.Footnote 163 Nevertheless, one must ask what are the precise harms arising from fraudulent representation on matters that cannot be objectively verified. From the victim's perspective, a person donating to a temple under fraudulent claims as to the funds’ usage is deprived of funds that could have been properly applied to the desired cause of temple renovation. However, the difference between making religious offerings to a recipient who sincerely believes his or her religious proclamations and a recipient who does not is less clear, especially if the donor continues to believe that the recipient was sincere in his or her proclamations.Footnote 164
The same ambiguity applies from the social perspective. Beyond the moralistic rationale of punishing unscrupulous individuals,Footnote 165 there is limited social harm caused by the proliferation of insincere pronouncements of religious truth in the modern context where there is easy accessibility to a vast array of religious claims arising from both traditional organized religions and emerging religious movements. Unlike the negative impact of counterfeit goods on commercial markets,Footnote 166 the existence of false religious claims can hardly disrupt the “religious market,” which has not abated despite being swamped with allegations and counter-allegations of false religions since time immemorial.Footnote 167
The Sliding Scale of Justified State Intervention
Putting the two dimensions together, we can map the different types of religious fraud on a sliding scale in terms of the normative desirability of state intervention, especially in the forms of public enforcement and regulatory supervision.Footnote 168 The case of state intervention is strongest where the religious fraud concerns contributions that are charitable in nature and in which falsehoods involve secular factual claims. On the other hand, state intervention is unnecessary and may even be counterproductive where the religious fraud involves transactions based on false (that is, insincere under the current legal regime) claims of religious truth.Footnote 169 For other combinations and hybrid scenarios, the desirability of intervention is more ambiguous and will require case-by-case analysis.
This insight normatively challenges the necessity of the Ordinance, whether in its existing form or in the proposed reform.
First, the singling out of Chinese religious practices for regulatory supervision is ironic given how Chinese religions are commonly practiced in Hong Kong. Unlike monotheistic religions that tend to place greater emphasis on faith in the designated supreme being with the goal of eternal salvation,Footnote 170 Chinese religious practices are premised more on an exchange relationship between the deity and the adherent.Footnote 171 Adherents perform religious rites and make religious offerings in expectation of favorable divine intervention in their daily affairs.Footnote 172 While considerations of the afterlife are not entirely absent from Chinese religions, religious offerings in Chinese religions tend to be largely transactional and are premised on the potency of divine intervention in return.Footnote 173 This is the category of religious fraud where state intervention is least justified.
Second, while it is true that religious offerings in some of the larger and more publicly oriented Chinese temples bear a resemblance to charitable contributions and hence justify at least some form of state intervention in combating fraudulent practices, the close resemblance to conventional charitable contributions is precisely why it is preferable to address this issue under regulations generally applicable to all charities rather than carving out a specific regime. A specific regime, such as the Ordinance, further complicates the already “fragmented” charity regulation regime in Hong Kong where both the public and charities face a confusing array of inconsistent standards in reporting, governance, and accounting.Footnote 174
Religion as Credence Goods: The Unintended Impact of Registration
Notwithstanding the questionable basis for state intervention as expounded in the previous section, one might plausibly argue that it is not a serious deficiency in the Review given that the central piece of the proposed reform—the voluntary registration scheme—appears a mild and benign regulatory action. Public disclosure of information, whether via a registration scheme or otherwise, is a popular regulatory tool because it enables the regulator or the state to avoid allegations of inaction or inattention without prompting backlash from regulated entities over perceived onerous regulatory burdens.Footnote 175 Indeed, where the regulatory context is primarily voluntary transactions between two private (or at least non-governmental) entities, the availability of more verified information appears an unqualified good in facilitating more informed interactions—and better outcomes—between the two entities.Footnote 176
However, as much as the utility of a registration or accreditation scheme is widely acknowledged in a whole host of commercial contexts involving consumers,Footnote 177 the peculiar nature of religious activities as true credence goods demands special consideration vis-à-vis a state-operated registration scheme. Credence goods is an economic concept for products (including intangible products, such as services) whose quality cannot be judged whether before or after purchase or consumption, rendering the credibility of the supplier particularly salient in the calculus of consumers.Footnote 178 Common examples include medical treatment, legal services, and automobile repairs. Because the market for such credence goods may break down if consumers are paralyzed by the fear of being defrauded, a whole host of government interventions ranging from licensing to certification to sellers’ liability have been advocated as necessary to mitigate the severe information asymmetry for consumers.Footnote 179
