Hong Kong Steals the Headlines

Mr. Lai’s imprisonment has transformed him into one of China’s most recognizable political prisoners. But that’s only half the story. The other half is that the government of a city that purports to be a center of global trade and finance took his newspaper from him without benefit of a court order or judgment.

Jimmy Lai and his wife and children are like family to me, so it’s gratifying to see world attention on his plight. But even those who have championed his cause haven’t paid much attention to the Hong Kong government’s taking of his property—and what it says about both freedom of the press and Hong Kong’s reputation as a safe harbor for international business.

The government accuses Jimmy of endangering national security. But his real sin was making Apple Daily too popular for its own good. Hong Kongers saw it as one of a few outlets willing to tell the truth, especially about China and their own government.

It all started three years ago, with Jimmy’s arrest just before Christmas. In May 2021 his majority shares in parent company Next Digital—71%—were frozen and his voting rights suspended. In June, trading in the company was halted when Jimmy’s stake was worth roughly 544 million Hong Kong dollars (US$69 million). The newspaper’s last issue was June 24, 2021.

There were other assets affected, including HK$500 million he had personally loaned the company. But the freezing of Jimmy’s shares was the key. It meant there could be no normal corporate governance for the company given that he controlled the company with a majority of shares.

The Hong Kong government then told Next Digital that using any of the companies’ significant funds to operate Apple Daily would be considered a crime. That meant the company couldn’t buy ink or electricity for the printing presses or pay its staff. This ultimately led to the liquidation of the company and all the shareholders were wiped out.

In response to an email from this columnist to Hong Kong’s financial secretary—asking how the government could take Jimmy’s property without a court order or judgment—the Security Bureau answered that it has “been handling such crimes strictly according to law” and “we strongly oppose any unfounded and baseless allegations” to the contrary.

It cited the National Security Law for the authority to freeze assets, and said those targeted can appeal to the Court of First Instance. But in the end, the government can trump an adverse court ruling by getting Beijing to declare the matter a national-security issue over which the city’s courts have no jurisdiction. It did just this to prevent Jimmy from hiring a British lawyer when Hong Kong courts upheld his right to do so.

Jimmy’s fellow newspaper owners and journalists should be disturbed by this. But so should everyone doing business in Hong Kong, because it strikes at the heart of property rights. If the government can do it to Jimmy, they can do it to anyone. And the free flow of information—the lifeblood of a world financial center committed to free markets—becomes impossible without the secure property rights needed to own and operate a newspaper.

“The Hong Kong government used the extralegal power of the Chinese Communist Party-imposed National Security Law to force the closure of Apple Daily,” says Gordon Crovitz, a former publisher of The Wall Street Journal who served on the board of directors of Next Digital, which operated Apple Daily.

“Not only did this put the nail into the coffin of a free press in Hong Kong, but it also took the property of its shareholders including Jimmy Lai, without any trial, conviction or any involvement of a court.”

“Ever since the Magna Carta more than 800 years ago, it’s been a basic test of a legal system that courts must be involved if there is a taking of life or property. The taking of Apple Daily put every company doing business in Hong Kong on notice that they no longer have this minimal protection of a rule of law.”

Maybe Jimmy will get his property back after the authorities are through. But even if he does, it will worth be a fraction of what it was when the government took it from him. Who needs censorship when you can take a newspaper from its owner and drive it out of business altogether?

In doing this to Jimmy Lai and Apple Daily, Hong Kong changed from a model of property rights and press freedom to a place where the law means whatever its leaders want it to mean. In other words, just another Chinese city.