China Jails Australian for 13 Years

An Australian businessman along with his two associates were sentenced to prison on bribery and fraud charges. The businessman, Matthew Ng, is a Chinese-born Australian whose ties with a state-owned Chinese firm had soured last year. Ng is one of several Chinese-born Australians that have encountered legal problems in their business dealings in China. The New York Times reports:

Mr. Ng was detained in November 2010 amid a dispute between a travel company he founded, Et-China, and Chinese buyers headed by Lingnan Group, a hotel and travel conglomerate owned by the Guangzhou municipal government.

According to Et-China’s Web site and news reports, Lingnan had earlier sold Et-China a controlling stake in a subsidiary, GZL, that runs Guangzhou’s largest chain of travel agencies, for a reported $10 million.

In June 2010, a Swiss firm, Kuoni Group, agreed to buy Et-China in a deal that valued the company at some $125 million — including a multifold profit on its stake in GZL. Lingnan officials then demanded to buy the GZL shares back at their original selling price, news reports state, but Mr. Ng refused.

Australia’s prime minister Julia Gillard expressed concern about the charges in April during a meeting with Prime Minister Wen Jiabao. Australian diplomats had raised questions about the case with top Communist Party officials in Guangzhou, and also sought without success to open the trial to news coverage and move it to a larger courtroom.

The chairman of Ng’s company, Zheng Hong, and the Chief Financial officer, Kitty Yang, were given 16 and 3.5 year sentences respectively on embezzlement and fraud charges. Ng, Yang, and Zheng all plan to appeal the ruling. The Sydney Morning Herald adds:

”We are the sacrificial objects of this case,” Ng and Zheng both told Judge He Chunzhu, after being asked if they had any comments. Ng, Zheng and Yang all said they would immediately appeal against the verdicts.

Yesterday’s judge, Ms He, is also presiding over a similar case involving a successful Australian businesswoman, Charlotte Chou. Ms Chou’s case involves similarly murky allegations that the Guangzhou judicial system and a Guangzhou vice-mayor have received huge bribes to keep her in jail, while her business partner takes control of the profitable private university she established. Her case has also been adjourned, in the same Guangzhou Intermediate People’s Court.

In a high-profile case, Australian Stern Hu, an official with Rio Tinto, was sentenced to ten years in prison last year on bribery charges.