More details after the jump.

From the horse’s mouth first:

The new Hong Kong office will focus on corporate transactions and corporate compliance, regulation and investigations. The office will be anchored by Kelly Austin, who joins the firm as a partner, after eight years in Hong Kong with General Electric International, where she advised on Asia-wide Foreign Corrupt Practices Act (FCPA) and other compliance matters across GE’s Asian business units. Gibson Dunn partner Joseph Barbeau, who previously practiced in Hong Kong from 1985 to 1997, is relocating to Hong Kong from the firm’s Palo Alto office. Also joining them is associate Kate Yin, who is relocating from the Los Angeles office.

“Gibson Dunn has been expanding our global platform where our clients need us, recently in Dubai in 2007, Singapore in 2008 and São Paulo in 2009,” said Ken Doran, Chair and Managing Partner of Gibson Dunn. “We have been looking for the right opportunity in Hong Kong for some time, and the opportunity to bring Kelly on board was key to our decision.”

Doran added, “Kelly’s extensive experience in designing and running a world-class compliance program, leading internal and government investigations, and driving compliance leadership across the region will be a tremendous asset for our clients. Her regulatory and compliance practice complements the firm’s compliance and enforcement practices, as well as other significant practices at the firm.”

“Compliance issues in Asia present unique challenges and the risk of a local enforcement action for multinational companies operating in Asia is real,” said F. Joseph Warin, Washington, D.C. partner and Co-Chair of the White Collar Defense and Investigations Practice Group. “Many of the U.S.-based FCPA disclosure and enforcement actions in the last two years have had an Asia component, and combining on-the-ground expertise in Asia with extensive support from the U.S. offices positions us to be particularly effective for clients. Kelly’s addition enhances Gibson Dunn’s ability to service client needs in the areas of antitrust, FCPA and related anti-corruption statutes, securities enforcement, money laundering, technological transfers and trade sanctions.”

I actually really like this move. To have Kelly Austin come on board to offer FCPA services seems like a very good idea in light of the current administration’s efforts to curb illegal and corrupt practices. Especially in a place like Asia (cough *China* cough), where it seems like grease payments, bribes, guanxi, and relationships are all the rage, having an FCPA expert there can be a boon to business looking to cover their tails. I could also see the Asia local offices of large MNCs (multinational corporations) really hating Gibson Dunn and Ms. Austin’s “interference” with their standard business practices, so it’s a real gamble in my mind. I expect that US and European HQs will love it, locals will hate it. How compliant the clients will actually be is a crapshoot though.

They are also planning to build a standard corporate practice.

Barbeau’s 12 years in Hong Kong include broad experience with foreign investment in China, cross-border mergers and acquisitions for Hong Kong and U.S. companies, and representation of private equity and pooled investment funds across the region.

Now the question to me is: where are they are actually looking to pick up their clients? I’m guessing its not HK because they brought in two Caucasian faces as partners and their one associate, Ms. Yin, is a mainlander who graduated from BeiDa. So this is Gibson’s effort to pick up mainland Chinese clients. Ms. Yin doesn’t speak Cantonese, at least, that’s what I gather from her profile. Now, why in the world would they set up shop in HK? Except for Barbeau and Austin being there prior, it makes little sense to me. Part of it may be the headache of getting into the mainland, but part of it (in my mind at least) is that these two partners wanted to be in Hong Kong. Very interesting. This is going to be an interesting experiment, or just a stepping stone into the mainland.

Here is part of their press release:

Hong Kong – International law firm Sidley Austin has announced that Thomas W. Albrecht, a member of the firm’s Management and Executive Committees, is relocating from its Chicago office to its Hong Kong office to assume responsibilities as Managing Partner for the Asia Pacific region.

Thomas A. Cole, Chair of Sidley’s Executive Committee, said, “We are very pleased that Tom has assumed leadership for developing and implementing our strategic plan for the Asia Pacific region. Our appointment of a partner who is highly respected by clients and is also a member of the firm’s Management and Executive Committees underscores our long-standing commitment to the region.”

Charles W. Douglas, Chair of Sidley’s Management Committee, remarked, “In addition to his finance practice which has attracted clients in the U.S., Europe and Asia, Tom has provided leadership for the expansion of the firm’s non-U.S. offices over the past fifteen years. We are tapping that experience for the further development of our operations in the Asia Pacific region, recognizing the increasing importance to our clients of that fast growing part of the world. The firm’s ability to realize its ambitions for our Asia Pacific platform will be greatly enhanced by basing Tom in our Hong Kong office.”

Mr. Albrecht will be working closely with two other members of Sidley’s Executive Committee presently in the region – Tomoo Nishikawa, the Managing Partner of the Tokyo office, and Constance Choy, a Corporate Finance partner in the Hong Kong office. William O. Fifield, who has served as Sidley’s Managing Partner for the Greater China region since 2005, will continue in that capacity until the end of 2010, when he will return to the United States.

Mr. Albrecht has been with Sidley for more than thirty years and is an accomplished finance lawyer. He has been recognized by several publications including Chambers Global and Chambers USA as a Leading Lawyer. He is co-head of Sidley’s global structured finance and securitization practice and has extensive experience in secured financings, structured finance transactions, restructurings, workouts and cross border financings and securitizations. His clients include investment banks, commercial banks, multinational corporations and insurance companies. He received his J.D., cum laude, Order of the Coif, from The University of Chicago Law School in 1979.

Honestly, I’m sure that Tom Albrecht is a good lawyer (or at least a good rainmaker). But given that the firm trusted a Japanese attorney to actually lead the practice, why a different approach for China/greater APAC? Note that Connie Choy is an HK based partner–why not her? Perhaps Albrecht is a better manager? Maybe. Or maybe he’s just more trusted since he’s as much a Sidley insider as you can get.

