06.12.11 MACCS Australian jailed for China embezzlement

An Australian citizen faces 13 years in a Chinese prison for embezzlement and corruption, raising concerns in the Australian government.

Matthew Ng, a Chinese-born Australian citizen, owned a travel company in the Chinese province of Guangdong. Between 2007 and 2008 his firm took a majority holding in a subsidiary of Lingnan Group, a corporation owned by the local government. Lingnan decided to reverse the deal in 2010, and demanded that he sell back the shares which he purchased at their original price.

When he refused, according to Australian analysts, he was punished by being arrested on bribery and corruption charges. At his trial, he told the court in Guangzhou that he was a “sacrificial object” in a bigger dispute between local players. The prosecution, however, said that he had bribed officials and illegally transferred money between his Chinese holdings.

The opacity of the case and the severity of the sentence, which local officials insist is in accordance with the law, has shocked many in Australia. Prime Minister Julia Gillard has taken the matter up with the authorities in Beijing, and other officials have put pressure on officials in Guangdong, but to no avail.

Australian commentators have argued that the case shows the “unbridgeable gulf” with China, an increasingly important trade partner for Australia. Concerns about the opaque and apparently arbitrary business environment in China have surfaced before, and the latest case will reinforce the impression that China is not open for business.

Sources: BBC, The Australian