Lai bankers warned of jail for dealings

Top News | Reuters and Sophie Hui 28 May 2021

Security chief John Lee Ka-chiu has sent letters to Jimmy Lai Chee-ying and branches of HSBC and Citibank threatening up to seven years' jail for any dealings with the media tycoon's accounts in the city.

The letters were sent this month after authorities announced the freezing of Lai's majority stake in publisher Next Digital and local accounts of three companies owned by him under the new national security law.

Lee said he served written notices to companies and institutions regarding properties related to offenses under the security law.

"I am exercising my power because Lai has been charged with two offenses of collusion with other countries or external forces to endanger national security," he said. "It's my duty to specify in my notice to the relevant parties what will be the consequences if they fail to comply with my direction."

Lee added: "Normal businessmen will go about their duties and have nothing to do with endangering national security and we should not associate the two matters."

One of Lai's financial advisers said 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 impact on offshore holdings.

The moves could imperil any attempt by Lai, 73, to move offshore assets back home to prop up Next's troubled Apple Daily newspaper, Lai's financial adviser said.

The letter to Lai, sent to him at the high-security Stanley Prison, threatens up to seven years' 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.

It lists seven Hong Kong accounts that are linked to three companies registered in the British Virgin Islands.

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. The letters to the two banks did not make clear which employees would be held liable.

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.

A Citibank spokesperson said it is "required to comply with all applicable laws and regulations in markets where we operate." An HSBC spokeswoman 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.

Lai has said that, given the pressure building on him, the bulk of his personal wealth was offshore.

His advisers say this is spread across Asia and North America, including property in Taiwan, hotels in Canada and tens of millions in US stocks.

Lai is serving a 14-month prison sentence for taking part in unauthorized assemblies in 2019.

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