He saw China's open door but it's closed to him

In 1981, amid the cold war, only a person of remarkable audacity, perhaps even hubris, would suggest that communist China would one day 'go capitalist'.

Steven Cheung Ng-sheong (pictured), self-assured and daring, fitted the bill perfectly. At the time, few agreed with the Hong Kong-born, US-educated academic's theory. Some called it wildly improbable. Cheung was already a respected economist in the 1980s, but his stature grew with China's GDP as his outlandish theory became conventional wisdom.

But the man who first predicted China's opening door can himself no longer cross the threshold into the larger world. He's a fugitive, hiding in plain sight on the mainland, on the run from US authorities who indicted him for tax evasion and fraud in 2003. At 74, Cheung still defies the odds, but he's fighting for his reputation, his assets and his freedom. In academia and in life, Cheung has always pushed the boundaries, and as a fugitive, he's employed every legal strategy at his disposal to protect what he believes is his.

Cheung's first six decades were years of steady achievement. Born in 1935 in Hong Kong, he moved to the US in his twenties, and eventually became a US citizen. After earning a PhD in economics from the University of California, Los Angeles, Cheung was awarded a postdoctoral fellowship in political economy at the University of Chicago in 1967.

There, he embraced the Chicago school of economics, falling in with a cadre of prominent economists and future Nobel laureates. Some thought Cheung, too, would one day be honoured as the first Chinese economist to win the coveted prize.

He took a post at the University of Washington in 1969, settled for more than a decade, built a consulting business, got married, raised two children, and eventually divorced. He moved back to Hong Kong as head of the University of Hong Kong's school of economics and finance in 1982. He married Linda Su Ching Ling, known in the US as Linda Su Cheung, who took over running his business in Washington.

In Hong Kong, Cheung was an academic celebrity, and a force in public policy. To this day, his economics works are mandatory reading for economics students in Hong Kong. But it all began to unravel in 2003, when he became the target of twin inquiries - the first for alleged tax evasion and fraud relating to income from a business in Hong Kong which was not declared in the US. Cheung's US citizenship makes him liable for tax on all income earned, anywhere in the world. He and his wife were indicted and ordered to appear in a US court, but they fled to the mainland.

He and his family were also investigated for selling fake Chinese antiques through a Washington state art gallery which they owned.

His legal travails were again spotlighted recently as a Hong Kong court dealt with a theft from an art gallery he owns in Central.

Attempts to reach Cheung for comment have been unsuccessful - e-mail messages to his publisher and his blog moderator have gone unanswered. A friend of Cheung declined to pass along an interview request.

For Cheung, investigations threatened his freedom as well as his reputation. He has fought back through the courts.

In February 2003, shortly after his indictment for tax evasion, Cheung launched a libel suit against the Chinese-language Ming Pao newspaper and its parent company for publishing an article that quoted a Seattle Times story about Cheung's ties to the sale of fake antiquities. Cheung sought to gag the newspaper and unspecified financial damages.

About the same time, the Cheungs sued a lawyer, Muriel Tsang Miu I, for allegedly disclosing confidential financial information about the Cheungs to US authorities.

The celebrity scholar has a long record of using the courts to try to rebuff critics.

In 1994, Cheung won a libel suit against Eastweek magazine for suggesting he failed to deliver lectures at the University of Hong Kong. A year later, Cheung threatened to sue the publishers of the Hong Kong Economic Journal for an article headlined 'Old Cheung is really boisterous'. In September 2000, Cheung sued University of Hong Kong professor Suen Wing-chuen for defamation, accusing the professor of making defamatory remarks about his performance and relations with colleagues and students. Cheung alleged that his contract as the head of the school of economics and finance was not renewed because of Suen's remarks.

As the Cheungs litigated in Asia to try to preserve their reputations, they fought in the US to retain their assets.

When they failed to appear in court, US authorities quickly moved to seize their American assets, including nearly US$1.5 million from Steven N.S. Cheung Inc. US authorities grabbed the cash after a company officer attempted to wire US$350,000 from the Cheung Inc bank account to an account in Hong Kong three days after the Cheungs' indictment, according to court records.

This was Cheung's 1977-established consulting business, of which he was initially president and sole shareholder, but he sold the company to his daughter, son and wife in the 1990s. By 2003, the company owned several subsidiaries - a Chinese restaurant, an aeroplane parts firm, a property management company, and the controversial Washington state art gallery. The company also owned a waterfront property, two Sea Ray yachts, and a Mercedes E420, which were primarily used by the Cheung family, according to court records.

