Tuesday, 6 December 2011

Shock Verdict Deja Vu

I was in Beijing when the Stern Hu incident involving Rio Tinto happened in July 2009, resulting in tense relations between China and Australia.

Hu was charged and convicted of stealing commercial secrets and receiving bribes and was sentenced to 10 years in jail.

At the time Australians were annoyed at then Prime Minister Kevin Rudd aka Lu Kewen for not being able to use his fluent Putonghua and knowledge of Chinese diplomacy to get China to throw out the charges and have the Chinese-born, naturalized Australian citizen Hu out of jail.

But now things have gotten worse with today's verdict of jailing yet another Chinese-born Australian Matthew Ng after another deal that went sour and is now paying for it with 13 years in jail.

Ng was detained in November after he, the chief executive of London-listed travel company Et-China and some shareholders had contracted to sell the company for $100 million to a Swiss firm.

In court, Ng's lawyer Chen Youxi explained the criminal case was orchestrated by a third party as leverage to obtain the profitable Guangzhou company cheaper.

Ng and other witnesses were offered offered release in exchange for Et-China's local joint venture partner Guangzhou Lingnan taking control of the local Guangzhou travel business at a discounted price, but Ng refused the offer.

Guangzhou Lingnan is the largest company owned by the Guangzhou municipal government.

Throughout the trial the prosecution didn't have much evidence against Ng and his colleagues, chairman Zheng Hong and the chief financial officer Kitty Yang.

In fact today the defense had thought today's day in court would be more procedural and so they were shocked when the judge started reading the verdict without warning. Ng's lead lawyer was not in attendance, nor were Australian journalists or diplomats.

Ng was sentenced two years for misappropriation of company funds, 2.5 years for false registration of company capital, two years for work unit bribery, and eight for embezzlement. The sentence was commuted to 13 years. Zheng was sentenced to 16 years, Yang 3.5 years.

China is sending a strong signal that it does not approve of Chinese who emigrate and then return to the country to work using a foreign passport. China seems to view these people as traitors, that they are working for other countries' interests rather than for the good of the motherland.

Obviously having a foreign passport doesn't give these people any diplomatic protection anymore and China has no qualms in trumping up charges when its officials or anyone with really good guanxi feel like sore losers in business deals.

How does China expect companies to want to continue to do business there with such a chilling treatment of foreign nationals?

And let this outrageous verdict be a warning to companies who think they can penetrate the Chinese market and become zillionaires. It's not going to work because China will find a way to screw them over, even if it's not even following the rule of law.

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