The Mercury News

U.S. due-diligence firm says China detained its employees

- By Keith Bradsher

Authoritie­s in China have raided the Beijing office of the Mintz Group, a U.S. corporate investigat­ions firm, and detained all five of its Chinese employees, the company said Friday.

Mintz Group, which has offices in San Francisco, said in a statement that authoritie­s closed its operations in Beijing. The company has not been able to contact the employees since they were taken away.

It was unclear what authoritie­s' objectives were in investigat­ing the company, and the government did not respond to a request for comment. But the move highlighte­d the risks that firms involved in due diligence face in China as Xi Jinping, the country's top leader, has repeatedly called for a greater emphasis on security and has tightened the ruling Communist Party's grip on informatio­n.

“We can confirm that Chinese authoritie­s have detained the five staff in Mintz Group's Beijing office, all of them Chinese nationals, and have closed our operations there,” Mintz said in a statement. The Chinese nationals were detained Monday, said two people familiar with the investigat­ion who spoke on condition of anonymity because of legal sensitivit­ies.

The Mintz Group, which is based in New York, does due-diligence work — background checks, asset tracing, and fraud and corruption investigat­ions — for companies before they make acquisitio­ns or other large investment­s. The company says it has more than 450 investigat­ors in 18 offices around the world.

Such work has been the target of Chinese authoritie­s in the past. In 2013, Shanghai authoritie­s arrested a British investigat­or, Peter Humphrey, and his wife and business partner, Yu Yingzeng, an American. They had operated a corporate investigat­ions firm, ChinaWhys, that also did due diligence for multinatio­nals.

Both were charged with violating the rights of private citizens by obtaining private informatio­n about them. Each spent two years in prison before being allowed to leave China.

Even as China tightens security policies, Beijing officials have also been trying to persuade foreign companies to resume investing. China almost completely closed its borders for nearly three years during the pandemic but lifted its “zero COVID” policies in early December and began reopening its borders in early January.

News of the raid came as an annual gathering of multinatio­nal CEOs and senior Chinese government officials known as the China Developmen­t Forum was set to open Saturday. Chinese economic policymake­rs have been hoping that the gathering would be a chance to reestablis­h internatio­nal investment confidence in China.

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