“We are not dealing with just a company here. We are dealing with the Chinese government. Why should we take a foreign government to court just to be paid?”
Yancoal, like its parent company Yanzhou, is fully owned by the Chinese communist regime. Since 2004 it has purchased six mines in Australia and invested in excess of $4 billion in direct acquisition fees alone.
The Department of Foreign Affairs and Trade (DFAT) acknowledges that APM has contacted them in an effort to resolve the dispute, but has failed to facilitate a resolution.
“Legal channels exist for the purpose of resolving these kinds of contractual disputes and we would encourage the company to pursue those channels,” said a Department spokesperson in an email.
In a recent article published in Chinese newspaper The Daily Express, Yancoal’s Director Cunliang Lai accused APM of “extortion”.
APM’s Executive Director Paul Moon defended his claim. “Who in their right mind would write out an invoice for $96 million and contact their government about it, unless it was real?” said Mr Moon.
Unusual Deal
Paul Raftery is a mining engineer with 30 years of experience. He was contracted by APM to prepare the evaluation and provide technical data to Yancoal for the Felix acquisition. Mr Raftery says he used his expertise and also personal contacts within Felix to assist in the deal.
He says the process in the Felix-Yancoal deal was unusual. Yancoal requested that the process would be kept low key. No formal contracts were signed and the negotiations were done in the typical “Asian way”, says Mr Raftery.
“People sat down, agreed on how it would be done. They had the meeting and then they had dinner. You have a commercial discussion and then a meal to celebrate,” he said.
Mr Raftery describes a specific meeting at a Chinese restaurant in July 2008, attended by APM Executive Director Paul Moon and Yancoal’s Director Mr Lai. Details of payment methods for APM’s services were discussed and agreed upon as two per cent of the final offer figure.
While the meeting was carried out via a translator for Mr Lai, there was no misunderstanding, says Mr Raftery.
“There is no question in my mind that he knew what he was doing,” Mr Raftery said.
“Our client had no agreement with APM, either written or oral, concerning the provision of any services to Yancoal or the payment of any fee,” said Cameron Hanson, a lawyer representing Yancoal.
Mr Lai could not provide a comment to The Epoch Times due to limited English skills, while Yancoal’s Company Secretary Laura Zhang stated on the phone that “there is no merit of claim” to APM’s demands.
Meanwhile, a 2009 Annual Report for Yanzhou states that a “consultancy fee” of $150,000 was paid to an unnamed company for the Felix acquisition.
Mr Raftery believes that Yancoal simply used the data provided by APM, as the final purchase price was very close to the evaluation he provided, while paying another company a cheaper rate.
“The irky thing for me is that we wrote in a way they would understand. They used our value.
“We know that they used the report because they came back and asked us questions. The bid was extremely close to what we told them it should be,” said Mr Raftery.
Mr Raftery offers a warning to other businesses considering doing business with China.
“Get the documents signed.”
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