Hong Kong’s Han Academy faces HK$100 million debt crisis amid parent refund row. Photo: Jelly TseHong Kong police and education authorities are investigating Han Academy after parents accused the school of failing to refund HK$5.8 million in debentures following student withdrawals.
A lawmaker helping the parents also said on Wednesday that Han Academy was HK$100 million in debt.
Education minister Christine Choi Yuk-lin said her bureau had already asked the Aberdeen-based private school to stop charging parents a capital levy, at a cost of HK$600,000 per student, after authorities became aware of its financial difficulties.
A police spokeswoman said its Western division had received reports from 11 parents between November 15 and 18 over claims they had been defrauded as they had not received refunds for their debentures.
“It involves around HK$5.8 million, but they could not get the refund after their children withdrew from the school,” she said.
She added no arrests had been made and the case was classified as “request for police investigation”. The Western district crime squad will follow up.
Details of the case emerged as lawmaker Edward Leung Hei revealed he had received calls for help from more than 50 parents in 1½ years.
Leung told a radio programme the school mainly admitted children from newly immigrated families.
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Annual fees for students in Year One to Six are HK$198,000, rising to HK$208,000 for those in Years Seven to 11 and HK$218,000 for Years 12 to 13, according to the Education Bureau.
According to the school website, parents must pay either a refundable capital levy at HK$600,000 or a non-refundable but transferable capital bond which costs HK$6 million from the 2020-21 school year, as approved by education authorities. The website states parents can get the capital levy back after their children leave the school.
Leung said the school, which was founded in 2017 by the Happy Life Education Foundation, had told parents in a briefing a few days ago that it was now HK$100 million in debt. The school had attributed its dire financial position to the economic strain of the Covid-19 pandemic.
He said parents had learned that HK$80 million was needed to cover debenture refunds and HK$20 million was related to rent arrears.
“The situation is difficult. Parents attending the school briefing told me the school said it could still operate if it could admit 100 more students after receiving the debenture fees and the donations,” Leung said.
He added the school urged parents to allow it five years to recover losses so it could pay them back. But he said the school already failed to keep a promise it made eight months ago to repay parents HK$10,000 each month.
“Parents now only want a timetable to let them know when they will get the refund,” he said.
He called on the government to require private schools to make their income statements public, including funds from debentures, so parents could have a clear picture of an institution’s finances. He said currently such schools only revealed details of income related to tuition, meal and boarding fees.
Xu Li, the founding supervisor of the school, said the institution would respond later. She stressed the school attached great importance to the rights of parents.
“Everything we do is to protect the rights and interests of everyone. We will never evade any problems or our own responsibilities,” she said.
She later said in a television interview that the income of the school’s sponsoring body had been affected by Hong Kong’s emigration wave following the social unrest in 2019 and the Covid-19 pandemic.
“We hope that all creditors can give us a grace period, which I call five years of recuperation,” Li said.
“If the enrolment situation improves and the financial operating situation improves during this five-year recuperation period, we are fully capable.”
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The Education Bureau said on Wednesday night it had received complaints from three parents and asked the school to stop charging debentures in April.
Education chief Choi said on Wednesday the bureau was following up with the school as authorities were very concerned.
She said about 100 students were enrolled at the school.
The minister said the government had scrutinised different fees levied by private schools after authorities introduced an application and approval mechanism last year for the collection of certain charges.
These charges cover capital levies, debentures and nomination rights fees collected by private schools to raise funds for long-term development.
“After being aware of the school’s financial problems, we [asked the school to] stop continuing to make parents pay other charges,” she said.
She said parents were also bound to the terms and conditions of financial contribution schemes as private schools were operated under self-financing models.
Hong Kong is home to about 179 private schools, including international schools, with some charging debentures in different forms to prioritise enrolments or give children a chance to interview for admission.