“The industry people are already living in fear. How can they not live in greater panic after the council made the allegations against us?”

Fung appealed to the council to clarify any concerns it had to dispel misunderstandings or the appearance of bias against the federation and retract its allegations that last year’s awards ceremony affected the funding body’s reputation. The federation had not been given any chance to explain itself to the council, he said.

“We don’t mind about the council drawing some red lines,” he said. “We all respect the [national security] law which was decided by our country.

“But we hope the council can be candid about what its red lines are so we can still communicate and have mutual trust.

“We are a group of people who love Hong Kong and our country.”

But Secretary for Cultural, Sports and Tourism Kevin Yeung Yun-hung on Friday expressed support for the decision, saying the council had fulfilled its duty in limiting its funding to appropriate art projects.

“The government deems the individual opinion accusing the Arts Development Council’s decision of affecting or even stifling creative freedom as putting the cart before the horse and muddling our understanding of the matter,” Yeung said.

“The government does not agree with such unreasonable narratives.”

Fung insisted the council’s allegations had no basis.

“What we have done is lawful, reasonable and fair,” he said. “We have our own reputation and dignity too – we can’t accept unfounded allegations.”

The federation went on the offensive after the council on Wednesday said it had decided to deduct about HK$88,000 of the HK$441,700 (US$56,460) grant for the federation’s awards ceremony last June.

The council said the “unusual arrangements” for the show had damaged the funding body’s reputation.

The federation added that grants for this year’s ceremony had also been refused.

The shock news came in a letter dated December 8, which also said that, after a review of a video recording of the 2023 ceremony and “prudent consideration”, the council had decided not to pay the final instalment of the subsidy for the 2023 event.

The council added in another letter, dated January 12, that the federation had invited journalist Bao Choy Yuk-ling and political cartoonist Wong Kei-kwan, who uses the pen name Zunzi, to the ceremony and had moved away from its previous practice of inviting sector veterans.

Zunzi’s regular series of cartoons was axed by Chinese-language newspaper Ming Pao last May after criticism from senior government officials.

Choy was the first journalist in Hong Kong to be found guilty of breaching the law over use of the government’s vehicle registry search system. The conviction, however, was last year quashed on appeal.

The council also accused the awards’ organiser of “generating buzz” to “draw attention from the public and the media” by including puns related to “red bridges” and “red lines” in the hosts’ scripts, which “implied a hidden meaning”.

It added that council members and government representatives had expressed concern over the ceremony’s content and presenters, as well as its theme of “courage”.

The Leisure and Cultural Services Department said it would not sponsor a venue for the event based on the council’s findings.

But Fung countered that the two guests only expressed their emotions and questions, which had also been echoed by the industry.

“They were just expressing their voices,” he said. “Actually, the industry has openly requested the council clarify what their bottom lines are and what is lawful.”

Fung insisted the awards, the city’s most prestigious theatrical prizes, presented every year for more than three decades, would still go ahead in 2024, although there might be difficulties.

“We don’t beg for anything,” he said. “Although we are poor, we still have pride.”

Fung also added that submitting content plans or guest lists to the council about how they were going to run the ceremony was never needed.

“So there is no such thing as us deviating from the past practices,” he said.

Playwright Candace Chong Mui-ngam, a committee member of the federation, said she felt “disappointed and angry” about the funding cut.

“This is really bullying. Why can’t we invite certain people as guests?” she asked. “It pains me to see that some young artists may make work compromises because of the council’s suppression.

“We are taxpayers and the government has the responsibility to subsidise cultural and arts groups … The suppression of this historic and important ceremony shows how the council has disregarded public feelings.”

Chong said she was horrified by the remarks council chairman Kenneth Fok Kai-kong made about reducing the risks of violating the national security law via the cut.

“If whatever we do or say runs the risk of breaching the law, this kind of unfounded worry could kill an artist’ creativity,” she said.

The council on Friday said it had put a set of procedures in place to vet funding applications and monitor subsidised programmes, but it did not mention whether it would retract its allegations against the federation.

“If we find improper content and arrangements of the subsidised programmes, we will follow it up,” it said.

“The council has attached great importance to the communication with the industry. No matter whether they are the funding recipients, we have used different channels … to maintain good communication and a mutually trusting relationship.”

Fok added the council’s assessment did not mean laws had been broken, but the body had a responsibility to be aware of risks.

The council had sponsored the annual awards ceremony for 24 years.

Additional reporting by Jess Ma