China detains staff, raids office of US due diligence firm Mintz Group
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[March 24, 2023] By
Michael Martina and Yew Lun Tian
WASHINGTON/BEIJING (Reuters) - Chinese authorities raided the office of
U.S. corporate due diligence firm Mintz Group in Beijing and detained
five local staff, the company said, putting foreign companies in China
on alert just as the country hosts an international economic forum.
News of the raid and detentions comes as Sino-U.S. relations have
spiraled downwards following months of diplomatic tensions, including
over the U.S. military downing in February of a suspected Chinese spy
balloon and a planned U.S. transit next week by the president of Taiwan,
the self-governed island China claims as its territory.
"We can confirm that Chinese authorities have detained the five staff in
Mintz Group's Beijing office, all of them Chinese nationals, and have
closed our operations there," the company said in an emailed statement
to Reuters late on Thursday.
It said it was ready to work with the Chinese authorities to "resolve
any misunderstanding that may have led to these events", and that its
top concern was the safety and wellbeing of colleagues in China.
"Mintz Group has not received any official legal notice regarding a case
against the company and has requested that the authorities release its
employees," the company said.
Chinese foreign ministry spokeswoman Mao Ning said on Friday she was not
aware of this case. The Beijing public security bureau did not respond
to a request for comment.
A source at the New York-headquartered firm earlier told Reuters on
condition of anonymity that the company's local legal counsel said the
raid occurred on the afternoon of March 20, and that the employees were
being held incommunicado somewhere outside of Beijing.
'RED ALERTS'
As per Mintz Group's website, the Beijing office is its only one in
mainland China. The website says the company specialises in background
checking, fact gathering and internal investigations. Its wide-ranging
clients include the National Football League, New York City and The
Beatles, according to media reports.
Mintz has 18 offices around the world and hundreds of employees. Randal
Phillips, a partner at the firm who heads its Asia operations but is
based outside of China, is listed on its website as the Central
Intelligence Agency's former chief representative in China.
Phillips worked in Beijing for years after leaving the CIA. There was no
indication the incident was related to him, and Reuters was unable to
reach him for comment.
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A general view shows traffic during
evening rush hour at the central business district (CBD) in Beijing,
China, January 15, 2021. Picture taken January 15, 2021. REUTERS/Tingshu
Wang/File Photo
The news of the raid and detentions comes as Beijing is gearing up
to hold the three-day China Development Forum from Saturday, where
executives from multinationals and representatives from
international organisations will be among the more than 100 overseas
delegates present.
One U.S. business community person told Reuters the Mintz Group
incident sent a "remarkable signal" that Beijing wants foreign money
and technology but that it won't accept credible U.S. firms
conducting due diligence on Chinese partners or the business
environment.
"Red alerts should be going off in all boardrooms right now about
risks in China," the source, who did not wish to be identified due
to the sensitive nature of the matter, said.
China has said it welcomes foreign trade and investment but stressed
that security comes before development.
U.S. businesses operating in China are increasingly pessimistic
about their prospects in the world's second-largest economy,
according to a survey released this month by the American Chamber of
Commerce in China.
Two-thirds of the respondents cited rising U.S.-China tensions as
the top business challenge.
Western due diligence companies have got into trouble with Chinese
authorities before. British corporate investigator Peter Humphrey
and his American wife Yu Yingzeng, who ran risk consultancy
ChinaWhys, were detained in 2013 following work they did for British
pharmaceuticals group GSK.
Humphrey, who spent two years in jail for allegedly acquiring
personal information by illegal means, which he denied, told Reuters
that providing due diligence in China was even harder now because of
a "massive tightening in access to information."
"The foreign business community needs due diligence in order to
conduct safe business, to pick the right partners and the right
hires, to invest in the right companies without losing their shirt
... But Beijing has made it impossible to do this," he said in an
email.
"This is at a time when Western companies need transparency more
than ever," he added.
(Reporting by Michael Martina in Washinton and Yew Lun Tian, Laurie
Chen and Joe Cash in Beijing; Editing by Raju Gopalakrishnan,
Muralikumar Anantharaman and Jane Merriman)
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