Next Digital Probe Is Necessary, Says Accountant

A Baptist University’s adjunct professor in business said on Thursday that it was appropriate for the government to invoke rarely-used powers under the Companies Ordinance to investigate Next Digital, saying a lot of questions surrounding the financial affairs of the media company remain unanswered.

Speaking on an RTHK programme, Nelson Lam, who is an accountant, said a comprehensive investigation should be done.

Financial Secretary Paul Chan said on Wednesday that Next Digital claimed in May that its liquidity was sufficient for its 18-month operation, but in June, Apple Daily closed down after the government froze HK$18 million in the firm’s bank account.

He added that in April, the company paid off a debt of HK$150 million in advance to its major shareholder Jimmy Lai, saying it was unfair to other creditors.

Lam said the matters should be cleared up in the public interest.

“The company couldn’t pay its staff and its creditors, but money was given to its major shareholder in advance. Some employees might have to seek help from the government and apply for payments from the Protection of Wages on Insolvency Fund,” he said.

Activist investor David Webb said the use of this power – for listed companies such as Next Digital – has been in abeyance since 2003.

That was when the stronger powers of the Securities and Futures Commission came into effect.

The last time the government used the Companies Ordinance to appoint an investigator was over two decades ago in 1999, following the collapse of investment bank Peregrine.