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Alibaba scam busted by Beijing Steele Business Investigation Center
 

It was a classic scenario in 1990s China: The real estate developer running off with clients’ money before the foundation was barely dug.

Back in the early, get-rich-quick days of China’s real estate boom, Beijing police official Hai Yang saw several friends losing their life savings to unscrupulous developers, buying apartment off the plans.

Hai decided to do something about it – by leaving the force. His nine years of service gave him the skills to set up Beijing Steele Business Investigation Center, which today cracks fraudsters across China.

The local State Administration of Industry & Commerce (SAIC) gave Hai the name when he handed in his badge and went to register his firm. “They told me the name means ‘very strong’”, says Hai. A 20-strong staff steer the firm in Beijing but Steele has 100 freelance staff on the payroll around Asian. The firm charges 500 yuan (US$73) an hour for its investigators. Crime and criminals have no borders, so Steele outsources investigations to associate firms in Japan and Malaysia. It’s also vital for many of his clients; foreign corporations, who go to Steele for Asia-wide fraud investigations.

Due diligence


Hai’s beefy smile and the salt and pepper hairstyle favoured by taxi drivers belie a confidence and a sharp-minded business sense. Steele’s 47-year-old president runs the firm out of spacious offices overlooking the Bird’s Nest.

When I arrived two uniformed policemen were bantering good-humoredly with Hai and two of his staff.

One of the officers carried a bulky camera. The duo may have been formed colleagues or fellow photographers: Hai is also a keen amateur photographer, his work decorating the white walls of Steele’s neat office.

Over oolong tea Hai reels off examples of the scams Steele has busted. An Australian client bought several shipments of sports apparel on Alibaba, a Chinese website, which turned out to be counterfeits. “I immediately found it suspicious that the Chinese firm’s website was all in English. “ The supplier proved elusive when Steele tried an on-site visit. Its office didn’t exist. “Doing this kind of due diligence prior to payment would have saved so much. “

A British client was saved from a potential nightmare partnership when Steele’s checks with local phone companies and SAIC offices drew blanks on the address of the client’s potential business partner, an auto parts suppliers. Hai’s investigators had found the Chinese side’s premises empty.

It transpired that a moonlighting member of staff had been using his boss’ name, and the address of another, defunct company, to sell company products for his own benefit.

Framed certificates and gold-plastic plaques on his desk confirm Steele as a member of the Association of British Investigators as well as the Association of Certified Fraud Examiners and the Council of International Investigators. To drum up business, Hai joined a plethora of world investigative bodies. The memberships are reassuring for foreign insurance firms, which supply Steele with a steady stream of work, typically proofing claims from clients involved in accidents.

Legal methods


Steele, which claims to be the first private provided of polygraph examinations in China, get its information the straight way. “We will never illegally acquire a company’s sensitive information, such as a list of clients.” Rather, the firm is adept at tapping into the databases of national and regional SAIC offices, with whom enterprise must log their details.

Databases are not only harder to find in China, they’re also often infrequently updated, “especially the databases of information on taxes and addresses. “ Still, Hai claims his company can get the legal records of any Chinese in three to five working days and can finish due diligence examinations on a company’s assets within 20 days. Fieldwork is more effective at filling in the blanks. Steele investigators question current and serving employees as well as clients at a target company. “There’s a lot of skills to good interrogation. But number one, you don’t give your interviewee too much trouble. “ Ninety percent of the time people won’t talk, says Hai, “but even when an interviewee refused to answer a question he’s giving you information.”

An ex-force member like Hai can get things done in China where geographic mass and regional variations in culture can make enforcement difficult. A visit to the local police station is his first call when Hai conducts background checks. “I first ask the policeman how long he’s been in the administrative area. If he says 10 years then I’ll ask if he knows the subject. Thirdly I ask if he’s got a criminal records. Even if he say I can’t tell you then he’s providing information.” Given his friends’ losses in 1990s, Hai takes great pleasure recounting how he averted a scam for a real estate management company. Due diligence on a local partner in a 50 million yuan real estate project showed the firm’s 20 million yuan registered capital was debt, stuck in a stalled villa project. The company hadn’t been able to get a further bank loan because it didn’t get land use rights.

 

Gray area


Private investigators like Steele operate in a gray area in China. He may rub shoulders with fellow private detectives from around the world at World Association of Detectives gatherings, but Hai's license describes Steele as a market research agency.


China's law is flexible enough to allow investigators to operate, says Hai, "though the industry is nothing like as developed as it is in Japan." Steele's brochures offer clients services like a Business Risk Assessment and steer clear of things like debt collection and surveillance, normal chores for private investigators elsewhere. "There is no legal approach to investigating marital infidelity in China. There is only one legal approach to collecting debt, through litigation. The rest is illegal."


With new laws in place on money laundering and extra pressure from WTO trading partners to fight counterfeiters, China may be warming to the notion of private eyes. "They welcome us, they want us to help," says Bob Youill, a retired Hong Kong police officer who investigates counterfeiting in China for Asia Risks.


Hai thinks China can learn a lot from foreign lawmen. He is full of praise for the ubiquity of CCTV cameras in the UK. "China will eventually build such a system."


But Hai is also worried that a backlash in the EU toward protecting personal information will spread to China. "We don't need that kind of law in China because already there are few reliable databases for tracing companies' credit history."


The bane of cheating spouses, thieves and all-around bad guys, private eyes are a dependable if sometimes murky fodder for decades of Western pulp fiction. It's not surprising that China has its own emerging legion of PIs.


It's clear from his well-appointed offices and his uniformed visitors, that Hai is a straight shooter enjoying the approval of officials as much as from satisfied customers. Fraudsters and general lowlifes watch out: Hai Yang has an enviable track record of getting his man.

Worse, Steele discovered that the vice president of its clients was doing an insider deal with the manager of the troubled company.

 



 

 

 

 

 

 

 

 

For more:

Brief Talk on Investigation in China

China Cracks Down on Illegal Online Trading of Contraband

7 Must Know Tips If You Are Going to Do an Email Address Search

How to Conduct a Complete Background Check on Anyone

How to verify Hong Kong Offshore Company

3 Easy Steps to Help You Build Good Business Credit

Criminal Records Check for Background Investigation

Protecting Your Most Important Asset

National identification number

Check Criminal Records

How to Successfully Manage Risk

Protecting Your Intellectual Property in China

The First Case on Foreign Shareholder Representative Litigation in China
Background Checks for Small Business
Reliable Chinese Suppliers
Due Diligence for Foreign Joint Ventures in China
Criminal Background Checks
Employee Background Check
Intellectual property--The Best Protection is Prevention
China Joint Ventures: Legal Due Diligence
The Importance of Comprehensive Business Information Services
The What and How of Background Checking
Resident Identity Card
Intellectual Property Protection in China

China weighs credit database options (Ⅰ) -- Analyzing credit reporting system models

China weighs credit database options (Ⅱ) -- Analyzing credit reporting system models

Growing of China Credit Database  

Credit Report

 

 

 

 

 

 

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