But at some point, I’m not sure that this is necessarily the best move. For a firm that prides itself on a strong Asia practice, you’d think they would tap an Asian attorney to manage the region–or at least someone who has Asia experience. Look at the firm’s offices:

Sidley has had an established presence in the Asia Pacific region for more than 25 years, having opened its first office in the region in 1982. It was one of the first U.S. firms to offer Hong Kong, English and U.S. law capabilities to clients. Within the region, the firm currently has offices in Beijing, Hong Kong, Shanghai, Singapore, Sydney and Tokyo.

So you want to tell me that your partners in Singapore, Shanghai, HK, or Beijing couldn’t run your China practice? That your current head of China practice who is coming back soon is an American is one thing. But that you couldn’t replace this significant of a figure with a local? Obviously I don’t know the firm well enough to know the personnel, and this may have been a spectacular choice. But that’s not apparent to me and left me scratching my head.

Here is their description of the program:

As more and more businesses expand into China and as the Chinese legal and business environment continue to mature, in-house counsel need to learn how to draft effective contracts with Chinese parties. Using a hypothetical joint venture model as a framework, the speakers will highlight common problem areas with joint venture, IP licensing, procurement and supply and real property agreements and offer suggestions for avoiding pit-falls and increasing the chances of enforcement. The speakers will also discuss the most effective mechanisms for resolving contractual disputes in China.

Speakers:
Andrew Pollock, Associate, Blake, Cassels & Graydon LLP
Michael McGowen, Asia Pacific Counsel, Cabot Corporation
Audrey Chen, Partner, Jun He Law Offices

Moderator:
Michael Chang, Senior Counsel, Warner Bros.

Well worth the hour to listen to it. It’s general, and not in-depth, but its a good start.

Here are some excerpts from their press release:

International law firm Weil, Gotshal & Manges announced today that John Fadely has joined the firm’s Hong Kong office as a partner and a member of the firm’s top-ranked global funds practice.

Mr. Fadely has extensive experience in Asia representing international and Asia-based sponsors in the formation and restructuring of Asia-focused private investment funds, including private equity funds, real estate funds and hedge funds, as well as in the formation of joint venture investment vehicles and carried interest plans. Mr. Fadely has also been active in representing institutional investors in private funds, including the formation of sizable co-investment vehicles.

Notably, Mr. Fadely (who is fluent in Mandarin Chinese) has been at the forefront of the recent formation of RMB private equity funds. He will work closely with Weil’s Shanghai and Beijing offices on China-focused funds and with the firm’s global fund formation group on global and Asia-focused funds. In addition, having practiced law in Japan for three of his eight years in Asia, Mr. Fadely will also continue to work on funds formed to invest in Japan and other Asian jurisdictions.

“Expanding our funds practice in Asia will allow us to better serve fund sponsors globally, particularly given the increasing focus of sponsors on Asia for both their fundraising and investment activities,” commented Barry Wolf, Executive Partner of Weil and prominent funds lawyer. “John brings to these clients both an understanding of international market norms and substantial experience in adapting those norms as necessary to the commercial, regulatory and tax environments in Asia.”

“John’s fund formation practice naturally builds on the strength of our Asia transactional practice. His addition will help us to continue delivering comprehensive support in Asia to private equity and other fund sponsors through all phases of the investment cycle, from capital formation to capital deployment and exit,” noted Weil’s Managing Partner for Asia, Akiko Mikumo.

“We are delighted that John is joining us. John will bring an added dimension to our clients, especially given the increasing importance of RMB funds and onshore-offshore fund structures to the China private equity market,” added Steven Xiang, Head of the firm’s China practice.

Seems like a good move since his practice has obvious synergies with the rest of the China practice. Only time will tell of course.

First off, they two speakers noted that the IRS has very good materials on its website about what lobbying is.  For example, the IRS site states:

An organization will be regarded as attempting to influence legislation if it contacts, or urges the public to contact, members or employees of a legislative body for the purpose of proposing, supporting, or opposing legislation, or if the organization advocates the adoption or rejection of legislation.

Organizations may, however, involve themselves in issues of public policy without the activity being considered as lobbying.  For example, organizations may conduct educational meetings, prepare and distribute educational materials, or otherwise consider public policy issues in an educational manner without jeopardizing their tax-exempt status.

Drew Porter noted the rules for lobbying are very clear because they were designed by tax lawyers to be “formulaic”, and of course, he is right on the money.  There are two types of lobbying, direct and grassroots.

• Direct: communication with a government official on legislation, which has to express a view on a specific proposal
• Grassroots: communication out to general public (facebook, tweeting, mass media, news, etc.) expressing view on a specific proposal

So how can you avoid lobbying?  Make sure you leave out one of the elements.  For example, you can tweet just fine—just avoid a call to action.  An you’d be surprised that you can say quite a lot rather freely.

Social media is a dangerous spot.  If any tweets, posts to the wall, etc., deal with legislative activity, both Lawrence and Drew said they would review the tweets and Facebook pages to make sure that a call to action was avoided.

Another common problem with social media is that they contain third party links in the posts/tweets/blogs/walls.  And often those are calls to action.  They emphasized that the links should be to general website pages, and not the direct call to action.  Definitely something to watch for since many staff in the non-profit and philanthropy sectors aren’t so careful with their social media.

Two suggestions that they ended with.  1) Produce a one page document that trains your staff on what lobbying is.  Yes, it is possible to do this.  And make sure it teaches creative ways and substitutes for how to leave out one of the lobbying elements.  2) Create pre-made talking points for your staff.  That way you can make sure they have something that won’t violate IRS regulations memorized.

All in all, very good advice for those who don’t want to incur some interest tax liabilities.

She came out very strongly that compliance and ethics polices are not optional for non-profits and exempt organizations.  In fact, she suggested that all non-profits should model everything as close to Sarbanes Oxley as possible, even though we are not governed by SOX.  Her thought is that we can do a lot in the non-profit sector.

