Dec 7, 2011

White-Collar Crime In China: The Michael Ng Saga and What you Should Know

The Chinese national government, in order to fight the prevalent perceived local corruption, has sentenced individuals to death for white collar crimes related to the powers of government officials. In recent years, many private disputes are, also, ending in convictions.
Foreigners, largely, have been off the radar of the Chinese government, until, the last half decade.  In recent years, many international business disputes, in China, have ended in prosecutions, many of which, have lead to international scorn.

The most recent includes a matter that IPG has been closely monitoring and that the Wall Street Journal has written an interesting article about.

An Australian businessman, of Chinese ethnicity, has been sentenced, last week, to a 13-year jail sentence for embezzlement and bribery.  The case has the Australian government up in arms.

Mr. Matthew Ng's friend was quoted by the Wall Street Journal as saying that:
"Matthew's problem was that he took a Western view of business in China and stood his ground behind the legal system" said Mr Rose, who was an original investor in Et-China and is a close friend of Ng's. "We do not believe justice has been served."
We see this issue all too often.  When doing business in Asia, a deep understanding of the local landscape and risks are needed.  Going about business in a completely Western manner often leads to
loses, litigation and in a small minority of cases - criminal prosecutions.

We, always, advise this to clients and I hope, all, will listen.  Many think it is just typical nihilism in the legal community, however, it is not.  Sure all lawyers are naturally pessimistic, however, these risks exist and are caused, largely, by either employing the wrong counsel or not properly listening to the advice of counsel.

The Michael Ng saga, fundamentally, is an issue of the poor structuring of deals and a lack of an understanding of doing business in and with China.   Risks can be mitigated, but stubbornness and too quickly jumping into "wonderful opportunities" can land you in the pokey.  Trust me, you don't want to be jail and you especially don't want to be in jail in China.

This is not intended to scare off businesses from doing business in China.  China is a wonderful place to do business - just listen to good advisers and always think before you jump.

Here are a few articles that will assist in keeping you on the good side of the Chinese government:
Our other blogs:
The Korean Law Blog
The Asian Law Blog
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SeanHayes@ipglegal.com