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Mark O'Neill

Ex-Brilliance chief accuses Liaoning of one-sided view in branding him a fraud

Mainland entrepreneur Yang Rong yesterday accused Liaoning officials of manipulating the law to seize his assets - a day after a province official labelled him a fraud who was never a private businessman.

In a statement  sent to the media, Mr Yang said the Liaoning government did not know the definition of a private entrepreneur.

'How can they say they regard private entrepreneurs highly?' he asked. 'How many more unjust cases will there be in China based on the Liaoning government's one-sided story? The Chinese law is being manipulated by a few Liaoning individuals.'

On Monday, Liaoning governor  Bo Xilai summoned reporters to a briefing during which  he said that  Mr Yang had never been a private businessman and had fled the country using  a fake passport.

The move was designed to counter a lawsuit filed by Mr Yang in Washington, which could hurt foreign investment in Liaoning.

In August, Mr Yang, former chairman of China Brilliance, filed a suit claiming US$690 million in compensation from Liaoning for assets he said it stole from him.

His lawyer, Jim Slattery, accused Mr Bo of sending a dangerous message to the global business community.

'Yang was forced out of his own company after working 10 years to develop a successful automotive business,' Mr Slattery said. 'Liaoning province seized his stock for less than 6 per cent of its market value after claiming it was state property. It did so without due process of law. This act looked like the action of a police state.'

Mr Bo's comments  were the first public response by the Liaoning government to the lawsuit.

'Yang was not a private businessman,' Mr Bo said. 'He was a manager and a representative of state assets. In taking over the state assets of China Brilliance, our province was implementing state policy.

'Liaoning province pays great attention to private entrepreneurs and strongly supports them in reviving our old industrial areas. The rights and interests of private business people will receive the protection of national law,' he said.

Wang Jindi, Liaoning's deputy secretary-general, read statements purportedly made by Mr Yang in September, 1993 in which the businessman stated he was merely the custodian of assets belonging to the state.

'He said many times that he wanted to hand the assets to the state,' Mr Wang said. 'Suddenly, in June, 2002, he disappeared and, using someone else's identity, illegally fled the country.'

The lawsuit is a high-profile case because China Brilliance was the first mainland company to list on the New York Stock Exchange, on October 9, 1992, raising US$72 million, and is the partner of BMW in its first joint venture to make cars in China.

Mr Slattery said  Mr Yang was removed from his post  because he tried to persuade BMW to set up the factory outside the province. The most likely venue was Ningbo, south of Shanghai, which offered Mr Yang a site in its Beilun harbour district.

In 2001, Forbes magazine rated Mr Yang the third-richest person in China, with assets of US$840 million.

Mr Bo had several motives  for a counter-attack. Attracting foreign and domestic private investment is vital to reviving what was China's most important industrial base in the 1950s.  According to official figures, there are 1.6 million unemployed and  80,000  jobs need to be found each year for the next five years. The actual number of jobless is probably substantially higher.

Mr Yang's case and a series of corruption scandals involving Liaoning officials have blackened the name of the province, discouraging investors.

Mr Bo said that, during the past two years, the province had attracted 19 billion yuan (HK$17.8 billion) in outside investment, creating 300,000 jobs and helping to relieve the unemployment pressure. He did not want Mr Yang's case to frighten  potential investors.

The law suit is the first case brought by a United States  citizen against a Chinese provincial government. The plaintiffs are Mr Yang, 46, who holds  a US  green card, and his wife, Rhea Yeung, who is a US citizen.

Liaoning  had 60 days from August 21 to enter its defence.

If the court  accepts the case, it sets a  precedent for China in allowing US citizens to sue Chinese state bodies  with substantial assets in the US.



Law being 'manipulated', says Yang