Dispatch

A Media Mogul, Alone on the Island

Hong Kong's fiery beacon of the free press, Apple Daily, is under threat from shadowy forces. Can it survive if Beijing wants it dead or quiet?

HONG KONG — When somebody rammed a stolen car into media magnate Jimmy Lai's home last June 19 and neatly arranged an ax and a meat cleaver in front of the battered gate, his reporters weren't cowed. They instantly ran the story on Lai's gaudy, irreverent, and extraordinarily popular Apple Daily website.

Over the next 11 days, Lai's massive Next Media received three further triad-style warnings. On June 26, assailants set fire to bundles of the group's flagship newspaper, the Apple Daily, as they were loaded into a distribution truck. On the morning of June 30, someone threw a meat cleaver at the doorstep of Next Media's headquarters in the southeastern corner of Hong Kong. And late that same night, assailants burned 26,000 copies of the Apple Daily at a distribution center -- workers there were threatened that they would be "chopped" if they didn't flee the scene. In all four cases, the assailants brandished the triads' weapon of choice: a shiny, steel meat cleaver.

And in all four cases, Apple Daily reporters have doggedly taken the lead in probing possible Beijing connections to the attacks against them. Police have not found the attackers or speculated on any motive, despite nearly a year of investigations. Lai's reporters, however, did highlight the appearance of synchronized editorial attacks on their boss in pro-Beijing media, including a front-page editorial in a Communist Party-controlled newspaper on the day of the attack on Lai's home.

Beijing does not like Lai. The founder of the hugely successful clothing brand Giordano, the Guangdong-born Lai became politically active after the 1989 massacre of protesters in Beijing's Tiananmen Square. "It was a very emotional moment," he told the BBC in 2009. "From then on I said, look, I'm going to fight."

Lai is the most powerful critic of the Chinese Communist Party in Hong Kong, if not the world. Next Media now employs more than 4,000 people, according to company executives, and also owns popular entertainment magazines and web portals. His flagship tabloid, Apple Daily, founded in 1995, introduced Hong Kong to an irreverent mix of salacious Fleet Street-style journalism and political activism. Lai brought large-character tabloid headlines, web-cam "scoops" of celebrities backstage, irrelevant animations of breaking domestic and international news stories, and front-page calls for protests. But his biggest cause is what in Hong Kong is called "universal suffrage" -- the right of citizens, not a council, to choose their chief executive.

Whoever wanted to silence Lai and his activism has instead increased public support for his cause and driven traffic to his websites. Just hours after the fourth triad-style attack, on July 1, tens of thousands of people took to the streets calling for genuine democratic elections in 2017. According to internal figures shown to Foreign Policy, traffic to the Hong Kong website has surged to about 20 million page views each day, and that's not including a staggering 10 million daily views of the news and animation videos.

But Lai's dream of universal suffrage for Hong Kong is looking less and less likely -- and the city's famously open and cacophonous media landscape is under threat. Hong Kong's independent-minded journalists are complaining that opinion columns are being tampered with, popular columnists sacked, and news self-censored by tremulous editors. This media crackdown reflects a trend of Beijing tightening its control on Hong Kong. "The Chinese Communist Party's growing subjugation of the Hong Kong executive and its pressure on the Hong Kong media through its 'Liaison Office' is increasingly compromising media pluralism there," Reporters Without Borders said in a February report. Hong Kong has slid to 61 out of 180 countries and territories on the organization's World Press Freedom Index, down from 18 in 2002.

And the challenges keep coming. This year, as the July 1 anniversary of Hong Kong's 1997 handover from Britain to Beijing again approaches, the 66-year-old Lai faces a different kind of threat. Now, two Western financial institutions -- banks nurtured in the laws and freedoms of the British Empire -- appear to be boycotting Lai's Hong Kong media business in service of Beijing.

Until September 2013, HSBC and Standard Chartered were Apple Daily's two biggest financial- sector advertisers. But neither of the London and Hong Kong dual-listed banks has placed any advertisements since then, according to Mark Simon, a senior Next Media executive and managing director of Lai's trust, through which Lai controls his media assets.

How does he know the banks weren't simply conducting a routine rearrangement of advertising? "They've told us, 'Look, we've just got a phone call from upper management saying, "No more advertising with Apple Daily,"'" said Simon, adding that account managers at HSBC and Standard Chartered had apologetically explained that they were implementing instructions from managers who had been pressured from Beijing. A Standard Chartered spokesman said the bank would not respond to "market rumors." Asked for comment, an HSBC spokesperson said its advertising strategies were shaped by "commercial" requirements, without elaborating.