All good tips for good non-profit compliance!

The morning session opened up with Sarah Hall Ingram, Commissioner of Tax Exempt and Government Entities (TE/GE) Division of the Internal Revenue Service (“IRS” or the “Service”). She had quite a bit to say in terms of developments, and I found some particularly interesting:

• Employment. The Service talks a lot about EO’s as charities, as taxpayers, etc. But there isn’t a lot about EO’s as employers. One thing she noted was the new Small Employer Tax Credit. It is applicable to non-profits because its’ measured by FTEs and not assets. (up to 25 FTEs) For small businesses, its taken against income; however, the Service provides a different set of rules for small non-profits. So if you are a small non-profit, you’ll want to check with your accountant/auditor about this.
• Governance. It was the buzzword of the morning actually. Sarah re-iterated over and over that this is one issue that needs to be part of ongoing education of non-profit executives, attorneys, accountants, boards, etc.
  • Note: The Service does not have a set of rules for governance.  Sarah (as well as Lois Lerner, also IRS) stated that there are principles of governance and its up to non-profits to create good, reasonable governance structures to fit their situation.
  • For new non-profit registrations, they want to see good governance from the beginning—its less to worry about. Here are some areas that the IRS particularly is checking:
    • Mission statements—IRS cant tell anything about an organization most of the time because consultants create flowery mission statements that say very little.   In other words, it was a warning to all of us to create true and accurate mission statements.
    • Board of directors—they should be involved and independent, but the extent is up to us to determine
    • Transparency, the point of the form 990 moving forward
• Studies and questionnaires: the Service uses these as compliance checks, and not a full exam or audit. Sarah mentioned that it gives them an opportunity to see what people are doing.
  • Executive Compensation Setting. The IRS is looking into how non-profits are setting compensation: what’s behind the rebuttable presumption and how each organization factors in things like for-profit comparables, etc.
  • Charitable Spending. The IRS wants to know about the sources and use of funds in charitable sector, with particular focus on 1) non-profits that spend an “unusual” amount on fundraising and 2) non-profits with lots of UBIT with low levels of program service expenditures. In other words, organizations that look a lot like businesses. If you fall under these categories, you have been warned.

Sarah said a lot more, but these are definitely the highlights in my mind. Will continue to blog away.

Here are two that looked pretty good to me. First is a 90 minute webinar on the FCPA entitled “Foreign Corrupt Practices Act Compliance In Joint Ventures and Consortia”. It’s being presented online Wednesday, April 21, 2010 at 1-2:30pm EDT:

This CLE webinar will provide counsel for companies in international joint ventures or consortia with guidance on effective compliance programs to minimize FCPA risks. The panel will examine the unique FCPA issues in such JVs, offer best practices to mitigate risks, and review strategies for handling investigations.

Most Foreign Corrupt Practices Act (FCPA) compliance risks are due to third party conduct, including joint venture (JV) partners and agents. However, the usual steps taken by companies to minimize FCPA risks don’t work in JVs and consortia.

In international joint ventures, unreliable partners must be identified early—and either avoided or carefully managed. Companies and their counsel must develop and implement tailored compliance programs to reduce the risk of government investigations and penalties.

They even provided a nice outline of the program:

I. FCPA risks and steps to minimize risk for JVs and corsortia
     A. Unique risks
     B. Due diligence
     C. Board/management reviews
     D. Compliance obligations in JV documents
     E. Audits and approvals
     F. Right to terminate
II. JV partners
     A. What can be expected from JV partners
     B. Handling disputes with JV partners
III. Best practices when facing:
     A. Investigation of the JV
     B. Disputes among JV partners

The speakers list consists of:

Judith A. Lee, Partner, Gibson Dunn & Crutcher, Washington, D.C.
Edward L. Rubinoff, Partner, Akin Gump Strauss Hauer & Feld, Washington, D.C.
Edward J. Fishman, Partner, K&L Gates, Washington, D.C.

And if you don’t want to do general FCPA compliance, and instead are looking for something more China specific, then Strafford is also offering “Foreign Corrupt Practices Act in China for 2010: Compliance Strategies Given China’s Unique Cultural and Governmental Intricacies”. Also a webinar, on Thursday, May 20, 2010, at 1-2:30pm.

A little more about the program:

U.S. companies continue to conduct business in and with China at an increasing pace, and China’s unique business culture provides ample opportunity for employees to cross the line and violate the Foreign Corrupt Practices Act.

The SEC and the U.S. DOJ continue to increase scrutiny of U.S. companies’ dealings with overseas officials and to strengthen FCPA anti-corruption enforcement efforts. At least two dozen U.S. companies had FCPA issues involving China in the past several months, with many in ongoing investigations.

Another handy outline:

I. Risk factors of doing business in China
     A. Defining government officials
     B. Defining a bribe
     C. Exposure to third party you may not control
     D. Chinese business culture/practices
     E.Reach of the FCPA in China
II. Intersection of FCPA and local Chinese anti-bribery laws
     A. Congruency of the laws
     B. Enforcement of Chinese anti-bribery laws
     C. FCPA affirmative defense to prohibition of payment that was lawful under rules/regulations of the country
     D. Gift giving
III. Best practices for mitigating risk
     A. Monitoring
     B. Compliance program
     C. Internal controls
     D. Education/training
     E. Due diligence
     F. Steps if misconduct is suspected

Here is your speaker list:

Kyle A. Wombolt, Partner, Goodwin Procter, Hong Kong
Amy L. Sommers, National Partner, Squire Sanders & Dempsey, Shanghai, China

Both look very interesting!

Here is the program description:

Interested in developing an international law career? These programs, geared towards both law students and practitioners, will feature a panel of seasoned attorneys practicing in several fields in the international law area. The panelists will discuss their respective paths in pursuing an active international law practice, provide advice about starting or growing an international law practice in this challenging market and answer questions from attendees.

