A Koch exec’s harassment in China adds to fears among visitors

A Koch Industries executive was told he could not leave China. An ex-diplomat who helped organize a technology forum in Beijing was hassled by authorities who wanted to question him. An industry group developed contingency plans in case its offices were raided and computer servers were seized. Business executives, Washington officials and other frequent visitors to China who were interviewed by The New York Times expressed increasing alarm about the Chinese authorities’ harassment of Americans by holding them for questioning and preventing them from leaving the country.

They worry that trade tensions between Washington and Beijing could turn businesspeople and former officials into potential targets. Some companies are reviewing or beefing up their plans in case one of their employees faces problems, three people said. Many of the more than a dozen people interviewed by The Times asked for anonymity because they feared reprisals from the Chinese authorities. “In a very not-so-subtle manner, the Chinese government has upped the ante by detaining Americans at the borders and at their hotels, and with the obvious intent to send a message to the Trump administration that they can engage in hostage diplomacy if push comes to shove,” said James Zimmerman, a partner in the Beijing office of the law firm Perkins Coie, which works with U.S. companies in China. “If they go in that direction, this would not be received well by the American business community, which puts at risk billions of dollars of investment in China,” he said.

The problems escalated after Canadian officials arrested an executive of Huawei, the Chinese technology giant, at the behest of U.S. officials. China then detained a Canadian businessman and a former diplomat. The fear spreading through the U.S. business community highlights how fraught ties between the world’s two largest economies have become. Although President Donald Trump and China’s president, Xi Jinping, have agreed to restart trade talks, which broke off in May, the two sides remain far apart on the most contentious issues. Chinese officials see the U.S. trade stance as a threat to their country’s economic future. By imposing tariffs on Chinese imports, the Trump administration is encouraging companies to shift their supply chains away from China. The administration has also threatened to withhold crucial U.S. technology from some of China’s most successful companies. China has had to look further afield to find ways to punch back, in part because it imports less from the United States. The extent of the harassment is unknown, but several recent episodes are likely to add to the concerns. Companies that publicly discuss such problems in China could face punishment from the politicized court system, calls for boycotts in the state-run news media or other punishments meted out behind closed doors. Officials at China’s Foreign Ministry and the Ministry of Public Security, its main police agency, did not respond to requests for comment. Many U.S. business figures still come and go without major incident. Elon Musk, the chief executive of electric-car maker Tesla, was offered permanent residency by Li Keqiang, China’s premier, after he visited China in January to open a factory.

Still, a number of recent run-ins with the authorities have prompted broader worries. In late June, one U.S. industry group sent an email to its members detailing how it was trying to mitigate its own risks. “Foreign staff in particular have reported a high level of anxiety about the current environment,” it said in the message, which was reviewed by The Times. It said it was “in the process of finalizing a detailed crisis plan to be used in the event that one of our offices is raided and/or one of our staff is detained.”

Those plans included a procedure if its servers were seized. It also said it had reviewed insurance policies to ensure that staff evacuations were covered, and it recommended that workers not travel to sensitive parts of China. Washington officials continue to warn travelers that the Chinese authorities have blocked a number of Americans from leaving China, a practice known as exit bans. Many of those targeted are businesspeople. Often they are naturalized U.S. citizens who were born in China. In some cases, the Chinese authorities use such bans to exert pressure on Americans who are members of the families of local officials, like the wife and children of Liu Changming, a former executive at a state-owned bank accused of fraud. Huang Wan, the American daughter-in-law of Zhou Yongkang, a fallen former senior leader, has also publicly said she has been forbidden to leave. In early June, a Chinese American executive at Koch Industries, the conglomerate owned by conservative billionaire brothers David and Charles Koch, was told he could not leave the immediate vicinity of his hotel in southern China, according to three people with knowledge of the matter. He was then interrogated for multiple days, with the discussion hitting on the trade war and souring relations between the United States and China. While the authorities told the man that he would not be allowed to leave China, they did not take his passport. After the State Department intervened, tensions subsided and he was able to fly out of the country, the people added. Given some of the discussion, two of the people with knowledge of the episode involving the Koch Industries executive said they believed it was an attempt to send a message to Trump. The Kochs have traditionally been major financial backers of Republicans, including Mike Pompeo, the secretary of state and a former Republican congressman from Kansas. Koch Industries also has big investments in China, where it employs more than 23,000 people. Last year, a Koch subsidiary said it would put more than $1 billion into a chemical plant in Shanghai. But the Kochs, whose views are more libertarian than populist, have also criticized Trump’s trade and immigration policies, prompting the president on Twitter to call them “a total joke in real Republican circles.” In late June, the authorities tried to interrogate a former Beijing-based U.S. diplomat, according to three people with knowledge of the incident. The former diplomat had been attending an artificial-intelligence forum in Beijing, which he helped organize, when a hotel employee called his room on the night of June 25, saying that government security officers in the lobby wanted to speak with him. Alarmed, the former diplomat emailed the other U.S. conference attendees, then went down. Two plainclothes officers asked him to go with them to answer questions. They asked him about his diplomatic status and whether he had diplomatic immunity, the people said. They demanded to see his passport, which he refused to show. The former diplomat called U.S. Embassy officials. After a few senior diplomats arrived, the Chinese officers left, the people said. Other run-ins create an atmosphere of intimidation. Early this year, a technology industry executive who has traveled to and worked in China for more than a decade without major incident encountered authorities in a smaller city in eastern China, according to an account from the person, who asked not to be identified publicly for fear of retaliation. While the executive was traveling between meetings, a black car appeared to be following, often taking no precautions to disguise its presence. When the executive arrived at the airport to leave, a group of about six men with earpieces and bulletproof vests emerged from the car. One carried a visible sidearm, and another filmed the executive. Two of the men then followed the executive through security to the airport gate before the executive flew out. As the trade war has intensified, China has tried to use U.S. businesses to send a message to the Trump administration. It summoned U.S. executives in June to warn them that they would suffer if they followed the administration’s proposed ban on sales of U.S. technology. Businesspeople have taken new steps to reduce their profiles when traveling in China, including using burner phones and wiping laptops that may contain sensitive information, according to three people with knowledge of the matter. Overall, that has led to growing nervousness among businesspeople. “A lot of Western businesses are not willing to speak up loudly because they think things could get worse,” said Peter Humphrey, a British private investigator who was imprisoned in China in 2013 while working for GlaxoSmithKline. Now living in Britain, he advises companies on security and business issues in China and says his clients face growing retaliation. “I believe we are seeing the worst environment since the Cultural Revolution,” he added, “in terms of the extent to which people are under surveillance and control, and the extent to which people are punished.”

Source: Thestar.com

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