Business Is Far From Usual in Hong Kong
By L. Gordon Crovitz and Mark L. Clifford, Nov. 15, 2022, WSJ

Hong Kong leaders would like the world to think the financial hub is back to normal as it reopens for international business. At a conference this month of more than 200 of the world’s top bankers, John Lee, Hong Kong’s chief executive, reassured
attendees that “the rule of law is sacrosanct.” “Fundamental rights and freedoms, including freedom of speech, of the press, of assembly, are enshrined in and protected by the Basic Law,” Mr. Lee said, referring to China’s guarantee of a large
degree of autonomy to Hong Kong. But Beijing’s 2020 National Security Law—also called the NSL—has done the opposite, allowing the Chinese Communist Party to stomp its boot on Hong Kong’s free society and markets.

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

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

That the government came after Mr. Lai’s business is no accident. Apple Daily’s reporters and opinion writers often detailed Beijing’s encroachments on Hong Kong’s freedoms and its violation of the “one country, two systems” arrangement
Beijing promised Hong Kong when it was returned to China from the British in 1997.

The NSL’s terms are dangerously broad, referencing crimes of “secession,” “subversion” and “collusion with foreign forces.” In 2021 Mr. Lee, then secretary for security, invoked the NSL to accuse Apple Daily of endangering national security
and declared 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 journalists’ salaries, forcing it to close Apple Daily. The government has appointed a “special
inspector” to determine the cause of Next Digital’s demise. It is no great mystery what happens to a company when it is prohibited 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, accused of collusion with foreign forces and conspiracy to publish a “seditious publication” for their journalism. Mr. Lai
has been in jail since December 2020 and the others since the summer of 2021.

After these arrests, the company’s accounting firm and insurers stopped working with us out of fear, as did the corporate staff responsible for the regulatory compliance duties of a publicly traded company. We—along with the remaining directors—
resigned in September 2021 to enable an orderly liquidation. As we wrote in our resignation statement to the Stock Exchange of Hong Kong, the NSL forced the company out of business despite “no trials and no convictions.” The stock exchange, likely
driven by fear, didn’t object to the use of government diktat to force Next Digital into liquidation, costing its shareholders their equity.

Next Digital’s fate should be a warning to all Hong Kong businesses working under the shadow of the NSL. The law’s vague crimes could apply to anyone who poses a risk to the Chinese Communist Party’s conception of national security. Most vulnerable
are the approximately 1,260 American companies with offices in Hong Kong. From Beijing’s expansive point of view, American executives could be guilty of “collusion” by complying with any of the growing list of U.S. sanctions against China.

Mr. Lai’s trial on national-security charges is scheduled to begin next month—two years after he was first jailed and more than a year after his Apple Daily was forced to close. What the Communist Party did to corrupt Hong Kong’s rule of law and
subsequently to 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 publisher of the Journal. Mr. Clifford is president of the Committee for Freedom in Hong Kong Foundation. Both were independent nonexecutive directors of Next Digital.

https://www.wsj.com/articles/business-is-far-from-usual-in-hong-kong-jimmy-lai-apple-daily-next-digital-china-ccp-national-security-law-trial-11668533197

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