A HK$120 million payment to Hong Kong media giant Next Digital from the buyer of its Chinese-language Next Magazine has been held by a bank for an unknown reason.
In July last year, businessman Kenny Wee sold off his free newspaper Metro Daily in anticipation of the Next Magazine acquisition. The purchase, however, has been delayed several times.
“We are at pains to understand why payment was held on a well supported and documented wire transfer originating from a top 5 US bank and apparently held from delivery by a well known Hong Kong bank to a publicly listed media company on a publicly announced transaction,” Mark Simon, a Next Digital executive, told HKFP on Monday.
The funds which failed to transfer to Next Digital’s account were among the HK$148 million in deposits that Next Digital said Wee had paid. The deposit completion was announced on January 3, based on evidence of the call-back confirmation from Wee’s bank.
A notice Next Digital issued to shareholders on Monday said Wee informed the company that “due to certain remittance issues,” the funds could not be remitted into the firm’s designated bank account. The funds transfer still failed after the transaction was tried with another financial institution. Wee’s side said it would use all commercially reasonable efforts and it was re-initiating the payment.
Simon said Next Digital has made an inquiry with the Hong Kong Monetary Authority and they are learning how to proceed in order to discover any problems. “We are working money once again through other top tier banks. We never have – nor have we ever – stopped trying,” he said.
According to Monday’s notice, documents from Next Digital to be released to Wee after the transaction is complete are being held in escrow. They include documents referring to the transfer of assets and related intellectual property rights. However, Next Digital is not authorised to release them until the funds are received.
According to the company’s previous notice on January 3, a set of safe-harbour measures had already been completed, including a payment of HK$108 million from Wee for the magazine’s Hong Kong edition. Before that, Wee had paid HK$40 million.
Wee had also paid a further deposit of HK$40 million for the magazine’s Taiwan edition, according to the January 3 release, in addition to the HK$20 million deposit he paid before that. The remaining amount will be HK$95 million.
The purchase is expected to be completed by the end of February.
A spokesperson for the Hong Kong Monetary Authority told HKFP: “In general, for incoming cross-border payments, unless otherwise instructed by the remitting bank, banks should promptly credit the remitted funds to the beneficiary’s account after receipt of the funds is confirmed and any necessary checking is completed.”
“If banks are unable to do so, they should notify the beneficiary and provide an appropriate explanation, unless there are strong justifications not to do so.”
Founded by Jimmy Lai in 1990, Next Magazine quickly became one of the most popular magazines in Hong Kong in the 1990s and 2000s, known for its exposés on celebrities and political affairs.
However, the tycoon’s Next Digital company – formerly known as Next Media – has been facing declining advertising and sales revenues in recent years. In 2015, Next Magazine dismissed dozens of employees. Staff staged a walk-out last year protesting plans to outsource news reporting at Next Digital’s flagship newspaper Apple Daily.
The proposed purchase sparked fears from the group’s labour union that the outspoken magazine would lose its editorial independence, while Wee had threatened to dismiss employees who were “biased” against him.
Clarification 23.1.18: A previous version of this article included a quote from Mark Simon naming Standard Chartered as the intermediary bank for the sales transaction, in addition to Standard Chartered stating that it was investigating. After publication, Simon and Standard Chartered have denied to HKFP that the bank was involved in the transaction.