In this regard, religion is the ultimate credence good. Religion's allusion to divinity, the spiritual realm, the afterlife and other effectively unverifiable concerns means that the inability of consumers or adherents to evaluate the true quality of the “product” is due to the absence of an objective way to verify the core claims of religious truth, and not simply the lack of information or expertise as with other more typical scenarios.Footnote 180 This contravenes the key premise of state intervention for more conventional credence goods, namely that the state enjoys economies of scale in information and expertise and is thus able to assess the otherwise elusive qualities of the product or service. This mismatch can cause unintended and even counterproductive consequences when the state tries to intervene in religious matters. For example, state action intending to suppress a religion (ranging from persecution of leaders to milder discriminatory treatment) will not only increase the cost of religious activities thereby pressuring adherents to leave the religion, but will simultaneously cause the rise of perceived credibility of the religion—given how these sacrifices by religious leaders and adherents can be interpreted as mutually reinforcing signals to both adherents and outsiders of the value of the religion and the strength of religious commitment.Footnote 181 The interplay between the two factors can lead to a variety of outcome. For example, the state suppression could reduce the overall numbers of adherents without being able to eradicate a highly committed core that continues to operate underground.Footnote 182 In other contexts where the suppressions are milder or successfully infused with theological meaning, the targeted religion may even experience overall growth.Footnote 183
In the specific context of the voluntary registration scheme under the Review, there is a risk that it may generate unwarranted perceived credibility of the registered Chinese temples by the public. The proposed registration scheme requires the provision, updating, and audit of information as to the “purpose of establishing the temple, the god(s) to be worshipped, major events involved, its owner(s) and administrator(s), its assets donated by the public and the uses of such donations.”Footnote 184 This information coincides with particulars that are typically solicited for regulatory supervision of charitable organizations in other jurisdictions.Footnote 185 However, none of this information engages directly with the authenticity of the underlying claims of religious truth, especially the key expectation of favorable divine intervention under the religious transaction conceptualization of Chinese religious practices.Footnote 186 Unless the individual adherents are fully aware of the specifics of the registration scheme and appreciate the causative relationship (or lack thereof) between the registered information and the characteristic or quality that is being assessed, then the status as a Chinese temple duly registered with a supervisory government entity designated to monitor Chinese temples is likely to give the false impression that the underlying claims of religious truth are somehow state sanctioned and hence more credible. In this regard, it is telling that even legislators mistakenly assumed greater significance and scope for the existing registration scheme.Footnote 187
Indeed, this risk of the public giving undue credence to a state-sanctioned registration scheme of more modest intent and design was identified in a 2013 Law Commission report on reforming charities law in Hong Kong.Footnote 188 In question is the list of organizations that have been granted tax exemption status for being a “charitable institution or trust of a public character” by the Inland Revenue Department. Although the tax authority is not responsible for registering or monitoring charities, it is common for members of the public to misconceive the list as a formal and supervised register of charitable organizations.Footnote 189 It is unfortunate that this laudable insight was lost in the reform of the Ordinance only a couple of years later.
CONCLUSION
Discriminatory at its core and misguided in its manifestation, the Ordinance should have been abolished in its entirety due to its clear constitutional violations and questionable normative justifications. More broadly, this case study highlights how religious fraud is not always amenable to the various state interventions typically employed to combat conventional scams. A circumspect analysis as to the differing nature and unique dynamics of religious fraud is necessary to ensure a justified and appropriate regulatory response.
ACKNOWLEDGMENTS
I thank Lisa Bernstein, Albert Chen, Rosalind Dixon, John Gregory, Eric Ip, Loveday Liu, Shitong Qiao, Weijia Rao, Jingyi Wang, Julius Yam, and the participants of the Hong Kong University Staff Research Seminar and Chicago Legal Scholarship Workshop for their insightful comments and critiques, Christopher Munn for invaluable advice and access to historical materials, and Alexandra Kong for her excellent research assistance. All errors are mine alone.
