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Australian business leader arrested in China

Posted by Author on November 26, 2010

Sydney Morning Herald, Nov. 26, 2010 –

ONE of Australia’s most successful entrepreneurs in China, Matthew Ng, has been detained on suspicion of embezzlement after an acrimonious business dispute with his Chinese joint business partner.

Guangzhou police are yet to lay charges or reveal their case for detaining him and this week refused his application for bail.

Mr Ng’s incarceration comes nine months after Australian iron ore salesman Stern Hu was sentenced to 11 years’ jail, amid fears that China’s business playing field is increasingly tilted against overseas business people.
A spokesman for Foreign Minister Kevin Rudd said Mr Ng and his family were receiving consular help. A close business associate told The Age that Mr Ng’s ”mental state is deteriorating” and his wife, Nicki Chow, had taken refuge with their two young children in Hong Kong after becoming ”distraught” and ”needing medical support”.

A Guangzhou security source told The Age it was ”just an economic case”, but Mr Ng’s financial backers said ”foul play” was involved and they would keep fighting.

Mr Ng, 44, founded and ran a company called Et-china, which is now backed by powerful Australian and international business entities including James Packer’s investment fund, Ellington Capital.

Mr Ng has earned accolades for building Et-china into one of China’s largest privately invested travel companies and listing it on the London Stock Exchange.

But Mr Ng has been feuding over control of his company’s profitable subsidiary, Guangzhou GZL International Travel Services, with a local conglomerate, Guangzhou Lingnan International Enterprise Group, which has the backing of Guangzhou deputy mayor Wu Yimin.

A series of unsourced local media reports allege Mr Ng’s company acquired the Guangzhou business in breach of foreign ownership regulations with the help of its former chairman, Zheng Hong.

Since September, Mr Zheng has been detained in the Communist Party’s quasi-legal interrogation procedure known as shuanggui.

A representative of Et-china’s wealthy Australian shareholders told The Age that acquisition of the Guangzhou business had been approved by all relevant local authorities and audited several times. He alleged the detention was inspired by executives at the disgruntled partner company, Lingnan, which had been trying to frustrate Mr Ng’s agreement to sell the Guangzhou travel business to Swiss travel giant Kuoni Group.

”Lingnan believe if they can scare us off they can get the company for a song and then list it on the Shanghai stock exchange,” he said. ”What they don’t realise is we’ve been here for 10 years and we’re going to hang on.”

In May 2009, the Australia China Alumni Association honoured Mr Ng as its entrepreneur of the year. He is well known in Australian official and business circles. But his detention has not been publicised. ”I’m quite surprised, I didn’t know this,” said an executive officer at Guangzhou’s Australia China Chamber of Commerce.

Association founder Edward Smith told The Age that Mr Ng was a hard-working family man.

”Throughout all our dealings with Matthew he has always been extremely ethical and generous of his time,” said Mr Smith, who works at Beijing Consulting Group. ”We can only surmise that it is perhaps related in some way to a commercial dispute about the recent sale of Et-china.”

He urged the Chinese government to investigate promptly and transparently.

Et-china issued a statement saying Mr Ng had been detained on suspicion of ”misappropriation of company assets”.

Acting CEO Chris Rose urged authorities to resolve the matter and allow Mr Ng to return to work.

Born in Guangzhou, Mr Ng migrated to New Zealand in 1986 and Australia in 1992.

Sydney Morning Herald

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