What impact will Patrick Ho corruption case have on Chinese companies doing business in the US?
- Former Hong Kong minister was found guilty on seven counts after being charged under tough anti-corruption laws
- Details of how China conducts business overseas may have been most revealing part of trial
Former Hong Kong minister Patrick Ho Chi-ping made at least 116 trips to 30 countries in Central and North America, the Middle East and Africa in the three years before his arrest in 2017 for bribery and money laundering involving US$2.9 million.
As the head of a think tank fully funded by Chinese oil giant CEFC China Energy from 2010, he pursued business and promoted what he called “public diplomacy” for China through a global network of contacts.
Some of his trips to Africa, however, are now expected to cost him several years in jail, after he was convicted last Wednesday of bribery and money laundering in New York. Ho, who was arrested in November 2017, is being held on remand until his sentencing on March 14.
His trial tossed up details of big money changing hands and deals struck with high-ranking UN officials, and leaders in Uganda and Chad.
Some observers say the case might result in greater scrutiny of Chinese businesses and think tanks operating in the US. Others say it has given the world a glimpse of the way China has increased its presence and influence in Africa.
Ho, 69, was arrested and prosecuted under the Foreign Corruption Practices Act in the United States after law enforcement agencies discovered him wiring money through New York banks.
He was convicted last week on seven of eight bribery and money-laundering charges, all linked to the US$2.9 million in bribes he paid to state leaders and top diplomats in Chad and Uganda.
Ho claimed the money was paid as donations, not bribes.
His trial revealed that he set out to help Chinese firms invest not only in energy projects, but also in building infrastructure, buying banks to introduce bonds, and a renminbi clearance system in Africa.
Ho’s lawyers described his work as quasi-official in nature, hinting he was acting as part of China’s “Belt and Road Initiative”, the central government’s global trade push.
A top eye surgeon, Ho was Hong Kong’s secretary for home affairs between 2002 and 2007, then went on to set up his think tank – officially named the China Energy Fund Committee, but not to be confused with the oil company bearing the same initials – which was later given a special status by the UN Economic and Social Council.
Ho positioned his centre as a “high-end strategy think tank” aimed at increasing China’s influence in the global energy market. He also described CEFC China Energy as “a privately run company, but with very close connections with the highest echelons of the Chinese government”.
Court documents revealed that Ho may have first come to the attention of US authorities as early as July 2014, when he was recorded having a telephone conversation with Sheri Yan, a China-born businesswoman serving as an aide to then president of the UN General Assembly John Ashe.
Prosecutors said Yan called Ho to make sure he had made a “political donation” to Ashe, and hinted Ho could offer a larger contribution after Ashe stepped down from his one-year UN post.
Ho said: “The problem is, it’s give and take.”
Yan responded: “This is business, right?”
Almost a year later, Ashe and Yan were arrested and charged in the US in a high-profile UN bribery investigation involving Macau billionaire Ng Lap Seng, who was also nabbed.
Ashe died before the trial began. Yan pleaded guilty to paying Ashe US$20,000 a month to serve as the honorary chairman of a non-profit foundation she ran. She was jailed for four months in 2016. Ng was jailed for four years.
Around the time the pair were jailed, US authorities began applying for warrants to intercept Ho’s five email accounts, eventually gaining access to 100,000 of his emails and 200,000 emails and attachments from others involved in the case.
The oil company distanced itself from Ho after his arrest, saying his think tank was not involved in any commercial activity on its behalf.
But prosecutors painted a very different picture, describing Ho as a man who played a key role in creating direct business links for CEFC China Energy.
Ho stepped up his interactions with African officials in 2014, when the state-owned China National Petroleum Corporation faced allegations of corruption and CEFC China Energy explored taking over its overseas projects, including an oilfield in Chad.
Through former Senegal foreign minister Cheikh Gadio, also a consultant for the oil firm, Ho contacted Chad’s long-time leader Idriss Déby to discuss an oil deal for the company and ways to improve China’s ties with the country.
Although Gadio was arrested in the US too, he was never charged and he testified against Ho.
Gadio suggested that Ho and the company reward Déby “with a nice financial package as an entry ticket into the Chadian oil market”.
Ho and the CEFC delegation proceeded to stuff US$2 million in cash into eight gift boxes which were given to Déby during a meeting in December 2014.
Gadio told Ho’s trial that Déby was furious and rejected the bribe, saying: “Do you think all African leaders are corrupt?”
Both sides eventually agreed to make the sum a charitable donation.
