The Chinese company must consent to the information being released to foreigners, Sinotrust wrote.
Difficulty in access to AIC files was ratcheted up in steps.
“Things were ramped up after the SVM investigation, and since September and October there has been a steady increase,” one executive at an investment firm said. SVM is the ticker symbol for SilverCorp, a company that has taken its fight against short seller Jon Carnes very public.
Qingdao Intercredit has also been put under pressure by Chinese media companies that have been running anti-short seller campaigns, including extensive interviews with company chairmen who make recriminations against foreign shorts. Journalists from mainland China have extensively documented the practice of companies buying media coverage for publicity.
One interview by National Business Daily asks the head of Qingdao Intercredit, “I’ve heard that you cooperated with some foreign funds, including giving AIC files to them, is that so?”
Li Chunyang, the director of Intercredit, responded: “This information actually is available through any lawyer in China. After the media reports, we became very cautious.”
Hired Help
Companies that find the prying eyes of short sellers and hedge funds inconvenient have more than the policy prong to get things done. They can also hire thugs to harass front-line investigators, or even contract local police at the county level to start criminal investigations, crossing jurisdictions to impound the evidence of due diligence investigators.
According to an investment firm that conducts due diligence on Chinese companies, which declined to be named because it doesn’t want to inflame the authorities, the Ministry of State Security has questioned investigators from most of the private investigative firms doing corporate due diligence in China.
“They started with the big ones (Kroll, Control Risks), and then went to medium, and then to the numerous small (mainly local) firms. Everybody is afraid to do work right now, and they think the crackdown might last until after the leadership transition in the fall,” a spokesperson for the firm wrote in an email. Spokespeople for Kroll and Control Risks both declined to comment on the claim.
It began about five weeks ago, the firm wrote. “The fear is really at the individual level for the local employees and sources who do a lot of the legwork. The individuals worry about getting messed with, so the firms aren’t able to do much—if anything.”
Dan David of GeoInvesting has a policy for his people in China: they cannot speak to an individual in person more than once. By the second time “chances are that they’re ready for you, and you could be arrested, detained, or beaten,” he said. “On a local police level, these people can do anything they want to you.”
Click www.ept.ms/ccp-crisis to read about the most recent developments in the ongoing crisis within the Chinese communist regime. In this special topic, we provide readers with the necessary context to understand the situation. Get the RSS feed. Get the new interactive Timeline of Events. Who are the Major Players? 
The Epoch Times publishes in 35 countries and in 19 languages. Subscribe to our e-newsletter.
