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Hong Kong Victim of Business Fraud in China Urges City to Scrap Extradition Bill

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Mr. Luo is a Hong Kong businessman whose factory in China was forcibly demolished by local authorities. Despite his many appeals to authorities for legal compensation, he was ignored and denied.

As Luo still maintains his business in China, he chose to identify himself only with his last name.

In a May 2 interview with the Chinese-language Epoch Times, Luo recounted his trials and tribulations.

He urged Hong Kong officials to reconsider the controversial amendments to Hong Kong’s extradition laws that are currently on the table at the Legislative Council.

The proposed amendments would allow criminal suspects, including nationals from other countries, to be sent to mainland China for trial at Beijing’s request.

The bill has already drawn opposition from all spheres of society, from ordinary citizens to the business community, who worry that given the Chinese regime’s disregard for the rule of law, the changes could allow Beijing to charge and extradite its critics with impunity.

“Whoever is extradited to China will definitely fall prey to China’s unfair judicial system,” Luo said.

Unfair Taxation and Forced Factory Demolition

Attracted by a series of incentive policies in mainland China directed at Hong Kong entrepreneurs, Luo initially invested over 4 million yuan ($594,000) in 1995 to start a factory producing artificial plants in the Shijie Town industrial zone, located in Dongguan City, of southern China’s Guangdong Province.

His business began to flourish.

But in 2005, a nightmare occurred.

Luo began to encounter endless harassment from Dongguan authorities. They first accused him of tax evasion and demanded him to pay overdue taxes, even though Luo said he did pay the taxes.

He explained that Hong Kong investment was treated as foreign investment at the time. The city was a British colony until 1997, when it returned to Chinese sovereignty. The handover agreement signed between China and the U.K. included an express guarantee that the city would operate with a separate administrative government, legal system, and economic structure than mainland China, under the “one country, two systems” framework.

When establishing a company in mainland China, Hong Kong businesses would sign a contract for foreign-funded enterprises with China’s Foreign Economic Commission. In the first ten years, the local customs and tax bureaus both acknowledged Luo’s contract under this setup. However, in 2005, the local tax bureau suddenly claimed that they would not recognize the initial contract and asked Luo to enter into another contract.

The local tax bureau claimed that Luo’s company in Hong Kong, which bore the same name as his company in mainland China, should be treated as a related company in taxation. Therefore, they demanded that Luo amend his tax returns by adding an extra 30 percent to his reported profits each year for the past ten years.

In desperation, Luo chose to suspend the factory operations in Dongguan, and moved most of the manufacturing equipment to Hubei Province, where he would open a new factory. The original site in Dongguan was reserved for research and development only.

In 2011, the Shijie town government wished to sell the land where Luo’s former factory sat. As all land in China belongs to the government, with real estate developers only leasing the land from authorities, local governments stand to profit from redeveloping the land.

The officials, while pretending to be willing to negotiate with Luo about the land sales price and terms, deployed a police force and a demolition team to tear down the factory buildings overnight when Luo was traveling back in Hong Kong.

It happened on the evening of May 8, 2011.  Luo’s factory was razed to the ground by bulldozers, and even the wolfhound dogs guarding the factory were crushed to death. A local TV station reported this incident, but that did not provide any help when Luo tried to seek compensation through legal channels.

Luo told The Epoch Times that he was the only entrepreneur from Hong Kong in the entire Shijie Town industrial zone. The other company owners whose factory buildings were also torn down were all mainland Chinese, and they all got compensation from local authorities. Luo was the only exception.

Seeking Legal Redress

From 2011 to 2018, Luo tried to secure compensation for his losses. He filed more than ten lawsuits.

The whole process was exhausting and disappointing, Luo said.

In 2013, after appealing a basic court decision, the Dongguan Intermediate People’s Court ruled that the factory was not considered an illegally constructed building and thus should not have been demolished. However, when Luo applied for compensation back at the basic court, the judge still claimed that the factory building was illegal construction, and thus Luo was not entitled to compensation.

After continuous efforts, he finally won in an administrative lawsuit and received compensation, but it only covered about 10 percent of his losses. Dissatisfied with the judgment, he continued to appeal until he brought his case to the highest court in Guangdong Province. But the court’s response was, “the legal procedure has been completed and the Supreme People’s Court will not accept this case.”

“The injustice of China’s judiciary system is shockingly ridiculous,” Luo concluded from his personal experience.

He deeply regrets his investment in the mainland. “If my 4 million yuan ($594,000) had been invested in Hong Kong real estate, I would have made big fortune,” he said.

Maria Tam Wai-chu, a pro-Beijing Hong Kong legislator, had previously described the judicial system in China as “justice under the sun.” Luo said his experience is a testament to the fact that Tam’s statement is “a big lie.”

Because the city’s unicameral Legislative Council is mostly pro-establishment, the extradition amendments are expected to pass.

Luo appealed to Hong Kong lawmakers “to vote based on your conscience, and not act like a puppet voting yes to every motion,” he said.

“If the new extradition law passes…all Hong Kong residents, as long as we have the opportunity, will try to leave Hong Kong.”


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