The case also revealed Ho’s connections with two other UN General Assembly presidents.
He had been introduced to Gadio by Serbian diplomat Vuk Jeremic, who served his UN term as president before being hired as a CEFC China Energy consultant for US$330,000 a year.
Jeremic introduced Ho to another president, Sam Kutesa, Uganda’s long-time foreign minister.
Ho approached Kutesa about developing Uganda’s infrastructure and banking system.
He also recommended that Kutesa appoint low-key oil entrepreneur Ye Jianming, his think tank’s chief, as a special adviser. Kutesa did so while visiting Hong Kong in 2015.
Ye, who pledged US$500,000 towards Kutesa’s campaign funds, was later arrested in China on corruption charges.
While Ho waits to learn how long he will be locked away, veteran American criminal lawyer Robert Precht said the case could see Chinese companies and overseas institutes facing closer scrutiny by US regulators.
“Nobody seriously believes that Ho’s bribes on behalf of CEFC were an isolated event,” Precht said.
Clay Porter, head of investigations at US consultancy firm Navigant, said Ho’s case could also force US companies to review their relationships with Chinese partners.
“I guarantee you, companies out there have compliance officers saying, ‘Hey, did you see the fact pattern in the Ho case? Do we have anything like that?’” Porter said.
However, Lau Siu-kai, vice-chairman of the Chinese Association of Hong Kong and Macau Studies, a semi-official think tank, does not believe Chinese companies were the US regulators’ main target.
“The US will of course take action against foreign firms in order to protect its own national interest,” he said. “But so far, there has been no indication that the US has been trying to target China or Chinese firms only.”
Wilson Chan Wai-shun, a lecturer at Chinese University’s Global Studies Programme, thought it was normal for “public diplomacy” to advance the state’s interest or offer support from the state.
The scrutiny of Chinese institutes, particularly those of strategic importance, had begun years before Ho’s case and would only increase in the ongoing US-China trade war, he said.
But what Chan found surprising was the way Ho’s trial exposed how Chinese companies deal with African leaders.
“The Western world has always had its suspicions about how China entered the African market so easily. Ho’s case may provide an explanation,” he said.
Below is the chain of events which led to the trial.
Ho first meets former Senegal foreign minister Cheikh Gadio in New York. Ho tells Gadio, a friend to Chadian president Idriss Déby, about CEFC’s interest in a Chadian oilfield.
October 10, 2014
Ho first meets Sam Kutesa, the foreign minister of Uganda and president of the UN General Assembly, in New York.
November 7, 2014
Ho and a CEFC delegation fly to Chad for their first meeting with President Déby.
December 8, 2014
Ho and a CEFC delegation fly in a private jet for a second meeting with Déby in Chad. The delegation leaves eight gift boxes with US$2 million cash inside.
December 9, 2014
Déby feels upset about the cash, according to Gadio. Ho says the money is a donation, not a bribe.
March 30, 2015
Ho and CEFC meet Déby for a third time in Chad.
April 2, 2015
Ho and Gadio talk for the last time about the oil deal in Chad. The talks do not progress further.
August 2, 2015
Kutesa meets Ho and CEFC chairman Ye Jianming in Hong Kong, and appoints Ye as a consultant to Kutesa.
Kutesa returns to Uganda as foreign minister after a year at the UN.
May 5, 2016
After talks of cooperation, Ho’s think tank wires US$500,000, originally pledged as a campaign donation, to an account picked by Kutesa.
May 12, 2016
Ho and a CEFC delegation attend the inauguration of the Ugandan president, Yoweri Museveni, and dine at Kutesa’s residence.
May 13, 2016
Ho and a CEFC delegation meet Museveni in Uganda.
May 21, 2016
Ho informs Kutesa and his wife Edith that CEFC’s priority in Uganda is to acquire a bank, which later emerged to be Barclays Bank Africa.
June 16, 2016
A US court issues the first search warrant intercepting Ho and others’ email accounts, as requested by US authorities.
August 24, 2016
A US court issues the second search warrant intercepting Ho and others’ email accounts.
October 13, 2016
Edith Kutesa asks of Ho and CEFC’s interest in acquiring another local bank in Uganda. Talk over both banks never bore fruit.
October 24, 2016
A US court issues the third search warrant against Ho.
February 17, 2017
A US court grants last of four search warrants against Ho.
November 18, 2017
Ho is arrested by the FBI at New York’s John F. Kennedy Airport.
December 5, 2018
Ho is convicted on seven of eight counts of bribery and money laundering at New York Southern District Court.