Two Western media executives have filed a formal complaint with the UK government against global accounting firm BDO, accusing it of violating international standards by assisting the Hong Kong government in liquidating the media company owned by imprisoned tycoon Jimmy Lai. This legal challenge underscores the growing scrutiny of business practices under China’s national security laws in Hong Kong.
Gordon Crovitz, a former publisher of the Wall Street Journal, and Mark Clifford, former editor-in-chief of Hong Kong’s South China Morning Post, submitted a detailed 32-page complaint in December 2023. They allege that BDO acted beyond its professional remit, essentially functioning as a quasi-governmental entity in the shutdown of Lai’s Next Digital Ltd, which previously operated the influential Apple Daily newspaper.
The complaint accuses BDO of operating without judicial oversight and alleges that Clement Chan, BDO’s Hong Kong managing director, was improperly appointed as a “financial inspector” by the Hong Kong government in July 2021. The executives claim Chan seized documents from a local law firm and pressured Next Digital’s directors to participate in interviews and produce documents under threat of prosecution.
Jimmy Lai, a prominent critic of China’s Communist Party, faces severe national security charges that could lead to a life sentence. His company, which once employed over 2,000 people, was forcibly closed in June 2021 following a police raid and an asset freeze. Lai remains imprisoned on various charges, including unauthorized assembly.
The UK Department of Business and Trade, which handles complaints related to the Organisation for Economic Co-operation and Development (OECD) guidelines, has stated it cannot comment on individual cases at this time. The department will issue a report on the complaint once the review process is complete.
Clement Chan and BDO Hong Kong have responded to the allegations, with Chan clarifying that his role as financial inspector was a personal appointment by Hong Kong’s financial secretary and not an official position held by BDO. Chan contends that his investigation into Next Digital was conducted lawfully and that he cannot comment further while the investigation is ongoing.
The case highlights the potential political and reputational risks for businesses operating in politically charged environments. The OECD guidelines, while non-binding, require multinational enterprises to prevent or mitigate adverse human rights impacts linked to their operations and to conduct thorough human rights due diligence.
The complaint against BDO is notable for its potential impact on the firm’s global reputation, drawing parallels to other instances where multinational corporations have faced backlash for their involvement in politically sensitive issues. Similar scrutiny has affected firms like Mayer Brown, which faced criticism for its work related to the removal of a Tiananmen Square commemoration.
As global regulations and political pressures evolve, BDO’s involvement in this case will likely attract significant attention and could influence how international businesses approach operations in politically unstable regions.