Tuesday, May 18, 2010

Why, that's just Un-American !

Huang, Once China’s Richest Man, Jailed for 14 Years (Update1)
Huang Guangyu, the founder of Gome Electrical Appliances Holding Ltd., was sentenced to 14 years in prison for graft, completing the downfall of a school dropout who rose to become China’s richest man.

The 41-year-old was found guilty of bribery and insider trading by the Beijing No. 2 Intermediate People’s Court, lawyers for Huang’s co-accused business partner Xu Zhongmin said in phone interviews today. Huang was also fined 600 million yuan ($88 million), the state-run Xinhua News Agency said.

Huang, who built Gome into China’s second-biggest appliance chain by market value and amassed a fortune estimated at $6.3 billion in 2008, is the highest-profile businessman to be snared by a government crackdown on corruption. He is among 19 people who have featured on the Hurun Report’s China Rich List who are either in jail or awaiting sentencing as the nation’s economic growth creates a new class of entrepreneurs and breeds resentment over graft and widening income disparities.

Yes, yes, yes. But that's not the un-American part -- at least not all of it.

It was his un-American lack of political patronage and lawyering what did him in.

What brought down China's Huang Guangyu?
Rupert Hoogewerf, the publisher of the Hurun Rich List, was the first to dub Huang Guangyu the richest man in China. He says that although the entrepreneur was a brilliant businessmen he wasn't a good enough politician.

"Huang Guangyu was quite strange in so far as he didn't really cultivate his political contacts assiduously," he says.

"They say he shouldn't have been doing so overtly what he was doing," he says. "He was considered to be living what was considered to be quite a high risk business life in that respect."

Wang Rongli, a lawyer who's studied entrepreneurial corruption, believes Huang was not unusual in his disregard for the rules here. China's first generation of entrepreneurs, he says, don't really understand the law or don't want to.

"They develop bad habits," Mr Wang explains. "At the start of their careers, they settle business over dinner or with small bribes. But once their businesses reach a certain scale, the bribes become huge and this has become really dangerous."

He says efforts to draw up new laws to govern business transactions have produced loopholes that can be exploited by canny operators to maximise profits.

But younger entrepreneurs like Bernhard Zhao, from what you might call the second generation of Chinese entrepreneurs, argue that the corrupt ways of their forebears are no longer acceptable.

"There are skeletons behind every entrepreneur in China," he says, so even though these are men and women who today pay a lot of taxes and employ a lot of people "if today you are going on and employing these sharp practices and doing it a little bit too overtly, they will take you down, and I think that was the downfall of Huang Guangyu".

He says if his company of financial advisers decides to offer an inducement to someone to help bring in business, for example, the decision's always run past the company lawyers.
He has a lot to learn, and Goldies could have taught him all he needed to know -- at a price. Maybe 14 years wasn't such a bad price after all:
Goldie as political hedge fund (2006)

Contrary to Shakespeare, the first thing they must do is bring in all the lawyers.

Of course, there is a small American minority group (there's always some small minority group with an anti- message) that thinks that sort of criminal activity actually ought to result in hard labor. Fortunately, most fair and balance media outlets don't give them much airtime:

Bank Bosses Should Go After ‘Massive Fraud,’ Filmmaker Says
The chief executives of U.S. investment banks that led to the financial crisis should be removed from their jobs, a documentary shown at the Cannes Film Festival advocates.

“Inside Job,” directed by filmmaker Charles Ferguson, says Wall Street bosses should be as accountable as those executives who were imprisoned for the collapse of U.S. savings-and-loans institutions.

“I think it’s inexcusable that they still have their jobs,” said Ferguson in a Cannes interview.

“Inside Job,” narrated by Matt Damon, spotlights the events that led to the collapse in September 2008 of Lehman Brothers Holdings Inc., the $700 billion U.S. bailout of the financial system, and the worst recession since the 1930s.

Ferguson -- who holds a doctorate from the Massachusetts Institute of Technology -- shows how finance got the world economy in a pickle. His explanation is contained in one word: deregulation.

Astronomical take-home packages and year-end bonuses rewarded the risk takers, who splurged on houses in the Hamptons, yachts, private jets, holiday homes, and prostitutes. A woman who once ran a prostitution ring says half of her 10,000 clients were from big-name banks, many charging their corporate cards.

Ferguson said in the interview that U.S. President Barack Obama and his team were unlikely to enact deep change. “The people in charge of fixing this problem are in most cases people who created the problem,” he said. “So it’s rather difficult for me to believe that they’re going to be interested in reversing everything that they’ve done for the last 20 years.”

Ferguson does not indict capitalism as a whole. “I think it’s perfectly okay to make profits as long as you do it by doing something constructive and legitimate,” said the filmmaker, recalling that he had started and invested in companies.

Ferguson also adds a new angle to the meltdown tale: He highlights the practice among academics at top U.S. universities of being on the board of, or consultants to, companies.

In the world of academia, he said, “I anticipate that there will be a lot of unhappiness. But that’s just too bad, because that’s true. I’ve shown what’s true.”

And whilst on things American and not ...

The Oil Pollution [Limited Liability] Act of 1990 as discussed in Let Free Markets Reign!
Regulations and government intervention are for (socialist) losers. It’s in our DNA.

Imagine my surprise, then, when I saw a section of the Oil Pollution Act of 1990 (Sec. 1004) that places limits on liability for polluters! How un-free-market-like, to limit BP’s liability in the Gulf of Mexico debacle to a mere rounding error of $75 million! What true free-marketeer would ever stand for such nonsense?

Balderdash! How dare the government limit BP’s liability. Let the free markets determine BP’s fate. Why should it be otherwise? Should they face multiple lawsuits and get sued out of existence, that’s nothing more than the Darwinism of capitalism.

I’m just guessing here, but I assume when Senator Lisa Murkowski (R – Big Oil’s Pocket, AK) blocked a proposed bill that would have raised BP’s liability from $75 million to $10 billion it was because, as a Republican and free-marketeer, she preferred no cap at all on their liability and wants to see the free markets work as God intended them to (i.e. sans caps).

So here’s the deal: What’s good for the goose is good for the gander. If you’re a free-marketeer and believe that BP’s liability for the gulf disaster should be capped by statute — at whatever amount — you’re either not a free-marketeer or a hypocrite.

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