A Hong Kong appeals court has overturned pro-democracy media tycoon Jimmy Lai‘s fraud conviction relating to an alleged lease violation at the now-shuttered Apple Daily newspaper headquarters.

His jail term stemming from the case was quashed, though Lai still remains behind bars, serving 20 years in jail under a separate national security conviction.

The Court of Appeal on Thursday granted the appeals by Lai, 78, against the fraud conviction and sentencing. High Court Chief Judge Jeremy Poon said the prosecution had failed to prove the offence and the trial judge did not consider “certain important matters” related to Lai’s state of mind.

“We give the applicants leave to appeal against conviction, allow the appeals, quash the convictions and set aside the sentences imposed on them,” three judges wrote in the judgment.

In December 2022, Lai was jailed for five years and nine months after being found guilty of letting a consultancy company, Dico, use a portion of office space at Apple Daily for his personal purposes, despite the premises being rented for the purposes of printing and publishing.

During an October 2022 hearing, Judge Stanley Chan dismissed arguments that Lai conducted a “trivial operation” occupying just 0.16 per cent of the premises. He said that the tenant remained responsible for applying for subsidiary licences irrespective of the area of occupancy.

Co-defendant Wong Wai-keung, a former Apple Daily executive, was sentenced to 21 months in jail. Wong had already served his sentence and the Court of Appeal quashed his conviction on Thursday.

Both Lai and Wong did not appear in court on Thursday. Poon said he had approved their absence.

In the Court of Appeal judgment, Poon and fellow judges Derek Pang and Anthea Pang said that the trial judge had “erred” in finding Lai and Wong guilty.

“We hold that even if Apple Daily Printing owed the duty of disclosure… and had breached that duty, the same could not as a matter of law be attributed to [Lai and Wong],” they wrote.

Ex-Next Digital executive Royston Chow, also a co-defendant in the case, testified as a prosecution witness in exchange for exoneration.

National security sentencing

Lai has been behind bars since December 2020.

Earlier this month, he was sentenced to 20 years in jail for foreign collusion and sedition – the heaviest sentence so far under the national security law Beijing imposed in 2020 following the 2019 protests and unrest.

During that case, the judges ruled that two years of the 20-year jail term would overlap with Lai’s fraud jail term, meaning 18 years would be added to his prison stint.

Lai was expected to complete his fraud sentence in June this year. It is unclear how Thursday’s ruling will affect his total prison terms.