But China’s experience has often proved that money will find a way to flow where it wants. In a post published on Sunday on Seattle-headquartered law firm Harris & Moure’s China Law Blog, Mr. Harris detailed his conversation with an adviser to a Chinese company. The adviser had called him essentially to ask Harris & Moure to help the Chinese company deliberately lose a lawsuit for a phony breach of contract that would result in a payout of $3.5 million, which the Chinese company would then send to the U.S.
The money, as it turns out, would be paid to entities in the U.S. controlled by the Chinese company itself.
Mr. Harris told China Real Time that the company, a privately-held Chinese manufacturer, wanted to pursue such a fake arbitration, rather than fake a simple legal settlement for the same amount of money, because it was concerned about convincing government regulators who have been closely scrutinizing offshore remittances.
“They wanted it to look really official,” he said in a phone interview. “Arbitration also moves quickly, so they could conceivably do it within three months.”
Mr. Harris said he got the call in the last two weeks, and it was the first and only of its kind he’s so far received. He said he altered the nationality of the adviser recounted in his blog post – the adviser was a Westerner, but not Australian – to shield the identities of those involved.
It became clear to Mr. Harris in his conversation with the Western adviser to the Chinese company that there wasn’t even a real counter-party in the U.S., where the Chinese company wanted to move its funds. “We would have helped to form this company that would have sued this Chinese company,” he told China Real Time.
Curious as to how China deals with these issues going forward, especially as large swaths of its wealthy class really sees the West as a more desirable place to live.