Authors: Tim Clissold
For the Triads, the secret ‘black societies’ that control these rackets, the geography of the region was perfect. The southernmost province of Guangdong had always been difficult to
administer from Beijing due to the huge distances involved and both Hong Kong and Macau were governed by remote and distracted European capitals. With these three different legal jurisdictions,
effective policing was almost impossible. If the authorities came too close to the trail of the gangsters in one place, the criminals would just hop over the border safe in the knowledge that
coordination between the different police forces was very difficult.
The seriousness of the problems came into the open in 1997 when Hong Kong went back to China. The Triads knew that two out of the three territories had now been unified and the third, Macau, was
soon to follow. So in the run-up to the handover of Macau in 1999, gang warfare broke out as the rival factions struggled for control of the territory before it reverted to China. Murder of the
most brutal kind, often involving lightning attacks in restaurants by mobs wielding Chinese meat-choppers, became commonplace; the newspapers didn’t even bother to report the regular
fire-bombings and armed robberies. The situation improved slightly after the arrest and jailing of ‘Broken-Tooth’ Wan, who was convicted of a host of Triad-related crimes in 1999.
But back in 1995, long before the handover, and long before the worst of the Triad activities became obvious, we had seen no particular reason to shy away from investing in Zhuhai. Macau had
still appeared calm; it seemed as if the two parallel communities were neatly segregated on either side of the ancient Portuguese gateway, the Porto de Cerco, that still guarded the border.
In April, 1995, we were introduced to Mr Wang Jinwen who ran the brake-pad factory in Zhuhai. He needed investment to increase his production. Sales to the local car
manufacturers were going well and he was convinced that there were huge potential export markets. After about six months of negotiations we agreed a deal and signed up to invest about eight million
in a three-way joint venture with Wang and a big US-based car parts company. It was a small investment for us but it looked as though the business would grow rapidly. On Christmas Day in 1995 the
business licence was issued and the cash was wired in shortly afterwards.
The factory was on the coast about five miles outside of Zhuhai in what used to be a tiny fishing village. The locals had long since given up their nets and there was a bustling business
community with many small manufacturing plants dotted about in the gently rolling hills that faced the sea. Palm trees lined the narrow rocky beach while further out, towards the horizon, the vague
and ponderous shadows of huge container ships moved sedately up the coast to Hong Kong. The sea breeze was clear and fresh and the local seafood was good. The brake-parts business had only been
running for five or six years so it had none of the problems of our former state-run operations up in the north. Wang seemed happy with the way that the business was developing and was keen to push
the export markets. Then, after the Mid-Autumn Festival the following year, he went to America to attend that fateful trade show in Las Vegas.
When we saw the fax from Zhuhai that freezing November morning, we realized immediately that Wang had somehow committed our money to pay for machines that we’d never
ordered. It looked as though the money was being channelled through one of Wang’s partners. Faced with what looked on the surface suspiciously like a fraud, we threw ourselves into a burst of
activity.
The first thing to do was to establish the facts. Then there would be lawyers. And I’d have to tell the Board, of course. I shoved that prospect to the back of my mind for the time being.
I could imagine the response I’d get, given the recent scenes when I had told them about Harbin.
The fax specified shipping dates for the goods and the vessels that would be carrying them to China. One should have set sail from Rotterdam, 16 November on a Panama-registered ship called the
Amazonite.
The easiest way to find out whether we had a fraud was to see if there really were any goods on the way. I contacted a friend who worked in a shipping line and asked if he could
confirm the whereabouts of some ships for me. ‘Sure, send me the vessel’s name and last port of embarkation and I’ll find it in no time.’ So we sent a fax confirming the
details and he called back in an hour and a half. He was puzzled. He said that there was indeed a ship called the
Amazonite
registered in Panama with all the correct references.
‘That’s your ship, all right,’ he said. ‘But it left Singapore on 14 November, bound for Hamburg.’
At that, the last doubts evaporated. We had a fraud on our hands. From there on, it would just be a question of damage limitation.
