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Patrick Ho

Patrick Ho case should serve as a lesson for Chinese firms doing business abroad

  • It is an unambiguous reminder to Chinese companies and businessmen going abroad of the imperative of complying scrupulously with the rules of other jurisdictions
PUBLISHED : Monday, 10 December, 2018, 5:47pm
UPDATED : Monday, 10 December, 2018, 11:16pm

The colourful rise and fall of former Hong Kong minister Patrick Ho Chi-ping seems to have ended in a New York federal courtroom, bar the sentencing next year. He can of course appeal against the unanimous guilty verdicts returned by a jury on seven of eight charges of corrupt and illegal business practices. But the lesson of the downfall of an advocate of China’s “Belt and Road Initiative” – a trade expansion strategy – stands. It is an unambiguous reminder to Chinese companies and businessmen going abroad of the imperative of complying scrupulously with the rules of other jurisdictions. The bribery and money-laundering counts on which Ho was convicted are serious matters. They involve offers of millions of dollars to African officials for oil rights in Chad and Uganda on behalf of Chinese conglomerate CEFC China Energy.

Ho, 69, who served as the city’s home affairs secretary from 2002 to 2007 before joining CEFC, faces the prospect of a long jail sentence. The jury found the payments were bribes and not gifts. He can be expected to appeal. However, not only were the verdicts unanimous but the jury did not find them difficult, returning in only three hours. Ho was convicted of violating the Foreign Corrupt Practices Act, which prohibits payments to officials to help obtain business, and anti-money-laundering laws. Firms with Chinese links have been punished before for violations, but Ho is the highest-profile case. The charges at first caused consternation and fuelled speculation about political motivation. However, they also prompted serious reflection on ways of doing business as more Chinese companies go abroad.

Music, medicine and an ominous fortune stick: Patrick Ho's life before scandal

The charges arose from the alleged use of the United States banking system to process bribes to obtain oil rights under the guise of donations originating from Hong Kong. The jury was not convinced by the denials advanced by a lawyer for Ho, who chose to remain silent. Ho’s résumé suggests he should have known better. The former ophthalmologist had not only served as a senior Hong Kong official, but also as a member of China’s national political advisory body and as a member of the Hong Kong Special Administrative Region Preparatory Committee.

His downfall should be a lesson not to be forgotten by Chinese companies and businessmen on the front line of the country’s overseas expansion, that they and their agents disregard or try to get around the rules and customs of foreign markets and financial networks at their peril. As Ho’s case shows, it is not worth the risk of the grief it can bring. For that matter, foreign companies have had to learn some painful lessons about doing business in China. Analysts say that with more outward-bound investment, Chinese firms can expect to come under even greater scrutiny as regulators familiarise themselves with different ways of doing business.