Allegations Against BDO by Western Media Executives

By James Pomfret and Greg Torode

LONDON/HONG KONG (Reuters) – Two Western media executives with extensive experience in Hong Kong have accused global accounting firm BDO of violating international regulations by assisting the city’s government in liquidating the company run by jailed tycoon Jimmy Lai.

The U.S.-based directors of Lai’s Next Digital Ltd filed a complaint with the British government in December, alleging BDO acted as a quasi-governmental agency for the Hong Kong government without judicial oversight to shut down Lai’s media enterprise, including the renowned Apple Daily newspaper.

Gordon Crovitz, a former publisher of the Wall Street Journal, and Mark Clifford, a former editor-in-chief of the South China Morning Post, detailed these allegations in a 32-page complaint reviewed by Reuters.

Lai, an outspoken critic of China’s Communist Party, is currently on trial for national security charges which carry a potential life sentence. He was the founder and controlling shareholder of Next Digital, which employed over 2,000 people before being shuttered in June 2021 following a mass police raid and asset freeze.

“The prosecution of Jimmy Lai and the forced closure of Apple Daily are a sad sign of what has happened in Hong Kong, indicating the decline of the free press and the misuse of power to liquidate a listed company without due process,” Crovitz told Reuters.

Western governments, including Britain and the U.S., have condemned Lai’s prosecution as politically motivated and are demanding his immediate release. The BDO case underscores the political risks businesses face in Hong Kong under Beijing’s national security laws, implemented in 2020 following pro-democracy protests.

Allegations of Improper Conduct

Crovitz and Clifford allege that Clement Chan, a managing director of BDO’s Hong Kong branch, was appointed “financial inspector” by the Hong Kong government in July 2021, breaching OECD rules. According to the complaint, Chan seized documents from a law firm and forced Next Digital directors to participate in recorded interviews under threat of prosecution, all without judicial oversight.

Once a complaint is made, all parties are given the opportunity to respond before the British government decides on arbitration. The findings will be published in a report.

Britain’s Department of Business and Trade could not comment on individual cases but noted that decisions are published on its website when appropriate.

In response to inquiries, Chan stated that he was never appointed as inspector of Next Digital but had a personal appointment under the Companies Ordinance. He insisted that his role was to investigate, not to liquidate the company, and indicated that he could not comment further due to the ongoing investigation.

A Hong Kong government representative clarified that BDO was not appointed as the Inspector of Next Digital Limited.

BDO International emphasized confidentiality under OECD rules and did not answer whether it received government payments for assisting Chan.

Geopolitical Implications

Under OECD guidelines, multinational enterprises must mitigate human rights impacts linked to their operations. These guidelines, though non-binding, require countries, including Britain but not China or Hong Kong, to support their implementation.

Clement Chan’s interim report justified the liquidation of Next Digital. Hong Kong’s Financial Secretary stated it was in the public interest to wind up the company based on this report.

Clement Chan’s contracts have been renewed since 2021, most recently in July.

BDO faces reputational risks, highlighted by Dutch advocacy research group SOMO, which claims this case may be among the first against a global accounting firm for enabling an authoritarian regime. SOMO’s advocacy director, Joseph Wilde-Ramsing, remarked on the unique geographical tension surrounding the case and warned of potential reputational costs impacting investor confidence.

The global legal firm Mayer Brown also faced backlash over its involvement related to the removal of a Tiananmen Square memorial in 2021.