Acton Institute Powerblog

Next Digital headquarters raided by Hong Kong government

(Image credit: Associated Press)

Media company Next Digital has had its financial records seized in Hong Kong’s latest move to stifle an independent press and pro-democracy activism […]

Read More…

Clement Chan Kam-wing, an inspector appointed by the Hong Kong government, raided the headquarters of Next Digital media company in a search and seizure of financial records on Sept. 28 as part of an investigation into the company.

The raid came a day after the Hong Kong Eastern Magistrate authorized a search warrant of Next Digital on suspicion of fraudulent activities.

The special inspector was appointed in response to allegations that Next Digital repaid HK$150 million loan to its founder Jimmy Lai on April 1, much earlier than its due date. This premature reimbursement led Hong Kong officials to suspect fraudulent activity.

The search warrant was necessary, as every member of Next Digital’s management team and board of directors has either resigned amid pressure from police or been arrested under Hong Kong’s ever-restrictive National Security Law (NSL). None of Next Digital’s senior employees were left to hand over its financial records.

The investigation is expected to last six months, according to South China Morning Post (SCMP). Chan is the managing director for assurance with a Hong Kong accounting firm and has over 30 years of experience. He is the first inspector to be appointed by the city’s government in two decades.

Apple Daily, a subsidiary of Next Digital, still has a satellite location in Taiwan, where it is published electronically. Several parties are interested in buying out its operations, according to SCMP.

This is not the first time Next Digital Media Company, founded by pro-democracy activist and long-time Acton friend Jimmy Lai, has been confronted by Hong Kong authorities and strict legislation under the NSL. Since July 16, trading in stock from Next Digital has been banned. On June 17, Hong Kong authorities raided Apple Daily’s headquarters, freezing HK$18 million (US$2.3 million) of their assets and forcing the pro-democracy news service to print their final edition on June 24.

Jimmy Lai was arrested for his participation in the 2019 Hong Kong pro-democracy protests, violating the NSL, which bans acts the government deems as subversion, secession, or terrorism. Such violations carry up to a life’s sentence in prison. Lai was charged and is currently serving a 20-month prison sentence. He stands trial in November to contest incitement charges.

In addition to Lai, eight other Next Digital senior editors and executives have been arrested under the NSL since June. Of the eight, publisher Cheung Kim-hung and editor-in-chief Ryan Law Wai-kwong were charged for publishing more than 30 articles that qualified as calling for foreign sanctions against Hong Kong and Chinese officials.

Four directors of Next Digital stepped down on Sept. 5, urging the Hong Kong government to allow Next Digital to be liquidated so employees and creditors could be paid.

Under Hong Kong’s Companies Ordinance, an inspector has permission to apply for a court order to seize books and financial records and call for witnesses for information and statements from any company under investigation.

Next Digital’s stock presence has raised some legal concerns as well. The same day as Chan’s appointment, Hong Kong’s market regulator, the Securities and Futures Commission, announced its investigation of Next Digital after a rapid change in its share price.

The fraud accusations and the inspector’s subsequent search of Next Digital is Hong Kong’s latest move in restricting the pro-democracy media company’s operation and legacy. The city moves swiftly to stifle any political opposition or hint of dissent, severely restricting freedom of speech and assembly.

As the future of Next Digital hangs in the balance by Chan’s continued investigation, so too does Hong Kong residents’ access to an independent press and the reality of a free, democratic society.

Kara Wheeler

Kara Wheeler is a member of the Acton Institute’s 2021 Emerging Leaders class. She is a senior at Aquinas College majoring in in English and Journalism. She loves to write, partake in any sport she can, and can be found either on the water or in downtown Grand Rapids.