Hong Kong’s justice system is tried, tested and worth preserving

Via Financial Times

Most fears over the national security law China will soon impose on Hong Kong focus, rightly, on the Chinese Communist party’s habit of twisting a person’s exercise of their constitutional rights into proof of a crime against the state. Hong Kong will no longer be Hong Kong if common law judges in the Chinese special administrative region start allowing similar perversions of justice.

But there is another perhaps under-appreciated aspect of Hong Kong’s unique judicial system that could be at risk if it becomes more like that of the mainland over time. In the former British colony, which reverted to Chinese sovereignty in 1997 under a “one country, two systems” arrangement, rich and well-connected business figures and financiers regularly end up in the dock. They are at the centre of open trials that can shed fascinating light on the inner workings of international investment banks, Hong Kong blue-chip companies and Chinese state-owned enterprises.

One of my favourite examples of this, during more than seven years as a business and finance reporter in Hong Kong, was this scrap of email evidence from a 2009 insider trading case:

“Be the man, Jun, be the man,” a senior banker at Morgan Stanley’s Hong Kong office told one of his subordinates. “You’ve never worked on anything this big. Trust me, you will be covered in gold if we pull this off.”

“Jun” was Du Jun, a relationship banker who worked for Morgan Stanley, and the golden opportunity in question was a potentially lucrative oil hedging contract with Citic Resources, the energy business of China’s Citic investment conglomerate.

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While the hedging contract never materialised, Hong Kong’s Securities and Futures Commission alleged that in the course of his work, Mr Du acquired inside information about one of Citic Resources’ upcoming acquisitions and bought $11m of its shares in advance of the announcement. After the deal was made public in May 2007, Citic Resources’ shares jumped more than 15 per cent and rose a further 135 per cent over the following six months.

Mr Du was eventually found guilty and sentenced to seven years in prison — a fate he could have avoided if only he had not returned to Hong Kong from his home in Beijing, where he had moved back after parting ways with Morgan Stanley in 2007.

According to one court document, SFC summonses sent to Mr Du in Beijing could not reach him because he lived with his parents at a military compound where “there is a restriction on contact with overseas entities and mail sent from overseas to that address will be returned”.

Would Mr Du’s wealth and connections have spared him from a similar prosecution in China if, say, he had worked in Shanghai rather than Hong Kong?

Maybe — or maybe not. Plenty of rich and powerful people go to jail in China if they have fallen foul of the Chinese Communist party.

And if put on trial there, would Mr Du have appeared in open court with journalists in attendance listening to arguments and evidence from both prosecutors and the defence? Almost certainly not. Nor would the outcome have been in doubt. In China, the defendant always loses.

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I have been barred from sitting in on Chinese court cases of far lesser import than Mr Du’s, for reasons ranging from “not having approval from the local government” to “no seats available in the gallery”. In one instance, when trying to witness a labour arbitration case filed by Walmart employees in central China, I was sent packing from the court building and followed back to my hotel by agents from the local state security bureau.

In Hong Kong, by contrast, over recent years billionaires and some of the territory’s most senior former government officials have stood in the dock in far more sensational cases than Mr Du’s, witnessed by large numbers of local and foreign journalists.

Also unlike China, in Hong Kong the outcome of such cases is never certain. In one famous bribery case, a billionaire property developer was convicted, along with the government’s former second highest-ranking official, while the billionaire’s brother was found not guilty. In another instance, a former Hong Kong chief executive was convicted and sent to prison, but later acquitted when a judge ruled that the jury had been improperly instructed.

This is how a justice system should function, and officials in both Beijing and Hong Kong insist that its fundamental workings will not be altered by the new national security law. I hope they are right.