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FBI Indictment Opens A Rare Window Into How Chinese Firms Operate Overseas


To another story now - the arrest of a man accused of bribing African leaders is shedding a rare light onto how China's government and its companies operate abroad. Here's Rob Schmitz of NPR's Planet Money podcast.

ROB SCHMITZ, BYLINE: A year ago, there was this packed conference in a New York City hotel ballroom - diplomats, senators, policy nerds. A large man in a silky, purple shirt stepped up to the podium.


PATRICK HO: Distinguished guests, ladies and gentlemen, good afternoon.

SCHMITZ: His name was Patrick Ho, a former Hong Kong official. And he'd become a regular fixture at these kinds of events. Slide after slide of his presentation showed how the West has exploited poor countries in Africa. China, he said, wants to change that.


HO: The world is in dire need of globalization 2.0, and China's Belt and Road Initiative is the answer to this need.

SCHMITZ: The Belt and Road Initiative is Chinese leader Xi Jinping's attempt to build a global trading network to be led by China, its banks and its companies. Patrick Ho was part of this. He worked for the nonprofit wing of a $40 billion Chinese oil company called CEFC.


HO: We're a think tank. We are dedicated to addressing issues relating to the emerging positions of China. Besides being a think tank, we're also a do tank.

SCHMITZ: And Patrick Ho was doing a lot. What the dignitaries at this event didn't know is that over the past few years, according to the FBI, Ho allegedly bribed the president of Chad and the foreign minister of Uganda with millions of dollars to help China and its companies get a foothold in Africa. Robert Precht, a former New York criminal defense attorney who divides his time between the U.S. and Hong Kong, has studied the indictment of Ho based on intercepted emails.

ROBERT PRECHT: What's striking about this case is how complete the picture is that's supplied by these emails. It's almost as if the emails and the criminal complaint - it reads like a Hollywood script it's so complete.

SCHMITZ: The 54-page indictment shows Ho wiring $2 million to Chadian president, Idriss Deby, and half a million dollars to Ugandan foreign minister, Sam Kutesa. Ho's emails indicate the money will not only help his oil company but will also help a larger Chinese state-run company reduce a billion dollar fine in Chad. And in Uganda, it will pave the way for China's government and its companies to get a foothold in that country. In one email, Ho writes, just give me a list of all the major projects from infrastructure, energy, agriculture to finance and banking, and we will bring the relevant heads to your country to kickstart each project. Robert Precht says the whole case offers a rare window into how China's beating out the competition as it pushes its investment machine abroad.

PRECHT: If it turns out that Chinese companies are routinely bribing foreign officials, then that is a stain on the Belt and Road Initiative. And it's a huge embarrassment.

SCHMITZ: It's already embarrassing for China's government. This case has shed a spotlight on CEFC, the private energy company Ho worked for, and its mysterious young founder - a man named Ye Jianming. In the last five years, CEFC grew from a tiny trading company into a $40 billion energy behemoth, gobbling up assets across the globe. Nearly half of the company's executives, including Ye, had ties to China's military or government. This raised questions. How did a private oil company like CEFC rise so quickly in a country where the energy sector is controlled so tightly by China's government? Former Fortune correspondent Scott Cendrowski, the only foreign journalist who has interviewed Ye, asked him this two years ago.

SCOTT CENDROWSKI: His point was simply that, listen, we're modeling ourselves after the companies that are around us in our industry. So in order for us to be competitive, we need to look a little bit like them.

SCHMITZ: Several China experts told NPR that China's state-run companies have developed bad reputations worldwide. And that's why China's government may have chosen CEFC, a private company with seemingly no government connections, to take their place - because the optics were better but not anymore. Ye Jianming is reportedly under investigation by Chinese authorities, and CEFC has been taken over by a state firm that has begun selling off its properties. As for Patrick Ho, Robert Precht says there are clues he's cooperating with U.S. officials.

PRECHT: If he goes to trial, it's very likely he'll be convicted and face years in jail. On the other hand - if he pleads guilty and he implicates others, that's going to have a fallout as well.

SCHMITZ: Precht says because of what Ho knows about CEFC, its connections to China's government and its role in Xi Jinping's Belt and Road Initiative, the safest place for him might just be his current address - a jail cell in Lower Manhattan. Rob Schmitz, NPR News, Shanghai. Transcript provided by NPR, Copyright NPR.

Rob Schmitz is NPR's international correspondent based in Berlin, where he covers the human stories of a vast region reckoning with its past while it tries to guide the world toward a brighter future. From his base in the heart of Europe, Schmitz has covered Germany's levelheaded management of the COVID-19 pandemic, the rise of right-wing nationalist politics in Poland and creeping Chinese government influence inside the Czech Republic.