Activist-investor David Webb says prosecutors would need to argue in court how jailed tycoon Jimmy Lai - the founder of the pro-democracy Apple Daily newspaper - benefited financially from alleged national security offences, after his shares in the paper's owner, Next Digital, and other assets were frozen last Friday under the national security law (NSL).
"If I were Mr Lai, I'd be wanting to understand what exactly the potential claim on those assets is because, although the NSL rules do allow assets to be frozen by the Secretary of Security, they also allow the defendant to seek a revocation of that order in the court," said Webb, who is a shareholder in Next Digital.
"The obvious question to the court would be, 'If you have frozen my assets, then you must think you have a valid claim. What is that claim?' because he has been losing money on that business for quite a long time and propping it up with his own cash and so how is it, exactly, that he has benefited from the alleged contravention of the national security law?" Webb said.
"I think that would be something the prosecutor would need to demonstrate."
On Monday, Hong Kong Exchanges and Clearing said it had halted the trading of Next Digital shares at the request of the company. Webb said he no longer held more than five per cent of Next Digital shares. He declined to comment on any holdings below that level.
Speaking about the case on Monday, Security Secretary John Lee rejected allegations that authorities were suppressing press freedom. Lee said he issued the notices because he had reasonable suspicion that such powers needed to be used. He insisted any activity, that endangered national security, would not be tolerated.
Lai is facing three security-related charges, and is already serving a 14-month sentence after being convicted of taking part in unauthorised assemblies in August 2019.