Panelists:
Cedric C. Chao / Morrison Foerster
Dean Fealk / DLA Piper
Amy Reinhorn / Reinhorn & Associates
Neil A. Smith / Sheppard Mullin Richter & Hampton LLP
Daniel R. Zimmerman / Sonnenschein Nath & Rosenthal LLP

Should be interesting since they have very different practices: international arbitration (Cedric Chao), corporate (Dean Fealk, Daniel Zimmerman), IP (Neil Smith), and immigration (Amy Reinhorn).

I would attend myself, but I am trying to close two M&A transactions at once, one of them being cross-border. As you can imagine, I haven’t slept much (Baby China Esquire notwithstanding), and as a result, the blog has been third priority. Apologies for the late notice!

An article from the Washington Post summarizes:

The Chongqing Municipality No. 1 Intermediate People’s Court upheld Li’s conviction but reduced his original sentence by one year because he repeatedly admitted to the charges against him during the latest trial, the court said on its Web site, without referring to any kind of plea bargain.

So what were the shenanigans this time that made it worth posting about?

But the Beijing Evening News reported that Li Zhuang yelled out in the court after the punishment was announced that he only confessed during the appeal after a “relevant official” told him that doing so would get him a suspended sentence.

Li apparently believed he had struck a deal with prosecutors ahead of the sentencing, the Beijing Evening News reported. He spoke out angrily, saying “I didn’t confess, the confession during this appeal was fake,” the paper reported, citing his lawyer Gao Zicheng.

“Li Zhuang yelled in the court, ‘Before the trial started, a relevant official promised that as long as I confessed, they would give me a suspended sentence’,” Gao was quoted as saying.

A standard defense lawyer tactic, the plea bargain, apparently doesn’t work in China either. Why? Because you have to have an honest prosecution to make it happen. Obviously, that wasn’t the case here. You know its a bad sign the prosecution is a conniving slime ball, and not the defense lawyer. (caveat: I don’t believe all defense lawyers are slime balls, I’m just having fun with imagery here) At the same time, I’m not all that surprised that various players in China’s justice system play fast and loose with their words (i.e., the truth), though it makes me think that some of the various reports of substantial progress for the Chinese justice system are a tad overplayed. (and yes, I do believe that it is making progress)

I’m not sure whether to laugh or cry about all of this frankly.

Again, caveat: I normally don’t just go into attack mode like this anymore. (I don’t litigate on a regular basis anymore and I try to turn off this gear that’s internal to my brain) But if you want to read on, feel free.

Let’s just get right into each argument, one by one. It’s easier to do it that way. And for me to call out each of these alleged “experts” as a bunch of people manufacturing lame arguments for the sake of their national pride.

China’s Criminal Law stipulates that the trafficking of more than 50 grams of heroin is punishable by death.

“According to China’s Criminal Law, the death sentence given to him is legitimate and it has nothing to do with human rights concerns,” said Wang Mingliang, professor of criminal law at Shanghai-based Fudan University.

Sure, that’s true… absent any context. The criminal law says you cannot do certain things. But the law isn’t blind. Law is applied to factual scenarios. And in this case, if you are going to appeal to the law to justify your conduct, then please read my last post where I call this out as the Nuremberg style appeal.

“Some Western countries also retain capital punishment, and its existence does not equate to a lack of human rights,” Wang said.

IRRELEVANT. Yes, some western countries retain capital punishment for particular offenses. But capital punishment’s existence isn’t the issue. It’s the use and/or implementation of capital punishment in this situation: on someone who is incoherent and mentally ill/disturbed. The fact of the matter is that China executed a man who had a very valid defense/mitigating factor. And they did it in a way that mocked any notion of judicial due process and fairness. That’s the human rights issue, not the existence of capital punishment itself. Sorry Professor Mingliang Wang, this argument is a loser.

Xue Jinzhan, professor of criminal law at the East China University of Political Science and Law, also in Shanghai, said the administration of the death penalty related to a country’s history, culture and other conditions.

China strictly enforced the law without discrimination in handling the case, Chinese legal experts told Xinhua.

Again, irrelevant. Agreed, the death penalty is not uniform. However, the issue isn’t the fact that the death penalty is or is not administered. It’s how. The “discrimination” language is a red herring here. The Chinese courts didn’t discriminate. They just exercised massive incompetence to the point of leaving justice at the doors of their courtroom. They didn’t allow a man to get a mental examination and wanted him to prove up his own mental condition. How? Did you leave your common sense at the door when you became a judge? It’s idiocy in action. This is not about discrimination, unless you mean the Chinese courts decided really to discriminate against a mentally ill person.

“It’s human nature to plead for a criminal who is from the same country or the same family, but judicial independence should be fully respected and everyone should be equal before the law,” Xue said.

I disagree. Judicial independence is not to be fully respected if its frankly bad and/or incompetent. This case was probably a little of both. Judicial independence is a trait that we value, but that does not mean we cannot criticize the obvious failings of another country’s judicial system. That’s not independence. That’s turning a blind eye to someone blatant.

Everyone should be equal before the law. Actually, not always. The law is applied to factual scenarios and circumstances. That’s why there are mitigating circumstances, defenses, etc. That is a misapplication of that phrase. Everyone has to obey the law, that’s for sure. But the application of the law, particularly punishments, are not “equal”. They are often specifically tailored. (That’s why people hate mandatory sentencing guidelines in the U.S. now) Or at least, they should be. Guilty/not guilty, yes everyone is equal. Sentencing/retribution/punishment, no, not everyone is equal. Do thieves who steal $25 and $25 million get equal sentences? No. You are supposed to tailor the sentence for a mentally ill person.

