As China Hits Jimmy Lai, a Bitter Tabloid Feud May Lead to Jail

(Bloomberg) -- Even as Hong Kong media tycoon Jimmy Lai looks to defend himself against possible charges under China’s national security law, a long-running feud with a rival tabloid may see him end up in jail.

Lai’s trial for “criminal intimidation” in 2017 of a reporter from the Oriental Daily News, a fierce competitor to his flagship Apple Daily, is set for closing arguments on Friday. If convicted, he faces as many as five years in prison. Lai has pleaded not guilty.

The case is the first among at least five faced by Lai, one of Hong Kong’s most influential democracy advocates who has loudly criticized Beijing’s push to clamp down on dissent in the city. After his Aug. 10 arrest under the national security law -- unrelated to the Oriental Daily case -- about 200 police officers searched the headquarters of his media empire, Next Digital Ltd., and seized multiple cartons of documents. Lai said the arrest was based on “trumped up” allegations.

Beijing, meanwhile, denounced him as an “anti-China troublemaker” after the arrest and its media organizations continue to lambaste him. “Apple Daily is not only the political propaganda machine of the opposition and forces that cause chaos in Hong Kong, but it may also be a dangerous political organization,” the People’s Daily, the Communist Party’s official mouthpiece in Beijing, said in an editorial on Wednesday.

The future of Apple Daily, founded by Lai in 1995, remains uncertain despite its popularity and statements that Lai’s arrest won’t hurt its operations. Its demise would almost certainly benefit Oriental Daily, a Chinese-language newspaper founded in 1969, which has significant coverage of entertainment and crime. The two are among Hong Kong’s publications with highest circulation.

Next Digital has made back-up arrangements to keep publishing Apple Daily in the event that Lai goes to prison and his assets are seized under the national security law, two people with knowledge of the company’s operations said, asking not to be identified citing sensitivity of the matter. Executives of the media firm have had their bank and credit-card accounts suspended, the South China Morning Post reported Thursday.

“We will still stand up, go on with our business, and keep going, keep fighting,” Lai said in an Apple Daily live feed on Aug. 18. “It’s our job to go on, our duty to go on.” Representatives of Next haven’t responded to a request for comment.

No Impact

In a statement to the Hong Kong stock exchange on Aug. 10, Next Digital said the arrests of Lai and Next’s two other top executives “are not expected to have any material adverse impact” on its daily operations or financial position. Shares of the company surged more than 1,100% immediately afterward as democracy backers rushed to support him. The day after Lai was taken in, the newspaper announced it had printed 430,000 additional copies as people lined up starting at 2 a.m. to purchase them.

The rivalry between the two newspapers goes back years as they battled for readers. Apple Daily has championed the cause of pro-democracy protesters and has also unearthed scandals involving some of China’s most powerful leaders. While some say Oriental Daily focused on protester violence during last year’s demonstrations, the publication said in a statement through its lawyers that its coverage was “fair and neutral.”

The son of the paper’s founder was once a delegate to the Chinese People’s Political Consultative Conference, the nation’s top political advisory body in Beijing. He did not participate in any editorial decisions, Oriental Daily said.

Funding Movement

Oriental Daily was among a few Hong Kong papers to step up criticism of Lai in 2014, accusing him of funding the pro-democracy movement. It even published an “obituary” of a man with the same nickname, but it said that such obituaries are merely advertisements and don’t reflect the views of the paper.

It sent reporters to track Lai’s movements, leading to the 2017 incident that sparked this week’s court proceedings. A video filmed by an Oriental Daily employee showed Lai getting into a fracas with one of the reporters at an annual vigil commemorating the Tiananmen Square massacre three years ago.

In the incident that’s at the center of the present trial, Lai is heard saying, “I will definitely mess with you, I’m telling you now,” pointing his finger and asking him to back off before unleashing a well-known Cantonese curse involving the reporter’s mother. The Oriental Daily said Lai is a public figure and the reporters were only discharging their duties. A representative of Lai said he couldn’t comment on the case.

Little Support

The Hong Kong police didn’t charge Lai with criminal intimidation until February this year. Apple Daily reported that Secretary of Justice Teresa Cheng -- one of 11 individuals sanctioned this month by the U.S. for undermining Hong Kong’s freedoms -- recommended prosecution in September 2019 even though it had no support among legal experts in her department. The Department of Justice declined to comment.

It’s “very unusual” for the department to take so long in deciding to prosecute for crimes like criminal intimidation, said Arthur Lee, a barrister and consultant at the Chinese University of Hong Kong. He added that there could be legitimate reasons, such as taking time for legal advice if the department thinks the case is serious enough.

After Lai’s arrest twice earlier this year on protest-related charges, Hong Kong Police Commissioner Chris Tang said in May he felt Apple Daily was targeting its investigations at alleged wrongdoing by police officials, including himself. At the same time, Tang announced that police were investigating a media group on suspicion of fraud and violations of land lease following a complaint, referring to Lai’s Next group. The company’s landlord didn’t find any breach of terms, Next said in a filing.

Resolute Action

In the Aug. 10 action, police arrested nine people on suspicion of colluding with a foreign country to endanger national security and conspiring to defraud, the police department said in a statement. Declining to comment further, it said a probe is underway and added all investigations will be conducted in a “thorough and impartial manner” and will take “resolute enforcement action in accordance with the law.”

Next hasn’t released more information about a jump in digital subscriptions beyond an additional 30,000 obtained from a direct appeal by Lai in March, in which it said its 600,000 subscribers remain below the 900,000 needed to break even. The company, which is 71% owned by Lai, reported a loss of HK$415 million ($54 million) for the year that ended in March.

In the protest-related cases, Lai has been charged with participating in and organizing unauthorized assembly and inciting others to join, violations that carry a maximum sentence of five years in prison.

For many in Hong Kong, China’s statements attacking Lai suggest it’s only a matter of time before he winds up in jail and his newspaper is shut down.

“A lot of people see the charges against Jimmy Lai as political in the sense that he and his media group have, over the years, been seen as one of the most vocal voices against the Hong Kong and the Chinese governments,” said Chris Yeung, chairman of the Hong Kong Journalists Association. “The government is trying to further weaken the power and role of the media.”

©2020 Bloomberg L.P.