Understanding China, One Blog at a Time

An American in China

Beijing Protecting Chinese Fraudsters

Posted by w_thames_the_d on September 14, 2013


China is an insane country run by insane people. One of thing those mentally ill mongrels in Beijing are dong is jailing about anyone who does not toe the commie line. In the excerpt below you see how a company which protected US citizens from fraud had its directors thrown i jail for exposing Chinese for what they are- lying thieves.

Excerpt

“Mr. Humphrey, 57, who is British, and Ms. Yu, 60, who is a Chinese-born, naturalized American, fit easily into the orbit of private investigators who must be part gumshoe, part financial analyst. Mr. Humphrey, who first came to China in 1979, had a long career as a foreign correspondent with Reuters, including in Central Europe. Ms. Yu is an accountant.

Mr. Humphrey was the founder of the Shanghai chapter of a Texas-based group, the Association of Certified Fraud Examiners, and gave a lengthy presentation last year at a conference in Hong Kong about how his company operated. Among his pieces of advice: “Think like the fraudsters.”

ChinaWhys, which kept modest offices in Shanghai, had about 10 employees, according to Xinhua, China’s state-run news agency.

Its clients included manufacturing, hotel and real estate companies and, most notably, GlaxoSmithKline, the pharmaceutical giant, which the Chinese government has accused of widespread bribery of Chinese doctors.

A Glaxo spokesman said Mr. Humphrey was never an employee of the company, but declined to say for how long or under what circumstances ChinaWhys did work for the company.

Acquaintances of Mr. Humphrey said they believed that Glaxo had asked Mr. Humphrey to find out if the company was in compliance with the Foreign Corrupt Practices Act.

In the CCTV report last month, a uniformed Shanghai police officer, Lu Wei, said the couple had collected the personal household registrations of Chinese citizens, known as hukous, automobile and homeownership records and details of cross-border travel.

The couple paid $130 to $163 per item of illegally obtained information, which they packaged into reports they sold for over $16,000 each, making about $980,400 annual profit, the report said.

It seemed likely that Mr. Humphrey and Ms. Yu were caught because they failed to adapt after the rules of the road changed last year.

That was when the Chinese government tightened access to corporate records at state industry and commerce bureaus, which give information about company structure, and made hukous virtually off-limits, several Western consultants said. The powerful Ministry of Public Security controls hukous, which are important to investors because they are often the only way to verify that someone is who he or she claims to be.

Many investigators stopped seeking hukous after a subsidiary of Dun & Bradstreet was charged in September 2012 by the Shanghai public prosecutor with “illegally obtaining private information from Chinese citizens.” Four employees were sentenced to up to two years in jail.

Mr. Humphrey appeared to be aware of the new limitations and wrote about them earlier this year on the Web site of the fraud examiners group.

“In February 2013, the government issued strict new rules to restrict access to what it called ‘personal information,’ ” he wrote. “I find this a step backwards that will make due diligence and catching fraudsters harder. We will have to be even more creative from now on.”

He described the consequences of failing to conduct proper due diligence, and cited the disastrous acquisition of a Chinese company, Siwei Mechanical Electrical Engineering, by Caterpillar last year.

“If Caterpillar had done the kind of due diligence” combining accounting with background investigation, retrieval of corporate records and discreet supporting inquiries, “it might have spotted the fraud before doing the deal,” Mr. Humphrey wrote.

There was no word from the Chinese authorities about when or whether Mr. Humphrey and Ms. Yu would be put on trial. The British Embassy in Beijing said it was concerned that Mr. Humphrey was “publicly interviewed about the details of his case, which is currently under investigation and has yet to come to trial.”

People with knowledge of the case said Mr. Humphrey was being held in the Shanghai Detention Center in Pudong.

The American Embassy in Beijing said consular officers had visited Ms. Yu on a regular basis since her arrest and would continue to do so.”

Link

http://www.nytimes.com/2013/09/14/business/global/china-hems-in-private-sleuths-seeking-fraud.html?pagewanted=all&_r=0

2 Responses to “Beijing Protecting Chinese Fraudsters”

  1. […] Beijing Protecting Chinese Fraudsters […]

  2. Me said

    China is cracking at the seams. If you are a fireigner, it us time to get out. The Chinese do not want you nor resoect any of us foreigners. We need to leave them in their misery.

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