Business in Hong Kong is anything but ordinary

Jimmy Lai in Hong Kong on July 1, 2020.


Vincent Yu/Associated Press

Hong Kong leaders want the world to think the financial hub is back to normal when it reopens for international business. At a conference this month with more than 200 of the world’s top bankers, Hong Kong Chief Executive John Lee assured attendees that “the rule of law is inviolable.” “Fundamental rights and freedoms, including freedom of speech, freedom of the press and freedom of assembly, are enshrined and protected in the Basic Law,” Mr Lee said, referring to China’s guarantee of a large degree of autonomy from Hong Kong. But Beijing’s 2020 National Security Law — also known as the NSL — has done the opposite, allowing the Chinese Communist Party to step in the footsteps of Hong Kong’s free society and free markets.

Business is anything but usual in Hong Kong. As the two American board members of Next Digital, a Hong Kong publisher, we know this first hand. Jimmy Lai, a self-made billionaire who fled communist China to Hong Kong as a child, founded Next Digital and its Apple Daily, a popular pro-democracy newspaper. Next Digital became a public company in 1999 and Apple Daily had more than 600,000 online subscribers as of 2020.

Our company existed under a legal and regulatory system that for years placed Hong Kong between global hubs like New York and London. That changed with the NSL.

It’s no coincidence that the government was after Mr. Lai’s business. Apple Daily reporters and opinion writers have often described Beijing’s encroachments on Hong Kong’s freedoms and its violation of the “one country, two systems” agreement Beijing promised Hong Kong when it was handed back to China by the British in 1997.

The NSL’s terms are dangerously broad, referring to crimes such as “secession,” “subversion,” and “collaboration with foreign forces.” In 2021, Mr. Lee, then secretary of security, invoked the NSL to accuse Apple Daily of endangering national security and made it a crime for Next Digital to fund Apple Daily. As a result, Next Digital couldn’t use its cash flow to pay for newsprint, web servers, or journalist salaries, forcing it to shut down Apple Daily. The government has appointed a “special inspector” to investigate the cause of Next Digital’s demise. It’s no big secret what happens to a company when it’s banned from funding its own operations.

The Apple Daily Seven, including Mr. Lai and the outlet’s top executives and journalists, were arrested in August 2020 and charged with collusion with foreign forces and conspiring to publish a “seditious publication” for their journalism. Mr. Lai has been in prison since December 2020 and the others since summer 2021.

After these arrests, the company’s accounting firm and insurers stopped working with us out of fear, as did the company’s employees who were responsible for compliance with a public company. We – along with the remaining directors – resigned in September 2021 to allow for an orderly liquidation. As we wrote in our resignation to the Hong Kong Stock Exchange, the NSL forced the company out of business despite “no trial or conviction”. The stock market, likely driven by fear, had no objection to using government dictate to force Next Digital into liquidation, costing its shareholders their equity.

Next Digital’s fate should be a warning to all Hong Kong companies operating in the shadow of the NSL. The law’s vague crimes could target anyone who poses a threat to the Chinese Communist Party’s conception of national security. The approximately 1,260 American companies with offices in Hong Kong are the most vulnerable. From Beijing’s dovish perspective, American leaders could be guilty of “collusion” by complying with one of the growing lists of US sanctions against China.

Mr Lai’s trial on national security charges is set to begin next month – two years after he was first jailed and more than a year after his Apple Daily was forced to shut down. What the Communist Party has done to corrupt Hong Kong’s rule of law and subsequently target Apple Daily is a clear sign of how far Beijing will go to end fundamental freedoms wherever it can.

Mr. Crovitz is a former editor of the Journal. Mr. Clifford is President of the Hong Kong Freedom Committee Foundation. Both were independent non-executive directors of Next Digital.

Main Street: When billionaire turns dissident, Hong Kong takeover is complete (17/08/20) Image: Apple Daily

Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8


Leave a Reply

Your email address will not be published. Required fields are marked *