Wang said it could be understood that British media ran emotional stories and local people reacted with sorrow or anger as Britain did not retain the death penalty.

“But one country should respect judicial independence of another country, without any interference in internal affairs,” Wang said.

“Shaikh’s case serves as a testimony to China’s judicial justice, which deserves full respect from other countries.”

Here is China pullings its, “we’re handling internal affairs, look away now” card. Come on. Or better yet, just shut up. Countries meddle in each other’s affairs all the time. That’s the point of diplomacy. I don’t believe for a second that China doesn’t the do the same with other nations. Because they don’t.

And sadly Professor Wang, if you really think the Chinese judicial system deserves respect for this case handling, you are badly mistaken. It deserves disrespect in every way, shape, and form. And I don’t think you even believe your own words on this one.

Western reports said British Prime Minister Gordon Brown condemned Shaikh’s execution in a statement issued on Tuesday and that Brown had even personally spoken to a senior Chinese leader about the case.

“It would have interfered with China’s judicial authority if the senior leader had accepted Brown’s request. How could a criminal be exempted from the death penalty only because he was British?” Wang said.

Red herring again. No one said he was exempt because he was British. Why make the argument if you know its a loser?

Experts said courts in China had the right to decide whether a psychiatric assessment was necessary.

“The court, based on available evidence, decided not to do the assessment, and it was strictly in line with the law,” Wang said.

China’s Supreme People’s Court on Tuesday issued a statement, saying it had reviewed and approved the death sentence against Akmal Shaikh and there was no reason to cast doubt on Shaikh’s mental state.

Again, I call Nuremberg. Sure it was in line with the law… at least, that’s what you’re saying. (But as Professors Cohen and Clarke note, actually, it’s not in line with the law because even the Chinese codes afford mentally disturbed people a defense) But was it in line with real justice, fairness, due process? No. (Again, see my last post if you need details) The court, based on available evidence, conducted judicial error by refusing to proceed. If this happened with a trial judge here, the appeals court would have no problem calling that judge out for this.

The Supreme People’s Court here was a rubber stamp if you ask me.

So ultimately, you have two “educated” law professors going on the record in Chinese media to say that the execution was legitimate. So what? So you can force more Kool Aid on the populace? To save face for the nation? To be the expert propaganda? Whatever the reason is, these two law professors lost their credibility with me.

]]> http://www.chinalawandbusiness.com/2009/12/examining-chinas-expert-defense-of-the-uk-execution/feed/ 1 http://www.chinalawandbusiness.com/2009/12/execution-of-mentally-ill-man-is-two-steps-back-for-china/ http://www.chinalawandbusiness.com/2009/12/execution-of-mentally-ill-man-is-two-steps-back-for-china/#comments Tue, 29 Dec 2009 09:56:48 +0000 Thomas Chow http://www.chinalawandbusiness.com/?p=462 CNN just published an article, “China executes British citizen for drug smuggling”. I normally don’t try to weigh in and blatantly criticize the Chinese justice system despite certain corrupt documented incidents and obvious issues because it’s been improving over the years, and I have been hopeful that the rule of law has a chance to survive there. I am, however, severely disturbed about the recent execution of the mentally ill British man when there were obvious due process issues, despite The Global Times insisting that “the trial process was extremely careful”.

The CNN article reads:

Akmal Shaikh was convicted of carrying up to 4 kilograms (8.8 pounds) of heroin at the Urumqi Airport in September 2007. China says he received due process under its laws, and he exhausted his appeals last week.

The British Foreign Office confirmed Tuesday’s execution, however, there was no immediate comment from China.

Ahead of carrying out the death sentence, China said it had followed the law.

“This case has always been handled according to law. During the trial, the defendant has been guaranteed his legal rights,” Jiang Yu, spokeswoman for China’s Ministry of Foreign Affairs, said last week. “Everyone knows that international drug smuggling is a grave crime.”

Oh yes, I agree that it’s a grave crime. I am not minimizing what happened because it is serious. But frankly speaking, so is murder. The fact that China has to go back to the defense of “we followed the law” attests to the fact that (1) this really is an atrocious situation, (2) they probably know better but are unwilling to do anything about it, and (3) care more about saving their face (as usual) than about actual justice. In fact, these words remind of one thing: the Nuremberg trials. The Germans insisted that they followed the laws in annihilating the Jewish people during the Holocaust too. No, this situation isn’t quite as atrocious as that, but there is something chilling when this is your fall back excuse.

For those of you who haven’t been following this case, just how much due process has there been here? I will let Professor Jerome Cohen speak to this, courtesy of Professor Donald Clarke’s blog:

Chinese legislation exempts from criminal responsibility someone unable to recognise or control his misconduct, and provides for reduction of punishment in cases of partial mental capacity. But Shaikh’s 30-minute first instance trial ignored this major aspect of justice.

By the time of Shaikh’s second instance trial, on May 26, the London-based rights organisation, Reprieve, had sent British forensic psychiatrist, Dr Peter Schaapveld, to Urumqi in the hope of conducting an examination that would confirm Shaikh’s condition and inform the court’s review. Unfortunately, without explanation, Schaapveld was denied an interview with Shaikh. He was also not permitted to attend the judicial hearing.

Moreover, the authorities, which had initially indicated that they would allow a local doctor to evaluate Shaikh, changed their mind. The reviewing court thus had the benefit of no expert opinion on this crucial issue. It did, however, apparently allow the defendant the opportunity, against the advice of his lawyers, to deliver a rambling, often incoherent, statement that caused the judges to openly laugh at him.

The second instance court affirmed Shaikh’s death sentence and, although both his fitness to stand trial and his mental state at the time of the offence were in doubt, the Supreme People’s Court has now agreed.

Yet there has been no indication that the mental condition of the condemned has ever been professionally evaluated, despite concerns expressed by the British government and the EU, as well as Reprieve and other organisations that have compiled massive evidence that Shaikh has long suffered from a serious bipolar disorder.

