Hong Kong court overturns China critic Jimmy Lai's fraud conviction in rare legal victory

By James Pomfret and Jessie Pang

HONG KONG, Feb 26 (Reuters) - Pro-democracy media tycoon Jimmy Lai's fraud conviction and prison sentence were overturned by a Hong Kong court on Thursday, in a surprise legal decision that comes soon after Lai was jailed for 20 years on a separate national security charge.

Judges Jeremy Poon, Anthea Pang, and Derek Pang said in the judgement that they allowed the appeal from Lai, and another defendant in the case, to proceed, as a lower court judge had "erred".

"The Court of Appeal gave them leave to appeal against their conviction, allowed their appeals, quashed the convictions and set aside the sentences," the judges wrote in a press summary of their judgement.

Even with the quashing of the fraud conviction and sentence, Lai will still remain imprisoned for 20 years in a separate national security case over two counts of conspiracy to collude with foreign forces and one for publishing seditious materials.

That case has drawn global criticism from rights groups and countries including the U.S. and Britain and served as one of the most high-profile events in a years-long crackdown under a national security law imposed by Beijing after mass pro-democracy protests in 2019.

Thursday's legal victory was a rare one for the prominent China critic who has faced multiple prosecutions in recent years, and described himself in court as a "political prisoner".

Also on Thursday, a court sentenced the father of a wanted pro-democracy activist to eight months in prison under a homegrown national security law after he attempted to terminate her insurance policy and withdraw funds.

'THE JUDGE ERRED'

Lai was sentenced in December 2022 to five years and nine months in jail after being found guilty of breaching the lease terms of Apple Daily’s headquarters by concealing the operation of a private company, Dico Consultants Ltd, in the building.

Another Next Digital executive, Wong Wai-keung, 61, was found guilty of fraud and jailed for 21 months.

"In conclusion, we hold that Apple Daily Printing did not owe a duty to the Corporation to disclose its breach of the user restrictions or the non-alienation clauses occasioned by Dico’s occupation and use of the said Premises. With respect, the Judge erred," the judgement read.

"His reasoning in concluding that the applicants were liable for the concealment as the prosecution contended is unsupportable. He erred in making those findings."

In the earlier ruling, Judge Stanley Chan wrote that Lai was aware of the need to apply for a license from the Hong Kong Industrial Estates Corporation for Dico to operate at the headquarters and had "acted under the protective umbrella of a media organization".

During the appeal hearing, Lai’s lawyer Derek Chan said that Dico, a company owned by Lai, supported the publishing and printing of the newspapers apart from handling the tycoon’s private affairs.

He noted that at the start of the charge period on April  1, 1998, Dico held a 49% stake in Apple Daily and was linked to Next Animation, the studio that produced animations for the newspaper’s online news reports.

It wasn't immediately clear if the prosecution would appeal.

DETERIORATING HEALTH

Lai's son and daughter have warned their 78-year-old father might die in prison given his deteriorating health from over five years in solitary confinement. Lai has suffered from retinal vein occlusion in his right eye, high blood pressure, heart palpitations and progressive hearing loss.

Rights groups and numerous democratic countries have called for Lai's release. U.S. President Donald Trump raised the matter with his Chinese counterpart, Xi Jinping, and is expected to follow up again in a closely anticipated visit to Beijingat the end of March.

(Reporting by Jessie Pang and James Pomfret; Editing by Anne Marie Roantree, Jacqueline Wong and Saad Sayeed)