Imprisonment suit gets green light
RULING: B.C. court will hear case against Vancouver mining firm of financial analyst once jailed in China
Before seeing his psychologist, Kun Huang is talking about his nightmares.
He says that he jolts awake and in his mind he’s in a 300-square-foot cell lying on the concrete floor with the toilet hole about 48 inches from his head. Then he feels his hands. They are not raw and bleeding. Not anymore. He’s in his home in Vancouver.
“Most of the fear is that I’m back in the Chinese cell,” says Huang — a Canadian hedge-fund analyst. “It’s dirty, the lights are on 24 hours per day. You can’t sleep. It was psychological torture to break you down.”
Huang was released from prison and deported from China in July 2014 after about three years detention. His psychologist has diagnosed him with PTSD and depression due to the experience.
But he has just received several pieces of hopeful news. A B.C. Supreme Court judge recently decided courts in B.C., rather than courts in China, are the appropriate place for Huang, a 38-year-old UBC business graduate, to sue Vancouverbased mining company Silvercorp Metals Inc. over his imprisonment.
And secondly, last week a B.C. Securities Commission panel dismissed fraud allegations connected to Huang’s work in China.
In a civil claim containing allegations perhaps difficult for Canadians to believe, and not proven in court, Huang claims Silvercorp paid, directed, corrupted and conspired with police in China in order to mastermind a plan to falsely imprison him and funnel defamatory information back to Canada.
In 2011 Huang and a team of “onthe-ground” investigators in China were employed by a Vancouver hedge fund to probe Silvercorp’s business. Huang’s findings suggested ore estimations in a Silvercorp mine in Luoyang were too high.
Huang’s hedge-fund boss published a damaging report based partly on Huang’s investigation and profited from a “short selling” position after Silvercorp’s shares plummeted. According to the claim, Silvercorp — a partner with the Chinese government on the mine Huang investigated — promised a “battle to the death” with “its enemies,” which included Huang.
In December 2011, months after the damaging report, Huang was detained in Beijing as he was trying to leave the country. His passport had been flagged by police in Luoyang, where Silvercorp is a major economic driver and taxpayer, according to the review of alleged facts in a recent ruling from B.C. Supreme Court Madame Justice Carol Ross.
Huang was strip-searched by airport authorities and his possessions were seized, including his laptops, hard drive, and passport.
The claim also alleges he was transported to a Luoyang prison and interrogated. Silvercorp executives texted instructions and questions to police, funded them, and at times company employees provided “on-theground” support, Huang alleges.
According to Chinese media, hundreds of hedge-fund analysts like Huang have been imprisoned. One of Huang’s colleagues escaped after an interrogation, but Huang never admitted wrongdoing, and he maintains his research was 100-per-cent accurate.
In 2013 Huang was eventually tried and convicted of harming the business credibility of Silvercorp, in a hearing where Silvercorp’s lawyers “effectively acted as the prosecutor” according to Huang’s lawsuit.
He was released from his twoyear term last July and immediately returned to Vancouver.
Huang says in the Chinese prison he lost 40 pounds, and he was forced to scrub his dirty cell floor with his bare hands, causing bleeding and sores.
“Hopefully one day if justice is served I will find peace,” Huang said. “It was outrageous this kind of thing could happen to me. I didn’t think the power of connections could come above everything else.”
Huang’s suit alleges Silvercorp’s actions were part of a broader campaign to silence critics questioning its business, and it happened while investors around the world were asking tough questions of many Chinese companies.
In response to Huang’s claim “for recovery of a life, reputation and freedoms that were critically impaired by the malicious actions of Silvercorp” — Silvercorp petitioned for the case to be heard in China. Madame Justice Ross disagreed. Among other reasons, she said that Chinese courts do have a “tort” covering false imprisonment, and that since Huang has been deported from China it would be difficult for him to pursue a legal case there.
Huang’s lawyers believe in B.C. courts they’ll be able to subpoena evidence of alleged “marching orders” issued in Vancouver, which they could not do in Chinese courts.
Silvercorp senior vice-president Lorne Waldman said the company will not comment on the case.
While the B.C. Securities Commission panel rejected fraud charges against Huang’s hedge-fund boss, a man named Jon Carnes, Waldman noted that the panel found “Carnes’ conduct unsavoury.”
Huang told The Province he believes the B.C. Securities Commission failed in this case by prosecuting his boss instead of Silvercorp.