I don’t think I need to comment at length about this. Even an elementary school (primary school) student could probably tell you that something is seriously wrong about this. 30 minute trial? Judges laughing at someone who is obviously mentally disturbed? Denying a local professional evaluation? Need I say more? This is a miscarriage of justice… though the Chinese adamantly claim that they followed proper procedures, thereby implying that justice was done. It wasn’t.

On a tangent, people often wonder why Americans stay on death row for so long and criticize that fact. (Don’t get me wrong, I’m not a strong supporter of this practice, but then again, I’m still on the fence about capital punishment outside of very extreme circumstances) The positive effect: repeated appeals and an long habeas can sometimes lead to revelations of procedural mishaps, ineffective counsel, etc., which gets them out of their death sentences. Maybe China could learn something from America and at least allow some time before executing a person–particularly in a case like this that has attracted international attention.

This is one step back for the development of the Chinese judicial system. So why do I say two steps back? It’s the fact that China has lashed out against the criticism in its usual hear-no-evil-see-no-evil-do-no-evil sort of delusion, intentional blindness, or whatever you want to call it. Professor Clarke blogged this:

As I was getting on a plane in Beijing on Dec. 23rd, I picked up a copy of the nationalistic ???? (Global Times), which saw the UK government’s protest as a hypocritical plea for special treatment for foreigners. “?????????????????‘??” (Don’t the Westerners most emphasize “all are equal before the law”?), asked the reporter (this wasn’t even an op-ed piece!) sarcastically.

Apparently China’s government feels that national honor depends on executing this pathetic and deluded man.

Special treatment? Please. All are equal before the law, but the law isn’t blind. The law looks at facts and circumstances, including mental illness. I also find it ironic that if this happened to a Chinese person in a western nation, the public outcry of the Chinese would be out of control and probably be much nastier, far more rabid, and more widespread on the internet. This is not a hypocrisy issue. And I think Professor Clarke nails it on the head: China, as always, thinks that their national honor and face is at stake. It is. Sadly, the nation got it wrong this time. Dead wrong. For someone to admit there is a problem is not saving face. It’s being stupid and then deluded about it too.

This is two steps back for China because now China will: (1) have to continue to justify itself for at least some period of time, leading to an adamancy that does not help judicial progress and change; (2) act like nothing is wrong, and set a precedent for the future… in a bad way. How can the nation ever admit that it screwed up in the past? Especially a nation so proud and so concerned about its image as China? It will be near impossible. (3) Continue to try to message to its people using its state owned propaganda… I mean media… and end up forcing its people to drink the Kool Aid a little longer. Which will harm your nation if your people don’t know how to be critical, how to properly dissent, etc.

I know my posts normally don’t contain this sort of tone. Again, I try to not criticize as harshly on a normal basis. But in this case, I had to because I found this so startling a situation. The second to last paragraph of the CNN article states:

Before the execution, Philip Alston, the U.N. special rapporteur on extrajudicial executions, said it would be a “major step backwards for China” to execute a mentally ill man.

I couldn’t agree more. What do others think?

]]> http://www.chinalawandbusiness.com/2009/12/execution-of-mentally-ill-man-is-two-steps-back-for-china/feed/ 0 http://www.chinalawandbusiness.com/2009/12/standard-defense-lawyer-tactics/ http://www.chinalawandbusiness.com/2009/12/standard-defense-lawyer-tactics/#comments Thu, 17 Dec 2009 07:38:41 +0000 Thomas Chow http://www.chinalawandbusiness.com/?p=455 Apparently, there is a crackdown on corrupt officials and organized crime in Chongqing. Others caught up in the sting? Defense lawyers. It’s like the tuna nets that end up picking up a few dolphins along the way. The only problem is this: the defense lawyer here is just doing his job. At least, he’s doing his job, in my opinion, as any normal defense advocate would do here.

The details after the jump.

The Wall Street Journal reports:

On Sunday, Chongqing police detained a defense lawyer on suspicion of providing false evidence and obstruction of justice, Xinhua reports.

The lawyer, Li Zhuang, of the Beijing Kangda law firm, is one of several high-profile criminal defense lawyers brought in to represent some of the alleged top gangsters in the Chongqing crackdown, which to date has resulted in the arrests of more than 800 people. Li was representing Gong Gangmo, who faces a long list of charges including murder, leading a criminal organization, drug dealing and gun-running.

According to Xinhua, Li and several other unnamed people encouraged Gong to say that he had been tortured by police during his interrogation. Gong said that Li, who was reportedly paid 2.45 million yuan ($360,000) by Gong’s family, had instructed him to say things like, “I was strung up for eight days and nights and tortured to incontinence” during their three face-to-face meetings, according to the report.

Of course, if you read the other accounts, you can tell that the views are skeptical of the lawyering that’s happening here. ESWN (h/t CDT) translated an article, which reads in part:

In Jiangbei District, the police noted that the suspected gang leader Gong Gangmo appeared seriously vexed and taciturn after he met with his defense lawyers including Li Zhuang. On December 4, after his third meeting with Li Zhuang, Gong Gangmo was especially troubled as he sat still all day refusing food and water.

The police spoke to him many times and asked him to face the court hearings with a proper frame of mind.

After much pondering, Gong Gangmo finally could not stand the pressure within himself and pressed the bell to summon the police: “I have something important to say!”