I had just hired a new recruit. He had sent me scores of messages from the States and when I told him that we weren’t hiring at the time he arranged to come out to China
to see me.
Li Wei had been born in Fujian, the coastal province in the south that lies between Shanghai and Hong Kong. His parents both had posts in the Chinese Peoples’ Liberation Army. He had
learnt his English at an army school which trained people to listen in to the wireless transmissions of the US pilots who flew reconnaissance missions up and down the coast of China in the 1970s.
He was a fast learner and went to one of China’s top language institutes in Shanghai. He eventually ended up with a PhD from the Massachusetts Institute of Technology. His PhD thesis was on
the Chinese Government ‘office systems’, which ran parallel to the government and party structures and was much more focused on powerful individuals rather than organizations. The
‘office directors’ took care of high level officials’ diaries and controlled document flows, just like a good PA in a Western context, but the role extends much further. It
includes arranging domestic affairs for the official and his family, such as accommodation, travel, education for children and so on, facilitating secret communication between officials and
undertaking much of the political infighting necessary for climbing the Chinese hierarchy. Consequently the relationship between the official and his ‘office director’ is one of the
utmost trust and the office director can acquire enormous personal power himself if his master’s star is in the ascendant. I realized that anyone who had completed a PhD on that subject must
have a grasp of Chinese politics which we, at that time, so clearly lacked. I liked Li Wei when I met him. He was certainly very bright and he had a touch of the humanizing air of a harassed
academic. He told me that after nearly ten years in the US he felt it was the right time for him to return to China. He had spent hours and hours searching the web for the right opportunity. He
thought that his language skills and experience in America gave him an ability to bridge the gap between China and the outside and he wanted a chance to have a role in something big where his
contribution would matter. I could identify with that. When he stumbled on our website, he thought that he had found the right place. I knew from our failures up in Harbin, particualarly the clumsy
way that we’d handled the ministry, that we needed someone who could guide us more skillfully through the bewildering maze of government offices and bureaux. I was also impressed by his
dogged persistence, so I hired him and pitched him straight into the middle of our difficulties down in Zhuhai.
We immediately flew down to Zhuhai with Michael and Ai Jian and had Wang’s office safe sawn open. It took two workers about twenty minutes hacking away before it finally
yielded. Inside, we found the first clues of what rapidly developed into a real horror story. There were about seven handwritten IOUs, one from a ‘Big Brother Qiu’ for one point two
million Hong Kong dollars. It looked as if Wang had been involved in loan sharking. We also found suspicious-looking travel permits, several company chops and two backdated cheques to Wang for just
under four and a half million Hong Kong dollars. They were drawn on Che Lap Hong and a company called ‘Poly-ways’. I had never heard of ‘Poly-ways’, but at the bottom of the
safe I found a contract to build a hotel in Vietnam signed by a ‘Mr Lam, for and on behalf of Poly-ways.’ I groaned. It was already looking distinctly possible that the hotel might have
been funded with our money.
The picture soon got worse. In Wang’s safe, we had found two air-ticket vouchers for his flight to America in the previous month. One was for Wang’s journey to Las Vegas, but who was
the other passenger? By the end of the afternoon Li Wei had found out: he was the assistant bank manager of the branch where we had deposited the US dollars. It was the same branch that had issued
the letters of credit.
Li Wei told me, ‘I called the bank manager and he said that he came back two weeks ago. Said he was with Wang in Las Vegas but left when Wang went off to New York. He said he hadn’t
a clue where Wang was now but seemed terribly nervous and started asking lots of questions.’
‘But did he explain what the hell he was doing on a trip to the States with Wang to sell brake parts in the first place?’ I asked. ‘He’s a bank manager, not a car-parts
salesman!’
‘He was a bit hazy on that one,’ said Li Wei.
‘Hazy?’ I exploded. ‘HAZY?!’
The story was getting murkier by the minute. There was no way to keep it under wraps; I had to tell the Board.
