Throughout the common law world, courts possess wide powers to issue forfeiture orders in criminal cases. Everyone agrees that anything that can be done within legal parameters to take the profit out of crime should be encouraged. If assets associated with offenses can be successfully targeted, it necessarily serves the public interest. The Hong Kong Court of Final Appeal has said a forfeiture order is designed to provide “a deterrent to serious criminal activity, and to protect the revenue” (HKSAR v Wong Hon Sun (2009)).
The courts can issue forfeiture orders against both offenders and other parties. If an order is directed at an offender, it will be punitive in nature. If directed at a third party, its impact will primarily involve deterrence. Whether a case involves national security or another crime, a forfeiture order denies an offender the funding needed to pursue future criminal activity and stymies related activities by their accomplices or agents.
Forfeiture orders can arise in different ways. In some situations, they are mandatory; in others, discretionary. Although they are sometimes triggered by a claimant’s application, they may also depend on administrative action. Whatever the precise status of a forfeiture proceeding, the principle of legality applies. Any governmental acts must be authorized by law, and the relevant law must be clear. The Hong Kong Special Administrative Region is underpinned by the rule of law, and citizens’ rights are scrupulously protected. Although forfeiture proceedings are civil rather than criminal, with a standard of proof on a balance of probabilities rather than beyond a reasonable doubt, the same human rights regime applies in both scenarios.
On April 2, the Department of Justice (DoJ) filed a forfeiture application in the Court of First Instance of the High Court involving Apple Daily founder Jimmy Lai Chee-ying. He was convicted in February of colluding with foreign forces to endanger national security and sedition, and sentenced to 20 years’ imprisonment. The forfeiture application reportedly involves approximately HK$127 million ($16.2 million), which is said to be offense-related, and will be considered by the Court on July 8.
The assets targeted are a mixed bag. They reportedly include credit balances in bank accounts linked to Lai, bank accounts and shares belonging to companies associated with Lai, and money deposited with the court in connection with Lai’s attempts to obtain bail prior to trial. In deciding whether or not any of these assets should be forfeited, the Court will have full regard to any submissions Lai’s legal team may wish to make, as well as to any evidence it may adduce.
However, the legal basis of the forfeiture application could not be clearer (and the forfeiture regime is not dissimilar to that applicable in the United States). The Hong Kong SAR National Security Law (NSL 2020) stipulates that “Proceeds obtained from the commission of an offense under this Law, including financial aid, gains and rewards, and funds and tools used or intended to be used in the commission of the offense, shall be seized and confiscated” (Art 32). The exact criteria to be followed after an application is made are identified in the NSL’s Implementation Rules (Schedule 3).
There is no reason why the HKSAR should not also be able to protect itself against what it perceives as national security threats. However, as befits a city in which the rule of law is paramount, it is the courts that will have the final say
The Rules provide that a forfeiture order may be made only if the Court is satisfied that the property is offense-related and meets strict criteria. The property must: (a) represent, wholly or in part directly or indirectly, “any proceeds arising from an offense endangering national security”; (b) be “intended to be used to finance or otherwise assist the commission of an offense endangering national security”; or (c) have been used to “finance or otherwise assist the commission of an offense endangering national security” (Schedule 3, s.13 (a)).
However, before a court can issue a forfeiture order it must first be satisfied either that the convicted person actually used some of his property to finance or otherwise assist the offense of which he was convicted, or else that there are reasonable grounds to suspect that he intended to use any part of his property to finance or otherwise assist the commission of the offense endangering national security (Schedule 3, s.13A).
In any event, as an additional safeguard, a forfeiture order can only be made where the convicted national security offender has been sentenced to life imprisonment or imprisonment for 10 years or more (as in Lai’s case), and if his property is categorized as “specified property” (meaning property already subject to restriction, whether by means of a freezing notice, a restraint order or a charging order).
At the hearing, it will be incumbent upon the secretary for justice to convince the Court that the assets sought to be forfeited actually belong to Lai and that the various legal requirements are satisfied. Although Lai’s stance is not yet known, he can dispute the claim in various ways. He may, for example, insist that all or some of the property is unrelated to the offenses of which he was convicted and is therefore outside the NSL’s scope. If, moreover, he can show that the forfeiture of all the specified property would be “plainly disproportionate” (as Schedule 3 puts it) to the aim of preventing its use for financing an offense endangering national security, the forfeiture order will be confined to the property actually dedicated to achieving that aim.
After the forfeiture application was filed, a response — as squalid as can be imagined — appeared in The Wall Street Journal (WSJ) (April 16). It was jointly penned by Mark Clifford, previously a director at Next Digital (Lai’s media firm), who now campaigns on Lai’s behalf, and Gordon Crovitz, a former nonexecutive director at Next Digital, another Lai acolyte. Although their piece was replete with slurs and half-truths, they made no reference to the damning evidence presented against Lai at trial (much of it from his own associates), let alone to the legal basis of the DoJ’s application (even though it owed much to the US model). It was crude propaganda, pure and simple, owing nothing to reality and everything to fantasy.
Although, for example, the American Chamber of Commerce in Hong Kong (AmCham) reported in February that Hong Kong retained its long-cherished status as a “corporate home”, and that the overwhelming majority of American multinational corporations had no intention to relocate their businesses away from Hong Kong, the pair told their readers Hong Kong was an “unsafe place for business”.
Their conclusion, moreover, that “Businesses know better than to invest in a place where private assets are seized on the whims of the Chinese Communist Party” flew in the face of AmCham’s unequivocal findings that its members have a robust belief in Hong Kong’s business environment and rule of law (information to which the WSJ’s readers were entitled). It was also misleading, not least because the Court has yet to adjudicate upon the merits of the application. If the WSJ wishes its China coverage to be taken seriously, the least it can do is protect itself by applying elementary quality controls, including an intolerance of politically motivated drivel.
What view the Court ultimately takes of the matter on July 8 is anybody’s guess, but the secretary for justice must consider he is on strong ground. The application will be based on evidence, which Lai, who may give evidence himself (he testified for 52 days at trial), can challenge. It will be open to him to fight the matter every inch of the way, and he is assured of a fair hearing.
Whatever impression the alarmists may give, forfeiture proceedings involving offense-related property are common everywhere. There is no reason why the HKSAR should not also be able to protect itself against what it perceives as national security threats. However, as befits a city in which the rule of law is paramount, it is the courts that will have the final say.
The author is a senior counsel and law professor, and was previously the director of public prosecutions of the Hong Kong Special Administrative Region.
The views do not necessarily reflect those of China Daily.
