Apple Daily did not violate lease agreement, court hears as Jimmy Lai seeks to overturn fraud conviction
Hong Kong Free Press
Apple Daily’s lease did not require pro-democracy media mogul Jimmy Lai to declare the operations of a consultancy firm at the newspaper’s premises, Hong Kong’s appeals court has heard as the tycoon sought to overturn a fraud conviction.
Lai appeared before judges Jeremy Poon, Anthea Pang, and Derek Pang at the Court of Appeal on Tuesday in a bid to launch an appeal against his conviction and sentence for a fraud offence.
In December 2022, Lai was sentenced to five years and nine months in jail after being found guilty of fraud. The mogul breached the terms of lease of the newspaper’s headquarters by concealing the operation of a consultancy firm in the building, the court ruled.
He was said to have hid the fact that Dico Consultants Limited (Dico) operated out of Apple Daily’s offices at the Tseung Kwan O Industrial Estate from April 1, 1998, to May 19, 2020.
Judge Stanley Chan ruled that Lai was aware of the need to apply for a license from the Hong Kong Science and Technology Parks Corporation (HKSTP) – which runs the estate – to allow Dico to operate at Apple Daily’s offices.
The prosecution at trial argued that Dico had violated the lease agreement by conducting business other than for the purpose of printing and publishing.
As laid out in the newspaper’s lease with the quasi-government science park, Apple Daily would carry out a “specified purpose” at the premises — printing and publishing newspapers or magazines — failing which it would have to bear a duty to disclose, the prosecution said.
Separately, Lai is also facing a national security trial in which he is accused of taking part in a “conspiracy to collude with foreign forces” under the security legislation, and also for conspiring to publish “seditious” materials under a colonial-era law. The trial has been underway for over 100 days.
Dico supported Apple Daily
Representing Lai, Senior Counsel Derek Chan on Monday submitted that while Dico, which Lai owned, had been handling the tycoon’s private affairs, it also supported the publishing and printing of newspapers, “at the very least.”
Noting that Dico was described during the trial as working “odd jobs” for Lai, Chan said: “I wouldn’t disagree with that, but [Lai] himself is intimately involved in the news business.”
At the starting date of the charge period, April 1, 1998, Dico was a 49 per cent shareholder of Apple Daily. Dico was also linked to Next Animation, the production studio that created animations for Apple Daily’s online news reports.
Chan also added that the 600 square feet that Dico took up amounted to 0.16 per cent of the Apple Daily office, saying: “99.84 [per cent] is used for the printing of newspapers. Does it render the representation false in a criminal sense?”
Senior Counsel Maggie Wong, representing Wong Wai-keung, who was the administrative director of Apple Daily’s parent company Next Digital and also sentenced in the case, said Dico provided supporting services to the newspaper’s animation arm, including accounting, secretarial, legal, human resources, and general administrative services.
Charge ‘badly constructed’
Senior counsel Chan on Tuesday also said that the fraud charge itself was “badly constructed,” arguing that there was no explicit provision in the lease prohibiting ancillary uses, which meant that Lai had no obligation to disclose Dico’s operations on the premises.
He noted that the fraud charge was based on a user clause in the lease which did not require the entire premises to be used for Apple Daily’s printing or publishing purposes. “How could that duty [to disclose] exist?” he asked.
During the trial, Lai said he did not apply for the license for the consultancy firm to move into the paper’s premises because he “must have thought that Dico did not meet the licensing conditions.”
According to a clause in the lease agreement read out in court on Tuesday, only an “associate company” or “related company” could apply for the license, of which Dico was neither.
The licensing regime was the basis for the duty of disclosure, the prosecution argued, saying that intended occupation of the premises by any company would have to be subject to the HKSTP’s approval.
The prosecution added that if the licensing regime was not applicable to the lessee, an “alienation clause” in the lease – which regulates whether third parties could enter the premises – would still have been violated.
The leave to appeal hearing continued on Thursday.
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