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Kim Dotcom’s lawyers get to negotiate with Hong Kong authorities over asset freeze

By Chris Cooke | Published on Thursday 4 December 2014

After a run of bad luck, things are possibly starting to turn in Kim Dotcom’s favour, though the latest development in Hong Kong is very much ‘possibly’.

MegaUpload founder Dotcom is, of course, currently on bail in New Zealand where the US government is attempting to extradite him to face charges of money laundering and criminal copyright infringement in relation to his former file-transfer business. The American movie studios and major record companies are also suing him over the alleged infringements, while all assets linked to MegaUpload were seized when the company was shut down by the authorities in 2012.

Nevertheless, since MegaUpload was closed down Dotcom has been busy setting up new companies, launching a pop career, spearheading a political party and, seemingly continuing to live a pretty good life in a very nice home. So much so, his opponents have alleged he must have access to hidden funds stemming from his former MegaUpload empire; funds which, the studios and labels say, should have been set aside to pay any future damages.

Dotcom insists he has been living off money earned since the MegaUpload shutdown, while adding that most of that cash has now been spent, $10 million on legal fees, and he is now struggling to pay the bills. The pop career was loss making, the political party failed to win much popular support, and he has had to step back from his two newer businesses – Mega and Baboom – because his involvement was hindering efforts to raise finance and engage with the content industries. Dotcom was the first to admit 2014 hadn’t gone so well.

And there were legal woes too. Although various technicalities ensured America’s extradition application was further delayed, Dotcom has had less success in getting access to the prosecution’s files, or stopping his opponents from accessing information about his finances, or on getting back some of the monies seized in 2012 to help pay his ongoing legal fees.

Though earlier this week Dotcom did manage to fight off an attempt by prosecutors to have his bail revoked on the basis he was a flee risk. And earlier today, according to Bloomberg, a door was opened that might enable him to access some of the MegaUpload assets seized in Hong Kong, where his former business was technically based.

Dotcom’s lawyers argued that back in 2012 Hong Kong’s Secretary For Justice, responding to requests from America, did not provide a “full and frank disclosure” of the facts to the court when seeking the warrant to seize MegaUpload assets. And because the warrant was issued without MegaUpload in attendance – the element of surprise being required at that point – the Secretary For Justice had a duty to be extra vigilant in providing the judge with all the facts.

The judge hearing that argument today, Garry Tallentire, agreed that the Hong Kong authorities had not done enough back in 2012 to detail efforts to serve summons on MegaUpload, though he said that the non-disclosure was not deliberate on the Secretary For Justice’s part.

Nevertheless, the judge did then reapply the order freezing MegaUpload assets in the Chinese region, but instructed the Secretary For Justice’s office to begin negotiations with Dotcom’s legal reps on the conditions of that order, making it possible that the Mega man may as yet get access to some of the $40 million seized in Hong Kong.

Dotcom’s legal rep in the dispute, John Rhie, said in a statement: “We are very pleased with today’s decision, which vindicates Kim’s position that he has been unfairly treated by the US authorities”.