Apple Daily is running low on funds to print Hong Kong newspaper: Source

Executives are now examining the practicalities of keeping the newspaper running. PHOTO: AFP

HONG KONG (BLOOMBERG) - Hong Kong's pro-democracy Apple Daily newspaper has enough cash on hand to continue operating as normal for only a couple of weeks, according to a person familiar with the matter, after the authorities used a sweeping national security law to freeze company assets and arrest top editors and executives.

To continue print operations and pay staff, the quarter-century-old tabloid is planning on seeking relief through the courts and is also looking to use its Taiwan operation to manage digital donations through and PayPal, said the person, who asked not to be named due to the sensitivity of a police investigation into the company.

Executives are now examining the practicalities of keeping the newspaper running, including checking supplies of ink and paper in its warehouse, the person said.

It is unclear how the newspaper can pay staff and even whether regular suppliers and vendors will continue doing business with it, the person added, after local news outlet HK01 reported that the authorities warned more than a half dozen banks not to deal with the company's bank accounts.

The HK$18 million (S$3.12 million) in Apple Daily assets frozen by the police are only a small part of parent company Next Digital's HK$521.4 million in cash as at end-March, according to an exchange filing.

But, the person said, it is uncertain if the newspaper can access that cash given the various court orders and warnings to financial institutions to avoid handling accounts linked to alleged national security violations.

If Apple Daily's print newspaper operation is shut down, the media outlet could continue publishing digitally from Taiwan while potentially paying journalist salaries via crowdfunding, the person said.

The police have charged companies connected to Apple Daily, including Apple Daily Printing, with the same national security crimes as the individuals arrested this week.

Some staffers are concerned about getting paid and are planning to leave for other jobs after the raid on Thursday (June 17), according to three reporters who asked not to be identified.

They are also worried that companies or media outlets will not hire anyone who worked at Apple Daily.

Representatives from Apple Daily and Next Digital did not immediately reply to a request for comment.

Roughly 500 police officers on Thursday descended on the headquarters of Apple Daily, which is owned by the now-jailed democracy activist and Next Digital founder Jimmy Lai.

The police searched the company's offices, barred journalists from their desks and eventually carted away nearly 40 computers belonging to them, the paper said.

The police searched the headquarters of Apple Daily on June 17, 2021. PHOTO: AFP

A Hong Kong court on Saturday denied bail to editor-in-chief Ryan Law and Cheung Kim-hung, the newspaper's publisher and chief executive of Next Digital. The others arrested included chief operating officer Royston Chow and Apple Daily deputy editors Chan Pui-man and Cheung Chi-wai.

The city's security bureau had earlier frozen some of Lai's assets and sent letters to some of his bankers, threatening them with years in jail if they deal with any of his accounts in Hong Kong.

"The government always has ways to freeze all of its assets and that will cause a lot of problems for paying salaries and cash flows," said Mr Law Ka-chung, an Apple Daily columnist who was previously the chief economist and strategist at the Bank of Communications Hong Kong.

"Companies which do business with Next Digital may also ask for payments immediately."

The police said Apple Daily published articles that violate the security law but they have not disclosed details about the articles in question, prompting confusion about what would amount to illegal journalism.

It was the first time the national security law - which bars subversion, secession, terrorism and foreign collusion - was used to arrest journalists, though Hong Kong Secretary for Security John Lee said they were not targeting "normal journalistic work".

Still, with the authorities investigating Apple Daily and warning others to stay away from the paper, it was not clear how long it could survive.

Mr Lee warned Hong Kongers to distance themselves from the suspects or "you will pay a hefty price", and the Communist Party-backed Global Times newspaper ran an article on Thursday speculating that a total shutdown of Apple Daily cannot be ruled out.

"Convenience store managers and operators should seriously consider whether they should still shelve the paper for sale - they should seriously seek legal advice on that point," said Mr Lawrence Ma, barrister and chairman of the Hong Kong Legal Exchange Foundation who is also a provincial representative of the Chinese government's political advisory body.

"They might potentially be exposing themselves to liability for potentially being accomplices to aiding and abetting an offence."

The Apple Daily arrests generated criticism from the United States and Japan, as well as human rights groups and press freedom advocates. The move marked an escalation by China, which warned journalists that press freedom was not a "shield" and that their "professional status" would not protect them if they violated the national security law.

Human Rights Watch called the Apple Daily arrests "a new low in a bottomless assault on press freedom", while Amnesty International said: "Hong Kong authorities are ramping up their crackdown on press freedom and using the pretext of 'national security' to justify it."

A woman buys a copy of the Apple Daily newspaper in Hong Kong on June 18, 2021. PHOTO: EPA-EFE

In a statement, the Foreign Correspondents' Club, Hong Kong, also said it was "concerned that this latest action will serve to intimidate independent media in Hong Kong and will cast a chill over the free press", which is guaranteed under the city's mini-Constitution, the Basic Law.

China's Foreign Ministry office in Hong Kong hit back, saying "external forces" had "distorted the truth, smearing Hong Kong's press freedom and even spreading rumor about so-called chilling effects".

"But it has only laid bare their ulterior motive to disrupt the rule of law in Hong Kong on the pretext of press freedom, in a bid to obstruct the HKSAR Government's law-based governance and undermine Hong Kong's prosperity and stability," it said, using the city's official name, the Hong Kong Special Administrative Region.

"Such attempts are doomed to fail."

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