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Ralls lawsuit against Obama a 'lesson' for China investors

Chinese-linked company's lawsuit against the president of the US fights unfair treatment, says affiliate's director as case goes high profile

PUBLISHED : Friday, 19 October, 2012, 12:00am
UPDATED : Friday, 19 October, 2012, 3:33am

A lawsuit by Chinese-linked Ralls Corp against US President Barack Obama, Treasury Secretary Timothy Geithner and the Committee on Foreign Investment in the United States (CFIUS) has been called a lesson for mainland companies expanding overseas.

Ralls, of which mainland construction machinery maker Sany is an affiliate, has been ordered to divest its interest in four windfarms in the US state of Oregon amid national security concerns.

"We do not threaten US national security, have not broken the law and yet we are blocked. So we are forced to go high-profile in this case," said Sany Group director Xiang Wenbo at a press conference in Beijing yesterday.

The case will be heard in the US District Court of Washington DC on November 28, reported Xinhua.

Ralls is owned by Sany chief financial officer Duan Dawei and Sany vice-president Wu Jialiang, according to Ralls' lawsuit filed with the court on October 1.

"Everybody knows we have received unfair treatment in the US. The order was issued by President Obama. If we don't sue him, who do we sue?" Xiang was quoted on the website of the Phoenix television channel.

Wu, who is also Ralls's chief executive, was quoted by Phoenix as saying the lawsuit is a sign of its faith in the rule of law in the US.

"We will fight till the very end. We have no choice but to sue Obama and CFIUS. Normally, Chinese people would not resort to legal action, especially in foreign countries," Wu said.

On September 28, Obama issued an order that Ralls divest its interest in the windfarms near a military base within 90 days, remove facilities from the wind farms within 14 days and Sany equipment is not to be used on these windfarms.

"There is credible evidence that Ralls might take action that threatens to impair the national security of the US," said the order.

In August, CFIUS ordered Ralls to stop construction and remove facilities from the windfarms, banned Ralls from selling Sany turbines to third parties for use at the windfarms and required Ralls to sell the windfarms' property only to buyers approved by the US government.

Ralls' lawsuit is seeking a declaration from the court that the actions of Obama and CFIUS were unlawful and unauthorised.

"In issuing respective orders, CFIUS and the President acted in an unlawful and unauthorized manner. By failing to provide Ralls with sufficient opportunity to be heard, CFIUS and the President have unconstitutionally deprived Ralls of its due process," the lawsuit said.

On October 3, Xiang wrote in his blog: "The deeper reason for the ban is the rise of China's high-end manufacturing threatens US core economic interests. In my opinion, this action indicates China's economic honeymoon with the US and Europe is over!"

Sany was co-founded by its chairman Liang Wengen, who was ranked China's sixth richest man by Forbes this year with a net worth of US$5.8 billion. There has been speculation that Liang might be the first entrepreneur to be appointed to the elite central committee of the Chinese Communist Party.

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