Merchant's Investment in China Results in Loss of Freedom and Estate
Merchant's Investment in China Results in Loss of Freedom and Estate

Xu Minfen, a Hong Kong citizen, was convinced by an investment symposium to invest in mainland China, but her investment of $5 million resulted in over two years of illegal imprisonment of her brother and sister-in-law, and the forced confiscation of her estate.

The Chinese Communist Party (CCP) has claimed to advocate economic reforms over the past decade. With its “economic boom,” China attracts those who want to have a share in its market. Since Hong Kong is the Special Administrative Region of China, it has been rather common for Hong Kong citizens to invest in mainland China. Yet, with the passing of time, many Hong Kong merchants have come to understand that many of the commercial investments which had been considered beneficial can turn into nothing in a short time, and that investment of one, ten, or even one hundred million dollars can be robbed and confiscated in the name of the CCP's “law.”

Usually these cases, which amount to robbery, have been conducted by the local authorities, members of Politics and Law Committee, the so-called legal system and law enforcement agents. Albert Ho Chun-yan, a member of the Legislative Council of Hong Kong, pointed out that the only protection offered by the Hong Kong government to its people was to notify them.

Governor Hosts Investment Symposium

In August, 2003, the Linyi City government of Shandong Province hosted an investment symposium in Hong Kong. The Hong Kong-owned Huayao Bio Tech Holdings Limited (Hong Kong Huayao ) was invited by the Linyi City government to exclusively invest in an important construction item—the Comprehensive Trading Goods Transfer Park of High Tech Traditional Chinese Medicine. In November 2004, the Linyi City governor arrived in Hong Kong once again for an investment symposium. As one of the symposium participants, Lin Tingsheng, Vice Governor of Shandong Province, hosted at a ceremony where the Linyi government and Hong Kong Huayao signed a trade agreement.

The capital of $US five million for the Shandong Huayao was presented on the spot. With all the files ready, city officials approved the Goods Transfer Park (the Park) investment. In addition, the Park was recognized as one of the 18 authorized trading markets of Chinese traditional medicine. The Liantian Group, a local enterprise in charge of the regional trading markets, acted as the partner of the Park.

With development of the investment, the company had kept facing threats, which were suspected to have been made by local gangsters and interest groups. As a result, construction of the transfer park was slowed. In response to the threats, Hong Kong Huayao wrote a letter to the Hong Kong and Macao Affairs Office of the State Council in the beginning of 2005. The authorities concerned, then instructed its subordinate, the Shandong Provincial government, to support the construction of the park. As a result, the Linyi City government founded a special project committee led by the Deputy Secretary of the Municipal Party Committee, and the Executive vice Mayor. Instructions were issued to “protect rights and benefits of Hong Kong Huayao, to protect the security of foreign investors and to attack illegal forces.” In addition, a Public Security Office whose members were mainly from the Public Security Bureau was set up to offer “protection for foreign investors.” Construction of the transfer park was then sped up.

Members of Politics and Law Committee Stage Feast to Arrest Hong Kong Huayao Executives

In less than half a year (on September 26, 2005) the company's top executives received an invitation from Li Honghai, the Secretary of the Politics and Law Committee, to a feast at a hotel chosen by him. Over twenty top executives of the company were ordered to show up for “feast.”

During the feast, numerous policemen then appeared and abducted all of the company staff present, including two shareholders, the legal representative Xu Dongfang and his wife Xiao Xiaohong, On November 20, 2005, the Linyi Public Security Bureau subjected Xu and Xiao to criminal detention for being accused of fraud. On December 27, the couple was officially placed under arrest. On the same day, the Public Security Bureau confiscated Shandong Huayao's seals, files, financial materials and computers as well as personal possessions. The company was forced to close, with its gates sealed. Afterward, they were imprisoned for over two years.

Company Registration Revoked and Sold for Low Price

After the company's registration was revoked, Xu Minfeng made appeals to the Foreign Investor Petition Center and demanded the truth. She said, “The only basis to revoke the company's registration would have been a so-called 'Document No. 429,' which was said to be issued to me in 2006 by Linyi City of Shandong Province. However, we never received that document. When provincial government officials requested that the city government produce the document, they were told the file was lost.”

Xu found the local city official who allegedly issued that document. The official told her it was issued by the Public Security Bureau of Linyi City to revoke the registration of Xu's company, accusing Xu Dongfang (Ms. Xu's brother) of being involved in a fraud.

The Foreign Investment and Trade Bureau of Linyi City organized a committee to liquidate Xu's company. Xu was named the vice committee chairman without being notified. When the event broke out, Xu rushed to Linyi from abroad. She said angrily, “I told them I was not there to attend the liquidation committee, but to find out on what basis they could liquidate my company.” She continued, “They gave me a pile of documents and said they had transferred the land to others. The transfer price was much lower than the market price. I refused to sign the documents.”

In March 2006, the liquidation committee sold all of the land (553,000 square meters) at 280 million Yuan (US$ 37 million) to a newly established private business called “Linyi Ruixing Market Development Co., Ltd.” without any legal procedures. The leading investor of this company was the Lantian Group, Shandong Huayao's original business partner. The transfer price was several times lower than the market value.

Attorney Challenges Fabricated Evidence

In a court hearing, the prosecutor's bill of indictment did not even mention “fraud” at all. Instead, Xu was accused of committing the crime of “stealing registered capital.” Even so, the “evidence” presented by the prosecutor did not sustain the defendant lawyer's criticism and was treated as perjury by the court. Under tremendous pressure from the defendant's lawyer and public opinion, all of the alleged criminal charges were dismissed.

Ms. Xu said, “My brother Xu Dongfang was imprisoned for two years, but he never attended court sessions. The court adopted a fabricated document purportedly signed by him as criminal evidence against him. My attorney said, 'Xu Dongfang was jailed for two years and he signed his name countless times. Can't you recognize that this is not his signature? Any outsider can see the difference with a glance.' Later on, they sent that document for judicial verification. Eventually, the signature was proven to not be that of my brother. The prosecution was then put on hold.”

Three court sessions were held for prosecuting the case. The third session was opened on September 27, 2007. Xu said, “In the latest session, the prosecutor (representing the government) argued that our company was invalid so that our subsequent administrative and civil lawsuits are preempted. Our attorney said in the court very sternly, 'In the first two sessions, you stayed in a low profile and your true faces were not revealed. Today, you have disclosed your true faces. What you are doing now is nothing less than robbery.'”

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