Gong Gangmo told the case investigators about the secret that has been tormenting him for days: His wife had just hired the lawyers Li Zhuang and Ma Xiaojun from the Kangda Law Firm in Beijing. During three meetings between Gong and the lawyers, Li Zhuang taught him five tricks to “overturn the case”: The first trick was to corroborate the false testimony of his wife so that he turned from “gang boss” to “victim” and “charitable citizen.” The second trick was to claim falsely to the court that his confession had been extracted by torture and therefore he was recanting his previous statements. The third trick was to provide false testimony to the court so that his case can be reversed. The fourth trick was for the lawyers to read to him the statements made by his co-defendants so that he would know what to say. The fifth trick was to disrupt the court proceedings by insisting on a medical examination of his injuries so that the trial had to be postponed until a later date.

So basically, we have a gang boss saying that he can’t override his conscience because of the wicked and terrible things that his lawyers are trying to do. I call BS on this. This is garbage propaganda that will make defense lawyers unable to do their jobs effectively if you ask me. Why? Because these are standard things.

The first “trick” of trying to pain the defendant as a charitable citizen instead of a crime boss? Standard fare. You always do this. It’s not a matter of lying–it’s a matter of humanizing someone who is viewed upon with suspicion. And if you ask me, there’s nothing wrong with it. So you call the wife to the stand and have her say good things about her husband. What’s wrong with that? Nothing. A competent judge or jury will be able to weigh the credibility of such testimony. Usually it doesn’t work since people aren’t stupid, but you know what? If you’re a defense lawyer and you are not trying to gain sympathy for your client, you aren’t doing your job.

The second “trick” of trying to call any confession something that was given under duress/torture/whatever you want to call this process of abuse of power? Also fairly standard fare. At least it is in America… because if you’re the police, you aren’t supposed to try to pull this sort of abuse. And if you are in China and the police, I’m dead sure you’re pulling these tricks on a regular basis. The article implicitly paints the police in a positive light… and the writer of the article would probably say that the police gained a confession without any coercion and didn’t abuse anyone. Yeah right. So what’s a good defense lawyer to do? Call a confession one that was obtained under duress. And if you didn’t, again, you aren’t doing your job.

The third “trick”? Okay, this is going a bit far… and yet, I wonder what the nature of this “false” evidence is. Is it really false evidence? Or is it evidence that’s meant to counter certain claims or paint the same facts in a different light? Not really a big deal if you ask me. I’m not advocating the falsification of evidence. But I am saying that any defense lawyer worth his salt is going to (1) go after the evidence like a shark and (2) try to introduce evidence that appears to go the other way in favor of the defendant.

The fourth “trick” is not all that out of the norm either. Know what your co-defendants are going to say so you know what to say? Standard. Any good lawyer will try to work with co-defendants to make a case as air tight as possible. At least, collaborate in a way that you aren’t selling your own client down the river.

And the last “trick” of trying to delay trial? Everyone does this. Not just criminal attorneys. Even in civil litigation, everyone is trying to buy more time and avoid trial. Any good attorney should be doing this to some degree to buy more time and wear out the other side. Or you aren’t doing your job.

So of these five “tricks”, only one is truly questionable. The rest? It’s anti-lawyer propaganda meant to discourage real lawyering. Who is the judge and jury? It’s not the public. It’s the judge and jury. Simple. So while everyone acts like this stuff is such a big deal, let me just say that it isn’t. That’s the point of an adversarial trial process.

]]> http://www.chinalawandbusiness.com/2009/12/standard-defense-lawyer-tactics/feed/ 6 http://www.chinalawandbusiness.com/2009/09/kirkland-to-staff-in-shanghai-with-transfers/ http://www.chinalawandbusiness.com/2009/09/kirkland-to-staff-in-shanghai-with-transfers/#comments Tue, 01 Sep 2009 16:50:35 +0000 Thomas Chow http://www.chinalawandbusiness.com/?p=406 National Law Journal today had an article entitled, “Shanghai Surprise: BigLaw, Feeling Bullish, Opens China Shop to Work Private Equity Deals”, which of course, caught my eye.  Seems like Kirkland & Ellis wants to have a Shanghai base in addition to its Hong Kong office, and is expanding after receiving permission to do so on July 30.  The firm says that:

Kirkland’s Hong Kong and Shanghai offices will be highly integrated. The Shanghai office will be led by corporate private equity and M&A partners Xiaoyang “XY” Li and Chuan Li, who will relocate from Kirkland’s Hong Kong office. They will be supported initially by several associates with Chinese and U.S. legal training and experience in private equity deals.

The article and more after the jump.

The NLJ article reads:

Kirkland & Ellis will open a new office in Shanghai in November, focusing its services at first on the firm’s private equity clients.

The firm will launch the new office with partners XY Li and Chuan Li and plans to transfer two to four associates there once new office space is completed, said David Eich, who heads Kirkland’s office in Hong Kong. The Shanghai office will be located in the new international financial center, now under construction, in the Pudong area of the city, he said.

Although Kirkland is far from the first U.S. firm to open a China office, Eich said the firm is coming at exactly the right time for its private equity clients. “There’s been a titanic evolution in the private equity market in China over the last five to seven years,” he said. “We see a real opportunity to being on the ground and close to our clients who are already doing deals in China.”

Jay Lefkowitz, a Kirkland partner in New York and a member of the firm’s management committee, said the firm has about two dozen private equity clients in Asia. Just recently, the firm finished working on Bain Capital’s investment in the Chinese company Gome Electrical Appliances Holding Ltd., he said.

The partners who will open the Shanghai office, XY Li and Chuan Li, are both natives of China. XY Li is currently based in Hong Kong and came to Kirkland last year from the major Chinese law firm Jun He. Prior to joining Jun He, Li had been head of the corporate practice at King & Wood, the largest law firm in China, according to Kirkland’s Web site. Chuan Li joined Kirkland in 2001 in Chicago, the site said. He currently works in the Chicago and Hong Kong offices.

“China’s a complex place to do deals, and in order to be effective you really need people who know their way around and have experience in China,” Eich said. The firm doesn’t have any specific plans for expanding the office other than adding lawyers to meet client demand, he added.