The two banks are not the only companies to allegedly boycott Lai due to pressure from Beijing. Simon said advertising embargoes by Beijing-dependent firms, mainly Chinese state-owned enterprises and construction firms, have cost the Hong Kong-listed Next Media at least $26 million annually, a significant sum for a company currently valued at just under $260 million. That figure, says Simon, does not include the recent moves by HSBC and Standard Chartered. The two banks used to spend roughly $3.8 million annually -- but haven't placed an ad since September. Simon noted that advertisements from the Bank of East Asia (BEA) have also dried up. A BEA spokesperson said that the decision was a result of business interests.

"It's Putinesque," says Simon. These banks have "got the Chinese running their business."

There are many examples of major Western institutions carefully fashioning what they say or do in hope of access to the Chinese market. In November, Next Media broke one of the biggest media stories of 2013 -- in an animated video, no less -- revealing in lurid detail how Bloomberg axed a pioneering investigative story on the private wealth of Chinese Communist Party's elite, before the New York Times published its better-known version of the journalism scandal. But there is little precedent of global corporations using their financial muscle to curb what others say about China, in the manner that Simon claims HSBC and Standard Chartered are doing.

And the blow could not have come at a more vulnerable time for press freedom in Hong Kong. "The gloves are off," says Shirley Yam, a senior finance reporter for the respected Hong Kong newspaper South China Morning Post and vice chair of the Hong Kong Journalists Association. "The party has always tried to impose its will but now the way they do it is more brutal and direct."

The evisceration of Ming Pao

Lai's Next Media was not always the vanguard of fearless Chinese-language journalism in Hong Kong. For decades, that honor belonged to Ming Pao, the newspaper founded in 1959 by legendary author and political commentator Louis Cha. Ming Pao's core of intrepid investigative reporters and their esteemed editor in chief, Kevin Lau, broke a slew of stories over the last few years that infuriated leaders in both Hong Kong and Beijing.

In February 2012, Ming Pao revealed an illegal home renovation that derailed the election hopes of Beijing's preferred candidate for chief executive of Hong Kong, Henry Tang. Ming Pao is also known for its deep coverage of mainland China, causing an uproar there in the summer of 2012 by establishing that a prominent democracy activist had been murdered and had not committed suicide, as had been previously reported. The newspaper was also the Chinese partner selected by the International Consortium of Investigative Journalists for its investigation into overseas tax-haven accounts controlled by Chinese officials, published in January 2014. And Ming Pao, unlike some other Hong Kong outlets, continued its strong coverage of the annual June 4 Tiananmen Square massacre commemorations and the pro-democracy protests that take place each July. "We maintained our traditions," says a senior reporter, Phyllis Tsang.

But what has happened to Ming Pao of late has been disturbing -- and it has been both a rallying cry and a warning to Hong Kong journalists. In January 2014, Lau gathered his staff around the Ming Pao newsroom in the high-rise district of Chai Wan, nested in a jungle at the east edge of Hong Kong Island, to tell them that management had removed him from his post and transferred him to an unimportant business role. "We were all shocked," says Tsang. "He answered our questions very calmly and told us what he knew, and much more of what he didn't know."

Journalists were mortified by the prospect of a new editor, Chong Tien-siong, who was practically unknown except for a commentary he had written in support of pro-Beijing patriotism. "The chief editor not only leads the newsroom in reporting, but more importantly in resisting pressure from the invisible hands who try to meddle in the newsroom at critical moments," a Ming Pao journalist said at the time. On Jan. 10, four prominent columnists left their columns completely blank, in protest. On Feb. 23, thousands of journalists and ordinary Hong Kong citizens protested Lau's removal.

Three days later, on the morning of Feb. 26, Lau pulled out of his Kowloon home en route to Ming Pao headquarters, as was his usual routine. But this morning, two men on a motorcycle tailed his blue sedan.

When Lau stopped, as usual, for breakfast at a leafy boulevard at Quarry Bay, alongside the headquarters of the maritime police, a man silently dismounted from the motorcycle, approached Lau from behind, and buried a meat cleaver deeply into both sides of his upper back and into his legs. Lau was rushed to a hospital, where he still remains in recovery. Doctors have had little success in reconnecting the main nerve in one of his legs, raising doubts about whether he will be able to walk normally again, according to a source close to the family.

On March 2, 10,000 protesters took to the Hong Kong streets. Some held banners that read: "They can't kill us all."

Lau's alleged assailants have since been detained. But, as with Lai's case and several other triad-style assaults on independently minded publishers and journalists, the police say they haven't found a motive or a mastermind.

Hong Kong-based journalists were appalled when the police chief appeared to question the likelihood that the attack on Lau was related to his journalism. "Before the truth is revealed, it is bewildering for the Commissioner of Police to have said that there had been no direct evidence to suggest that the assault was related to any journalistic work," Lau said in a March statement from his hospital bed. "[M]y family members and I are not involved in any financial, extra-marital or other personal disputes. I am, therefore, positive that the assault is related to my job in the newspaper."

