National security law: Jimmy Lai’s Hong Kong bankers warned that handling assets could land them in jail

·4-min read

Hong Kong’s security chief has warned bankers for jailed media tycoon Jimmy Lai Chee-ying that dealing with his frozen accounts could land them in prison for up to seven years.

When asked whether his move would undermine the reputation of the city as a global financial hub, John Lee Ka-chiu said on Thursday he was following the national security law laid down by Beijing last summer that banned acts of subversion, secession, terrorism and collusion with foreign forces.

“I am exercising the power because Lai has been charged with two offences of collusion with other countries or external forces to endanger national security,” he said. “It is my duty to specify in my notice to the relevant parties what will be the consequences if they fail to comply with my direction.”

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Media mogul Jimmy Lai has been charged under the national security law. Photo: Sam Tsang
Media mogul Jimmy Lai has been charged under the national security law. Photo: Sam Tsang

The Security Bureau froze nearly HK$500 million (US$64 million) of Lai’s assets earlier this month, including his 71 per cent stake in Next Digital, which publishes the Apple Daily tabloid, as well as the local bank accounts of three other companies he owns.

The move marked the first time authorities had invoked new powers to freeze or take control of assets of a listed company that could be related to the commission of a national security crime.

But Lee said the warning contained in letters sent to an unspecified number of banks after the freezing was only related to assets under suspicion and people carrying out normal business should have nothing to worry about.

Lai has been accused of collusion with a foreign country and was also charged with two counts of conspiracy last month. He is currently serving 14 months in prison for taking part in unauthorised assemblies connected to the anti-government protests of 2019.

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A spokesman of the Hong Kong Monetary Authority, which is responsible for maintaining the city’s status as a financial centre, said it would not comment on cases under investigation by police.

But he pointed to the long history that banks had in cooperating with law enforcement agencies in criminal investigations, including freezing and confiscating funds and property under relevant laws, including the national security law.

Next Digital resumed trading after a 10-day suspension following the freezing of Lai’s assets and its share price surged 330 per cent from the HK$0.19 (US$0.02) at opening to as high as HK$0.80 (US$0.10), before falling to HK$0.28 (US$0.04) at the close of market.

Next Digital’s management issued a statement on Wednesday saying its unaudited bank and cash balances as of March 31 stood at HK$521.4 million (US$67 million) and its working capital would last a minimum of 18 months from April 1, even without additional funding from Lai. It also said the asset freeze had no impact on a standing shareholder’s loan Lai had provided to the company and its subsidiaries.

Former Hong Kong chief executive Leung Chun-ying. Photo: Nora Tam
Former Hong Kong chief executive Leung Chun-ying. Photo: Nora Tam

But that assessment was questioned by former city leader Leung Chun-ying who has been a staunch critic of Apple Daily but also revealed that he was a minority stakeholder in the company.

Leung put the reserves closer to HK$100 million, after subtracting outstanding bank loans totalling HK$93.6 million, and other liabilities and payables.

“Will the bank call the loans? Will suppliers continue to offer credit terms?” he said on his Facebook page.

Noting the statement was issued by the board, Leung questioned why it had not made its own assessment during the trading suspension, rather than relying on the management’s.

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“Who is the person in charge of the management? This is the chief executive officer. And who is the chief executive officer? He is Cheung Kim-hung,” he wrote.

The former leader – who is also a vice-chairman of China’s top political advisory body – had already lashed out at Cheung before Next Digital’s announcement, revealing on Wednesday that he had appointed a lawyer to file a formal complaint with law enforcement against the CEO for making “negligent, irresponsible and intentionally misleading” remarks.

Leung disputed Cheung’s suggestion the company’s operations and finances would not be affected by the freezing of Lai’s assets, and demanded a thorough investigation by authorities.

Asked about the criticisms, Cheung declined to comment.

Additional reporting by Jeffie Lam

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