The lead prosecutor in an ongoing fraud case against Hong Kong media tycoon Jimmy Lai has claimed that Lai violated the terms of the lease for Apple Daily’s headquarters by operating a consultancy firm from the newspaper’s offices.
According to the opening statement from Director of Public Prosecutions Maggie Yang presented on Tuesday, Lai and other senior members of staff concealed the alleged violations of the leasing terms from the Hong Kong Science and Technology Parks Corporation (HKSTP) for over 20 years.
Lai, the 74-year-old founder of pro-democracy tabloid Apple Daily, and the former director of administration Wong Wai-keung of Next Digital – the newspaper’s parent company – appeared in front of Judge Stanley Chan at the District Court on Tuesday.
Lai faces two charges of fraud over two periods from April 1, 1998 to December 31, 2015 and from January 1, 2016 to May 19, 2020, while Wong faces one charge for the latter period. Both pleaded not guilty last Wednesday.
They stand accused of concealing the use of parts of Next Digital’s office in Tseung Kwan O Industrial Estate for the operation of Dico Consultants Limited (Dico), together with Next Digital’s former chief operating officer Chow Tat-kuen and “other people.”
Chan ruled in February that Chow’s case would proceed separately and he will next appear in court in July.
According to the prosecution, the lease stated that the office in Tseung Kwan O Industrial Estate had to be used for a “specified purpose.” When Next Digital signed the formal proposal in 1995, the premise was stated to be used for “the publishing and printing of newspaper and magazines” only.
Yang said, however, that Dico primarily provided consultancy and management services which was “completely irrelevant of the specified purpose but closely related to the interests of Lai and his family members.”
Dico provided company secretarial services to 22 local firms, Yang added, of which 11 had Lai as their director and 10 listed his son Lai Yiu-yan as director. It was also responsible for the management of Lai’s personal property and expenditure, including his family home, the prosecution said.
Yang said Lai was familiar with the use restrictions of the rented premises as he was involved in the leasing process and had signed the license applications of Next Digital’s subsidiaries to use the building.
“While clearly understanding the limitation on use of the premises, and having the controlling rights and decision-making power over Apple Daily Publishing Limited and Dico, [Lai] concealed the operation of Dico at Apple Daily’s headquarters and provided false statements to the Science Park and its predecessor,” Yang said, accusing Lai and others of deceiving with intent to defraud.
Citing the estimation by a surveyor, the prosecutor said Dico would have paid between HK$5.93 million to HK$7.69 million for its 646-square-foot office if it had rented it.
The prosecution also estimated that the Science Park could have obtained around HK$110 million from Lai’s media corporation as compensation if it exercised its rights under the lease.
HKSTP was not aware of Dico’s existence at Apple Daily’s headquarters until it received a media enquiry about the consultancy firm’s operations on March 2020, the prosecution said. HKSTP then asked Wong about the situation and sent over staff to inspect the premise.
According to the prosecutor, HKSTP’s enquiry prompted a meeting between Wong, Chow, Mark Simon, an aide to Lai, and Rosa Ho, an internal legal counsellor, during which Simon communicated Lai’s instruction to relocate Dico’s office from the premises.
The government lawyer said Wong was in charge of arranging the new addresses for Dico and issued a “false statement” in April 2020 in response to the enquiry from HKSTP. In it, Wong said “Dico does not occupy and is not operating on any part of the Lot” and “we, Apple Daily Printing Limited, are in full compliance with all terms and conditions of our lease of the Lot.”
The prosecution said Wong was obliged to reveal the relevant facts to HKSTP as he had been in contact with them and dealing with licensing procedures. However, Wong had “concealed the fact that Dico was operating at the premise throughout the period.”
Apple Daily folded last June after Lai and several other members of the publication and Next Digital were charged under Beijing’s sweeping national security legislation. The law criminalised subversion, secession, collusion with foreign forces and terrorist acts, which were broadly defined to include disruption to transport and other infrastructure.
The media tycoon has been remanded in custody since December 2020 and is now serving time in jail for other protest-related cases. He is also facing charges under the colonial-era sedition law.