Normally, I would have ripped Kirkland for wanting to start an office in China by transferring Hong Kong lawyers, but then I read the fine print a little.  XY Li, being someone who actually practiced in China will have a lot more name recognition and knowledge of Chinese PE deals–that made a lot of sense to me.  Here is Kirkland’s version of his short bio:

XY Li, 54, joined Kirkland last year from Jun He Law Offices in Beijing and is internationally recognized as a leading attorney in private equity and M&A. He represents private equity funds and international and domestic public and private companies in mergers and acquisitions and other complex corporate matters in China. Mr. Li has more than 20 years of experience advising clients in China while working in both international and elite Chinese law firms. Prior to his tenure at Jun He, he was the managing partner of the corporate practice group and a member of the management committee of King & Wood, the largest law firm in China.

Seems like this had been in the works when they brought Li on board, and it seems like a good move.  A former head of King & Wood’s corporate group will be a good thing to market outside of China (though I know many in China are quite cynical about Chinese lawyers’ actual legal advising skills), and he was actually in Beijing.  My only criticism is that they are opening a Shanghai office with a Beijing attorney, which is probably not what I would have chosen to do.  Still, it beats what I thought Kirkland was doing, which was opening a mainland office with HK attorneys.

Note of course that Chuan Li is an HK partner being transferred out, but I am guessing that the second Li is more likely the administrative or service partner for the first Li.

It’ll also be interesting to see how much of a “right time” it is to be in Shanghai chasing after PE work when so many say that this is a bubble waiting to burst.  Maybe Kirkland is trying to cash in now while it can and then figure out its strategy afterwards.  But the timing is strange given that the market is ripe for readjustment and I would expect PE to take some hit in the process.  Perhaps its just cheaper to open an office now.

Stay tuned I suppose.

]]> http://www.chinalawandbusiness.com/2009/09/kirkland-to-staff-in-shanghai-with-transfers/feed/ 2 http://www.chinalawandbusiness.com/2009/08/social-entrepreneurism-in-china-the-qifang-story/ http://www.chinalawandbusiness.com/2009/08/social-entrepreneurism-in-china-the-qifang-story/#comments Mon, 24 Aug 2009 16:51:45 +0000 Thomas Chow http://www.chinalawandbusiness.com/?p=400 Last month, I was invited to a lunch seminar (invitation only) hosted by Give2Asia where they discussed the challenges facing Chinese education, and more specifically, the problem of funding Chinese higher education.  Scott Sugiara with Give2Asia gave us some of the statistics: since 2001, their organization has given over $100 million to Asia, and about 35% of that has been in the forms of grants/scholarships to individuals.  (focused mostly on Jiaotong Daxue and other Shanghai university students)  One thing he also noted was that education is not cheaper at the top universities because there are often scholarships for those students.  Ironically, its the students who go to regional and vocational schools who have a harder time affording their higher education.

One solution, after the jump.

Enter Qifang, a social enterprise headed up by Calvin Chin.  (I promised Calvin that I would post on this)  Qifang is a company that is trying to close this educational funding gap by providing loans via microfinancing.  (think Kiva for Chinese students)  And so what one does is logs into the Qifang site, views profiles of students who need money, and can choose to make a loan of a small amount that will be aggregated with other funders to that student.  That student agrees to pay a particular interest rate on repayment, and bingo, you have microfinancing for needy students.

So why the need for Qifang anyways?  Apparently only 10% of the people can borrow from the China Development Bank, which often will leave out the poorest of people who have little access.  Because of this, only 22% of the Chinese population can get higher education, compared to 45% like in the U.S.  (of course, the downside is that there is degree inflation here, but I’ll save that rant for another time)  Using web2.0, they came up with a microfinancing site because the need was so large.  Ironically, the very barrier to entry on Qifang is the method of delivery: internet access.  Not enoguh people in the poorest areas have internet connections so that they can login and create a Qifang profile.  So while the service helps people, it still is figuring out how to reach the most needy.

On the whole, I found the presentation interesting.  Calvin also talked about his (and the Qifang) story, which is basically a small group of expats were in business.  (Calvin was at SMIC, along with some other folks I know there)  And instead of wanting to start another business, they wanted to start an enterprise what was profitable and community impacting–not profitable to rake in money, but so that it could be sustainable.  Social enterprise.  Which I am quite familiar with since TechSoup Global is one as well.

Okay, so now you’re thinking that I’ve gotten a bleeding heart with no legal writing anymore.  I’ll quell that as well, since my first question was about the structure of his organization.  Qifang is run through two foreign holding companies, and if I recall correctly, one is based in Bermuda.  The parent is in Bermuda, that is a holding company for another foreign entity, which I believe is U.S.  That U.S. based entity formed a WFOE in Shanghai.  (if you want to read about WFOEs, go to China Law Blog and do a search–you will see a lot of stuff by Dan Harris which is excellent reference material)  Using that WFOE, they formed a joint venture with their local Chinese staff.

Qifang is at 6 employees, down from about a dozen.  The Chinese staff who run the joint venture is 2 of their employees.  The foreign holding companies layered well, check.  That’s a good thing.  A WFOE as the proper form of incorporation in China (instead of as a Representative Office), another good call.  Check.  And then the JV.  Red flag.  I asked Calvin point blank, “you really trust your staff, right?”  Of course he did.  But as you can see if you search multiple blogs, JVs can turn sour very quickly.  And this is a risk that Qifang is willing to take because he does trust his team.  If you are ever planning to use a JV legal form in China, you must trust your team–do your due diligence with them, work with them, supervise them.  You cannot mess up at this point, or you are asking for trouble.

This company is doing cool stuff, but its also doing it right.  Calvin told me they had a good lawyer, and I was happy to hear that.  (no, I am not fishing for business)  I can only hope that others, particularly my readers, are well situated too.

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