Tycoon Jimmy Lai was found guilty on Tuesday of two counts of fraud after a court ruled that he concealed the fact he was operating a consultancy from the headquarters of his Next Digital media empire from the landlord, in breach of a favourable lease.

District Court Judge Stanley Chan said Lai's actions in allowing Dico Consultants to operate from the building on the Tseung Kwan O industrial estate went beyond a mere civil breach of the rental contract with landlord the Science & Technology Parks Corporation.

The lease from the government-owned corporation was provided for the specific purposes of printing and publishing. Dico operated there for two periods, between 1998 and 2015, then from 2016 to 2020.

The judge rejected an argument from Lai's counsel that the breach did not represent a criminal offence, using as a parallel a hypothetical case in which a civil servant could be charged with fraud if he concealed the fact that he had been bankrupt when applying for a loan.

Chan also rejected Lai's argument that Dico took up only a small space in the headquarters and that its presence did not change the overall use of the building. The judge also noted that Dico was the only company operating in the building without a licence from the landlord, saying Lai had a responsibility to seek a permit from the landlord no matter how little space it took up.

He said he accepted that Lai was a smart businessman who managed numerous companies, but said that did not mean he could shrug off his responsibilities.

Chan also noted that while Dico Consultants had provided support for the operations of Next Digital, it had mainly handled personal affairs for Lai and his family members.

A former executive of Next Digital, Wong Wai-keung, was convicted of one fraud count over the same offence. They will be sentenced at a later date.

Lai is serving a 20-month jail term on unauthorised assembly charges.