HSBC freezes accounts of Next Digital top management after their arrests

Published (HKT): 2020.08.28 05:42

HSBC has frozen the bank accounts of Next Digital top management following their arrests in Hong Kong earlier this month over national security, fraud and other alleged offenses.

Cheung Kim-hung, chief executive of the company, told Apple Daily that his HSBC personal account had been blocked from allowing money withdrawals and transfers, but his credit card was still available.

“The bank did not notify me. I found out that certain functions were not usable when I used my account,” he said.

Cheung believed the functions were locked after he was arrested along with other top management on Aug. 10 over suspicions of conspiracy to defraud. The other detainees were also facing the same banking problems, Cheung said, adding that his lawyer was in contact with HSBC to understand the situation.

Next Digital is the publisher of Hong Kong newspaper Apple Daily. The police arrested five senior executives in the operation, including Next Digital founder Jimmy Lai, who was also suspected of collusion with foreign forces under the city’s new national security law. The legislation covers acts of secession, subversion and terrorism as well.

United States Secretary of State Mike Pompeo on Wednesday night responded to the HSBC moves, claiming the bank still maintained banking relationships with sanctioned government officials while preventing Hong Kong-based media executives from accessing their credit cards and personal bank accounts.

Mark Simon, an assistant to Lai, told Reuters that although Next Digital’s business account at HSBC remained open, his boss’ personal and private business accounts were frozen. So were Simon’s own personal and credit card accounts. But the bank was still taking loan and credit card payments from the frozen accounts, he said. Simon, believed to be overseas, is also wanted by the Hong Kong police.

A spokesperson for London-based HSBC declined to answer Reuters’ queries on Pompeo’s remarks or the allegations made by Next Digital.

At the United Kingdom’s Foreign & Commonwealth Office, a spokesperson told Reuters: “We are in close contact with a wide range of businesses in Hong Kong and are working with them on the impact of the national security legislation and related developments.”

An unidentified compliance source told Apple Daily that the bank might have frozen the accounts because of crimes related to terrorism under the national security law. Although four of the five company executives were not arrested under the law, their partnership with Lai might prompt the bank to freeze their accounts after considering the risks, but it would be the bank’s individual decision, the source said.

The stock price of HSBC (005) ended down 1.9% at HK$33.30 on Thursday.

Separately, the police met with top banking management at a session arranged by Hong Kong’s de facto central bank to answer questions that the industry might face in daily operations, given the police was the law enforcement agency for the national security legislation.

Representatives from the Hong Kong Association of Banks attended. The Hong Kong Monetary Authority told Apple Daily that the meeting was helpful in deepening the industry’s understanding of the law and that communication between both sides would continue to take place.

The authority previously said that U.S. sanctions imposed on 11 Hong Kong and mainland Chinese officials had no legal power in the city. It reminded banks to carefully assess all risks involved and try to treat customers fairly.

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