Whoever was behind the violent warnings to Lai and the brutal attack on Lau, they have galvanized Hong Kong's independently minded journalists and pro-democracy advocates and have attracted international attention. In April, U.S. Vice President Joe Biden met with two top Hong Kong democracy advocates, Martin Lee and Anson Chan, in the White House. Party newspapers branded them "traitors" upon return.

The problem with "patriots"

A speck of land appropriated by the British Empire after the Opium Wars in the 1840s, Hong Kong has long succeeded in absorbing what it wants from both East and West. One of the first institutions to exploit these opportunities was HSBC, founded by a Scotsman in Hong Kong in 1865 as the Hongkong and Shanghai Banking Corporation; Standard Chartered established a foothold in Hong Kong at roughly the same time. Financiers, writers, refugees, and even members of the Chinese Communist Party underground have all at various points sheltered under the protective umbrella of British institutions at the gateway to mainland China.

In 1984, when then British Prime Minister Margaret Thatcher agreed to return Hong Kong to Chinese sovereignty in 1997, she placed great stock in then leader Deng Xiaoping's formula of "one country, two systems," which he said would "remain unchanged for 50 years." But as the agreed 2017 date for universal suffrage draws closer, it seems she may have overlooked a crucial qualification: The city's administrators must first be deemed "patriots" by Beijing before they can be trusted to "autonomously" run Hong Kong, according to Deng.

What is a patriot? "One who respects the Chinese nation, sincerely supports the motherland's resumption of sovereignty over Hong Kong, and wishes not to impair Hong Kong's prosperity and stability," said Deng in 1984. "Those who meet these requirements are patriots."

Senior Chinese leaders have explicitly said that patriots can include British-trained professionals, tycoons -- even those linked to organized crime triads, if they love their country.

One such patriot is C.Y. Leung, the current chief executive of Hong Kong, the third since the 1997 handover. Leung's challenge, since coming to power in 2012, has been to straddle the divergent objectives of patriotism, as defined by Beijing, and "two systems," as understood by the 7 million people of Hong Kong.

Leung appeared to signal he would prioritize the former in July 2012 when, in one of his first moves after taking office, he announced that Hong Kong would be implementing a "patriotic education" curriculum in the city's schools. When the first patriotic textbooks were distributed, however, tens of thousands of parents, students, and civil society activists protested in anger. "We don't need no thought control," said one placard. Officials backed down; in September 2012, Leung said the classes would be optional. He has struggled to establish authority ever since, so Beijing has found other ways of letting its will be known.

Liberal-minded journalists in Taiwan, an independent island wary of mainland Chinese influence, are also closely watching Hong Kong's shrinking media space. "We are very aware of the Hong Kong situation, and we do not want to end up like that," says Po-Hua Liang, editor in chief of one of Taiwan's leading news magazines, CommonWealth. Liang, who once admired Hong Kong's media, now feels that "Apple Daily is all that is left."

According to Jimmy Lai's executives, their boss -- who has dedicated his business to the prospect of a free China -- is not even considering toning down his company's media coverage, especially not in response to global financial institutions that might have fallen under Beijing's sway. After all, the executives say, he has weathered the triads' warnings. "We will make money," says Next Media's Mark Simon, pointing to a statement just submitted to the Hong Kong stock exchange, which foreshadows a return to the black.

In the quest to increase Next Media's lead as the region's top digital news media group, executives say their journalists and creative artists are constantly finding new ways to publish stories that no one else is willing to touch. The policy is simply to make Next Media so popular that advertisers will be forced to follow. It's too early to say whether defying Beijing is a sustainable business move -- but maybe an animated news special on HSBC's and Standard Chartered's advertising decisions is next?

A version of this article originally appeared in the Sydney Morning Herald.

Photo by MIKE CLARKE/AFP/Getty Images

Dispatch

Spain's Poisoned Chalice

The Spanish monarchy is in big trouble, and not even a young, handsome new king may be able to do anything about it.

If Queen Elizabeth II famously had an annus horribilis, King Juan Carlos's announcement on Monday, June 2, that he is to abdicate in favor of his son, Prince Felipe, comes after three spine-tingling years in which a series of scandals and mishaps have seen the Spanish royal family's star fall from a lofty position far above the riff-raff of common politics to the gutter in which virtually all of the country´s institutions now languish. Once the top-ranked institution in periodic polls by the state-run Sociological Research Institute (CIS), 2011 saw the royal family slump to a failing grade of less than five out of 10, for the first time. Its favorability score in last month's CIS survey was a miserable 3.72.

In a country where many on the left of the political spectrum made an exception in their republican worldview in deference to Juan Carlos's crucial role in piloting Spain's democratic transition after the 1975 death of the dictator Francisco Franco, it is hard to imagine a more hostile environment for the incoming monarch. The 46-year-old heir not only has to shore up evaporating support for the monarchy, but he has to do so at a time when virtually all of the institutions that brought about the country's late 20th-century renewal have been discredited.

