Bribery Trial Spotlights China’s Belt and Road

By James T. Areddy (Wall Street Journal)

Nov. 23, 2018 8:00 a.m. ET

SHANGHAI—China’s global investment and infrastructure program is about to face scrutiny in a New York courtroom when one of its most prominent promoters stands trial on bribery charges.

Patrick Ho Chi-Ping, a 69-year-old Hong Kong surgeon-turned-politician-turned-pitchman, toured the world in recent years marketing China’s international development strategy as “globalization 2.0.”

His promotional vehicle was a Virginia charity active at the United Nations; its funding came from a privately owned Shanghai oil company that invested in expanding China’s global push, the Belt-and-Road Initiative, signing nearly $20 billion in deals in Africa, Russia and the U.S.

Hundreds of pages of court filings paint a detailed, sometimes negative picture of Belt-and-Road deal making by Dr. Ho and the Shanghai company, CEFC China Energy Co. Ltd.

Road Work

U.S. prosecutors say Patrick Ho Chi-Ping paid bribes to expand CEFC China Energy’s business in Africa; Mr. Ho’s defense says he did nothing wrong. Key figures in the case and the alleged bribes:

The Justice Department says Dr. Ho furthered deals for CEFC by disguising $2.9 million in bribes as charitable donations. Prosecutors allege he bribed political notables in Chad, Senegal and Uganda with CEFC money, beginning with connections made at the U.N. The trial starts Monday.

Dr. Ho denies bribing anyone, according to court filings. His defense team argues that he saw himself on a patriotic mission to generate goodwill about Belt and Road, which involved spending CEFC’s money to support the policy.

Lawyers for the prosecution and defense declined to comment ahead of the trial, as did CEFC, which is funding Dr. Ho’s defense, court records show.

Prosecutors also say that Dr. Ho helped CEFC pursue sales of Chinese weapons to Libya, Qatar, South Sudan and Chad, and offered Iran a way to gain access to a bank account frozen under international sanctions. He isn’t being charged for any of these activities.

According to the prosecutors, the defense team wants to portray Dr. Ho as a scapegoat in a U.S. smear of China; prosecutors deny that, and call it a straightforward case of corrupt business dealings. The case follows two other Justice Department prosecutions in recent years related to alleged bribery at the U.N. involving China-connected figures.

U.S. investigators have gone after Dr. Ho with particular zeal and his criminal indictment fits a pattern under the Trump administration to call out China for bad behavior in global commerce, said Robert Precht, a Hong Kong-based, U.S. criminal law expert.

“One of the goals of the Patrick Ho prosecution is to put a spotlight on China’s use of foreign bribery to win contracts for Belt and Road,” Mr. Precht said. “I don’t think it’s simply a bribery case.”

In some nations, no Chinese company executed on the goals of Belt and Road more clearly than CEFC and its champion Dr. Ho. In one filing, Dr. Ho’s defense team stated: “The jury cannot understand this case without understanding [Belt and Road].”

The Trump administration has hit China with trade tariffs, tightened scrutiny over its investments and prosecuted economic espionage.

The administration is trying to counter China’s international expansion in part by discrediting Belt and Road, a policy promoted by President Xi Jinping. U.S. authorities say Beijing strong-arms weaker governments into projects that run up their debt and chiefly benefit China and its companies.

“We do not offer a constricting belt or a one-way road,” Vice President Mike Pence told a regional summit in Papua New Guinea on Saturday.

Dr. Ho pivoted from a successful career in eye surgery into local politics in Hong Kong as the former British colony returned to Chinese sovereignty in the 1990s. Along the way he married a famous actress. About six years ago, he joined CEFC to launch its think tank and charity arm, just as the company was gaining notice for bold acquisitions.

Beginning in 2013, Dr. Ho hosted an annual “China Story” forum at the U.N.; after he described Belt and Road as “globalization 2.0” at the 2017 gathering, Chinese media adopted the characterization.

Prosecutors say in filings that Dr. Ho’s emails and phone calls with interlocutors in a half dozen nations show he funneled $2 million to bribe the president of Chad and $500,000 to bribe the foreign minister of Uganda while pursuing deals for CEFC with the official’s wife. The Chad and Uganda governments deny improper activity.

One of the interlocutors was a former Senegalese diplomat initially charged along with Dr. Ho for allegedly helping him and taking $400,000. Prosecutors withdrew those charges and the ex-diplomat is now a prosecution witness.

Until recently, CEFC appeared to enjoy top level support. It organized some of the Chinese president’s appearances in foreign capitals, worked with Beijing’s leading energy companies and had ties to the People’s Liberation Army.

CEFC, meanwhile, was striking multibillion-dollar investment deals in Russia, United Arab Emirates and Czech Republic. In the U.S., CEFC had an agreement to pump $275 million into brokerage Cowen Group Inc.

Since Dr. Ho’s indictment last November, the oil company’s troubles have cascaded. Days after, CEFC and Cowen said U.S. regulators declined to approve their deal. A deal for CEFC to acquire $9 billion in shares of Russian energy giant Rosneft fell apart; other deals were also abandoned.

Chinese authorities are investigating CEFC’s founder, Ye Jianming, who disappeared in early 2018 and is believed by associates to be detained. Around that time, a plan for a company linked to Mr. Ye to buy Manhattan’s most expensive townhouse for $80 million fell apart.

Mr. Ye was named in a Chinese court case last month as a bribe-giver during the conviction of a provincial governor for corruption. No charges against him have been announced.

The Justice Department’s pursuit of Dr. Ho goes beyond a normal bribery case by, for instance, denying him bail, according to Thomas Creal, an American forensic accountant who investigates cross-border financial flows for organizations including the U.N.

“I think the prosecutors want to go after the Chinese and hurt them financially,” he said.