Because Cheung had only a small stake in the company in 2003, the company fought the asset seizure in court and ultimately recovered the US$1.5 million, plus hundreds of thousands of dollars more in interest and fees. The case was finally closed six years later, in 2009. US authorities successfully seized US$69,000 from Cheung's retirement account. Since 2003, Cheung has lived on the mainland, out of reach of extradition by US authorities but rarely out of the spotlight.

He writes columns for the Hong Kong Economic Journal, is often interviewed for his take on economic policy and current events, and lives in an apartment in Shenzhen's upscale Futian district, according to a friend.

Despite his legal woes, Cheung has maintained his characteristic confidence, according to the Chongqing Morning Post. In a speech last autumn at Chongqing University, Cheung told students: 'You can burn all other economics books except mine.'

Over the years, the Cheungs have denied any wrongdoing, but could never prove their innocence because they fled to the mainland.

Recently, however, a Hong Kong court cast light on the Cheung tax evasion case. Judge Joseph Yau Chi-lap, commenting on the theft case involving Cheung's Central art gallery, confirmed Cheung's ownership of companies at the centre of the US case against him, the first time a Hong Kong official has affirmed details of the 2003 US indictment.

US officials remain tight-lipped. 'Our standard practice is not to comment on ongoing law enforcement cases,' Matthew Dolbow of the US consulate in Hong Kong said.

The United States can seize assets in Hong Kong, but gaining approval to seize Cheung's Hong Kong assets would be difficult because tax cases are treated differently from other criminal cases such as money laundering, a former prosecutor who worked on the Cheung tax evasion investigation in the US said. Because they never showed up in court, the Cheungs have not been convicted of a crime, and there are few avenues open to US authorities unless the Cheungs are charged with other crimes.

If, for example, the Cheungs had appeared in court in the US and then jumped bail, US officials could make a stronger case to seize their Hong Kong assets, the prosecutor said. 'One might infer that's why they never showed up,' the prosecutor said. 'It has worked to their benefit.'

There are still open arrest warrants for both the Cheungs. Interpol has issued a red notice on Linda Su Cheung, Steven's wife. Some countries use the red notice as a provisional warrant to detain a suspect for extradition. Hong Kong, however, does not.

The Interpol database did not list a red notice for Steven Cheung, who faces much more serious charges. The US consulate declined to comment when asked why a red notice has not been issued for Cheung. The US Attorney's Office did not respond to a request for comment.

Cheung's case is inactive because he is in a country where he cannot be extradited, said Rick Ploof of the US Marshals. But 'if he's travelling to Hong Kong, we can definitely work on getting him picked up', Ploof said.

However, Hong Kong authorities must receive a request by an extradition partner before they will arrest a suspect. As long as he remains at large, Cheung's legacy as a groundbreaking economist will retain a heavy asterix - alleged tax evader, fugitive.

The door is still open for him to cut a plea deal with the US, according to an associate who was involved in failed plea negotiations for Cheung in 2003. The associate said he receives calls from the US Marshals periodically asking whether Cheung is ready to cut a deal. Cheung isn't keen to turn himself in, 'because that would require him to admit he was wrong', the associate said.

'In his mind, Steven believes that he's the first Chinese economist who should have won the Nobel Prize. In the Chinese community, they really did believe that he would win the Nobel prize. I think he would have been nominated.'

Some have suggested that Cheung's mainland exile has isolated him intellectually, affecting his scholarship. For years he has written weekly columns for the Apple Daily and Next Magazine in Hong Kong, earning HK$20,000 apiece.

According to an executive close to Next and Apple Daily owner Jimmy Lai Chee-ying, Next stopped running his columns in June 2008 because he was too far removed from academia and the market, hampering his ability to analyse economic developments.

'What he wrote mostly about was how robust the Chicago school of economics was in the late 1960s, even though he had written about that a hundred times before,' he said.

However, the associate who was involved in failed plea negotiations said Cheung's views had evolved. 'What he's been writing has changed quite a bit,' he said. 'It's been more pro-China. He finds more to like about the Chinese economic system than he did before.'

At a 2008 forum on China's economic future, Cheung reportedly praised the Chinese system as the best in human history. His remarks were mocked by several bloggers, including prominent Chinese writer Xu Lai, who derisively renamed a summary of the forum 'Steven Cheung: China's system, #1 under heaven', in his satirical ProState in Flames blog.

The Cheung associate lamented the change he's seen in the professor. More than once, he mentioned a bizarre press conference Cheung called in 2003, where he decried the investigations against him.

'He stood up there in the Conrad Hotel press conference, saying: 'I know everything there is to know about antiques, I can spot a fake with the naked eye.' And the journalists were just laughing at him. It was so sad.'

Additional reporting by Vivian Li, Vivian Kwok and Austin Chiu