The hastily called telephonic board meeting that night provided further scenes of chaos. I had told Pat about the problem earlier but he was in Germany with some customers so it was left to me
to break the news. With the time delay, the crackling lines connecting people in six different locations around the world and tempers rapidly deteriorating as the complexity of the mess became
apparent, it was a struggle to keep the meeting on track. As I went through what had happened, a confused mass of questions burst in from all different directions with three or four people all
shouting at the same time. One of the directors kept on asking about bills of exchange and bills of lading, repeatedly confusing the two and getting furious whenever anyone pointed out that they
were completely different. Some wanted to call the police to catch Wang, but another said it was a waste of time. One pitched in with the truly amazing suggestion that ‘We should go directly
to the Hong Kong Monetary Authority to have everyone’s bank accounts closed down.’ The hordes of lawyers attending the meeting from different parts of the States all gave contradictory
advice, droning on about injunctions and Worldwide Mareva Orders long into the night and it wasn’t until three in the morning that a consensus emerged.
It was Rubel who eventually got to the point. ‘OK,’ he said, ‘we’ve got those letters of credit out there but the cash is still in the bank, isn’t it?’
‘Yeah.’
‘So we just need to make sure it stays there and the L/Cs never get paid, right?’
‘Right.’
He asked what controls we had in place over the cash at the bank. We had all the normal stuff, with sets of signature cards, just like everywhere else. For any payment out of our dollar bank
accounts in Zhuhai, the bank had to get a chopped approval from Beijing; Wang’s signature alone wasn’t enough.
‘So the bank shouldn’t take the cash out of our account to pay for the letters of credit, unless we sign off in Beijing,’ Rubel said.
It looked as though we might be safe. But two questions made us all deeply nervous about the bank: why had they agreed to open the letters of credit in the first place when they had no chop from
Beijing? And why had the assistant bank manager been on the same Las Vegas flight as the missing Wang?
The Board eventually decided that we should try everything to stop the bank from honouring the letters; if we stopped them paying out the money to the fraudsters, whoever they might be, and kept
the money in our bank account, we were safe, or so it seemed. They instructed me to insist on a meeting with the Chairman of the bank the next day and demand that he stop the payment. And then some
bright spark said right at the end, just as the phones went down, ‘But, anyway, it’s all governed by Chinese law, so maybe we should get a Chinese lawyer.’
The following morning, Ai Jian and I went to the head office of the bank in Guangzhou. It was about a two-hour drive from Zhuhai so we didn’t arrive until mid-morning. We
had called on ahead and eventually found the Chairman’s office. He was away, but the bank’s President was there. We had asked for a meeting but received no clear response, so we decided
to go and find him. The head office was located in a huge tower block in the business district of Guangzhou, the main city in Guangdong. It occupied fifteen floors of the building so it took some
time to find the President’s office. When we got there, I found his office manager and demanded a meeting. Then we sat down to wait.
To my surprise, the President arrived after about ten minutes. He looked like a man whose curiosity had been aroused. It was probably a novelty having an agitated foreigner turn up on his
doorstep without any warning and insist on a meeting. We got straight down to business and I explained that we were a foreign investment company with factories all over China. His bank held the
account of one of them in Zhuhai, and ‘There is a problem.’
I went through the facts, as we saw them. Our manager, Wang, was missing; before disappearing he had opened four letters of credit with the bank; the bank had agreed to open the L/Cs without
proper authorization; no goods existed because the ships were in the wrong parts of the world; it therefore looked as though there had been a fraud and the cash appeared to have ended up in a Hong
Kong account linked with Wang; and ‘the assistant bank manager of your branch in Zhuhai seems to have been on the same flight to the States as the missing Wang.’ The bank’s
President listened patiently but became annoyed when I mentioned the assistant bank manager. ‘Just because he was on that flight doesn’t mean that he’s done anything wrong,’
he said hotly.
‘I didn’t say it did, but you have to admit that it’s a bit unusual.’