Global Times
Hai Yang at his office. Photos: Gao Fumao and AFP
By Gao Fumao
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 officer Hai Yang saw several friends losing their life savings to unscrupulous developers, buying apartments 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 tracks 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 Asia.
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 favored 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 former 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 paying 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 supplier. 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 provider of polygraph examinations in China, gets its information the straight way. "We will never illegally acquire a company's sensitive informa-tion, such as a list of clients." Rather, the firm is adept at tapping into the databases of national and regional SAIC offices, with whom enterprises 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 company 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 refuses 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 record. Even if he says I can't tell you then he's providing information."
Given his friends' losses in the 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.
Worse, Steele discovered that the vice-president of its client was doing an insider deal with the manager of the troubled company.
