Hong Kong Secretary for Security John Lee (李家超) this month sent letters to media tycoon Jimmy Lai (黎智英) and branches of HSBC and Citibank threatening up to seven years in jail for any dealings with the billionaire’s accounts in the territory, documents showed.
The letters, signed by Lee, were sent to Lai after Hong Kong authorities announced the freezing of his majority stake in publisher Next Digital and local accounts of three companies owned by him under Hong Kong’s National Security Law.
One of Lai’s financial advisers said that while the amount of funds in the accounts was relatively small, they represented the Hong Kong management end of a global network of banking relationships covering his private wealth.
Three senior private bankers and three corporate lawyers — independent from Lai’s accounts — said the action extended the tightening national security apparatus into elite tiers of the banking system for the first time, exposing risks for clients and top financial managers in Hong Kong.
The advisers are seeking guidance from bankers and lawyers on how to challenge the freeze, and its effects on offshore holdings and banking relationships managed through Hong Kong.
Lee’s action is also fueling concern about the broader investment climate in Hong Kong given the potential reach of the security legislation, which Beijing imposed on the territory in June last year, lawyers, bankers and diplomats say.
The moves could imperil any attempt by the democracy advocate to move offshore assets to prop up Next’s troubled Apple Daily, a staunch government critic, the financial adviser said.
Shares in Next Digital rose as much as 330 percent as they resumed trading yesterday after authorities last week froze Lai’s 71.26 percent stake, then worth US$45 million.
Lai has emerged as one of the highest profile targets of the legislation and is facing three national security charges, including allegedly colluding with a foreign country.
The letter to Lai, sent to him at Hong Kong’s high-security Stanley Prison, threatens up to seven years in jail and an unspecified fine for any dealing in the named assets, including disposal or conversion, using them as collateral or transferring them in or out of Hong Kong.
The letter to Lai lists seven Hong Kong accounts that are linked to three companies registered in the British Virgin Islands.
Lai could not be reached for comment.
Described as “Notice No. 1,” the letter states that the action is taken under the “implementation rules” of Article 43 of the law, which allows for the seizure or freezing of property “used or intended to be used” for the commission of an offense.
The letters also acknowledge the right of Lai and the banks to challenge the notice, which expires in May 2023, in court.
The same language was used in letters to HSBC and Citibank, according to the documents.
The letter to Lai specified that he would be held liable if he dealt with the assets “except under the authority of a license” granted by Lee.
The letters to the two banks did not make clear which employees in the bank would be held liable.
A Hong Kong-based spokesperson for Citibank said the bank did not comment on individual client accounts.
“Citi is required to comply with all applicable laws and regulations in markets where we operate,” the spokesperson said.
A spokeswoman at HSBC in Hong Kong declined to comment.
An account in OCBC Wing Hang Bank is also listed in the letter sent to Lai, but it is not known if that bank received a similar notice. OCBC Wing Hang declined to comment.
Lai said in May last year that, given the pressure building on him, the bulk of his personal wealth was offshore.
His advisers said it is spread across Asia and North America, including property in Taiwan, hotels in Canada and tens of millions in US stocks.
“We are certain they are determined to choke Apple [Daily], and even without trying to seize assets offshore, they are making it difficult to move that money back into Hong Kong,” one adviser said.
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