Since tens of thousands of mostly young protestors known as indignados first took to the streets and occupied plazas across Spain in May 2011 and as the euro crisis and subsequent recession saw unemployment climb up to and stay above 25 percent, political parties, labor unions, big business, and the judiciary have all felt the tide of public opinion turn against them. Corruption and abuse of authority are perceived as standard practice among the country's elites. The ruling center-right Popular Party is mired in a slush-fund scandal centered on its jailed former treasurer, Luis Bárcenas; the main opposition Socialist Party and its labor union associates are under the microscope in their Andalucian fiefdom over misspent funds meant to help the unemployed; former National Business Association chief Gerardo Díaz Ferrán is in jail after embezzling his own bankrupt company; and the country's top judge, Carlos Dívar, had to resign from the Supreme Court after fiddling expense accounts.

So how did the royal family fall into this morass of ignominy? In 2011, the king's son-in-law, Iñaki Urdangarin, became the focus of a fraud investigation after he and his former partner at the helm of a supposedly non-profit PR and event management firm were accused of channeling millions of euros in public funds into their own pockets via tax havens after overcharging regional governments for services rendered. The king used his televised Christmas address that year to underline that "no one is above the law," and both Urdangarin and his wife, Princess Cristina, were frozen out of official royal engagements. But they were not cut off altogether. Prince Felipe is reported to have urged a stronger response against the couple, but the king sought to protect his youngest daughter from the slow-moving judicial dragnet. Ultimately, even the hiring of defense lawyer Miquel Roca, one of the framers of Spain's 1978 Constitution, was not enough to prevent the couple's sumptuous Barcelona mansion from being seized and the infanta herself being questioned in a Majorca court as a suspect in the case.

By this time, Juan Carlos had also disgraced himself, falling in the middle of the night and breaking his hip, forcing him to reveal in April 2012 that he had been on a secret elephant-hunting trip in Botswana. The king apologized to the whole country for his frivolity but the damage had been done. Five surgical operations later, abdication seems a logical step for the 76-year-old. Crown Prince Felipe is repeatedly described as having been "prepared" extremely thoroughly; with the king frequently out of action, he has taken on plenty of the diplomatic load in recent years. But can the prince connect with the Spanish public? He can hardly expect to enjoy a moment like King Juan Carlos's dramatic public intervention when defusing the 1981 coup attempt against Congress.

King Juan Carlos's legitimacy came from deeds, pushing forward democracy under the noses of the remnants of Franco's fascist regime, and ultimately being recognized as head of state by the referendum of Dec. 6, 1978, when Spain's constitution was overwhelmingly approved by 88 percent of the Spanish electorate. Those great majorities have now vanished from the Spanish political scene. In last month's European parliamentary elections in Spain, the Popular Party's and the Socialists' votes combined did not add up to 50 percent for the first time since the transition. In the same elections in 2009, the big two had racked up 82 percent of the vote.

Many on the left, such as the leader of Podemos, a leftist party which came from nowhere to claim 8 percent in the European elections, are now calling for a new referendum on the monarchy. "This abdication will accelerate the decomposition of the political regime of 1978," Pablo Iglesias told the newspaper El País. "If the government believes that Felipe has the confidence of the people, it should be put to the test at the polls."

The monarchy isn't blind to this change in the political winds. In a speech broadcast on Monday, King Juan Carlos observed that the country's "economic crisis has left deep scars in the social fabric." He appeared to be acknowledging the fact that corruption and a lack of transparency can no longer be tolerated within any institution and that his son, a member of "a new generation which wishes to take charge," will have to do much better. But whether Felipe is the man that can quell a raucous political climate in Spain today is anything but assured.

As a prince, Felipe has studiously avoided controversy. He won't be able to for long, however. One of the biggest concerns the new king will face is the Catalan government's plan to hold a referendum on independence from Spain in the fall. The prince has learned to speak Catalan and will no doubt develop the royal household's recent and tentative experiment in online transparency regarding public funds. The question remains, however, whether in such a fragmented political environment such niceties will suffice to keep the monarchy safe. In a poll published earlier this year by the right-of-center daily El Mundo, barely 50 percent of the respondents said they were pro-monarchy, while a larger majority said Juan Carlos ought to abdicate.

And so he has. But the old king's gesture was not enough to stop thousands of indignados filling squares in Madrid, Barcelona, and other cities on Monday evening to demand a referendum on the future of the monarchy in Spain. The arduous but ultimately successful Spanish transition with which the reign of King Juan Carlos was once synonymous now seems to have reached the end of its cycle, with so many of the country's democratic institutions lying exhausted. Is Felipe VI going to provide a breath of fresh air or is he just a fall guy?

Gonzalo Arroyo Moreno/Getty Images