Aleba Briefing Memo to the US Embassy
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1 MEMORANDUM TO: Andrew Billard FROM: Ed Morrison, Aleba Water Company SUBJECT: Background on confiscation of Aleba Water Company DATE: March 15, 2013 This memorandum provides background on the confiscation of U.S. investor property in Lantian County, Xi’an Municipality, Shaanxi Province. We are requesting the Embassy’s assistance in getting our property registered under the All China Land Survey. 1. Xi’an Aleba Water Company received approval to establish a Joint Venture in 1998 to produce mineral water in Lantian County, Xi’an Municipality (Exhibit A). Operations began that year to produce mineral water in five gallon bottles for sale in Xi’an. The factory was the first occupant in Lantian’s first industrial park. 2. The factory produces mineral water from a 750 foot well dug on the property in 1997. (That’s about 1.5 times the height of the Washington Monument.) The well is carefully constructed and the casing is lined with cement to prevent ground water pollution. Water is pumped into large stainless steel settling tanks where it is filtered and mixed with ozone to kill any bacteria. The water is then bottled for distribution. 3. The water factory sits within a larger factory compound operated by Aleba Soya. The Joint Venture agreement called for the Chinese JV partner, Aleba Soya, to contribute 7 mu of land to the Joint Venture to accommodate the water factory operation (Exhibit B). 4. The US Joint Venture partner, Aleba Water Company agreed to contribute capital to develop and launch the business. Aleba Water Company is based in Shreveport, LA. 5. The Lantian government did not issue land certificates to any operations in the industrial park, because they had not received approval for the park from provincial authorities. This problem, common across China, arose because the pace of industrial development was taking place more rapidly than changes in land regulation. (The Central government launched the 2d All China Land Survey in 2008 to cure these problems.)
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This memo provides background on the confiscation of our Aleba Water factory in Xi'an. The confiscation took place May 7, 2014 by a criminal gang supported by corrupt officials, led by Lantian Vice Mayor Wu.
Transcript of Aleba Briefing Memo to the US Embassy
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!!MEMORANDUM!!TO:! ! Andrew!Billard!!FROM:!! Ed!Morrison,!Aleba!Water!Company!!SUBJECT:!! Background!on!confiscation!of!Aleba!Water!Company!!DATE:!!! March!15,!2013!!This!memorandum!provides!background!on!the!confiscation!of!U.S.!investor!property!in!Lantian!County,!Xi’an!Municipality,!Shaanxi!Province.!!We!are!requesting!the!Embassy’s!assistance!in!getting!our!property!registered!under!the!All!China!Land!Survey.!!!
1. Xi’an!Aleba!Water!Company!received!approval!to!establish!a!Joint!Venture!in!1998!to!produce!mineral!water!in!Lantian!County,!Xi’an!Municipality!(Exhibit!A).!Operations!began!that!year!to!produce!mineral!water!in!five!gallon!bottles!for!sale!in!Xi’an.!!The!factory!was!the!first!occupant!in!Lantian’s!first!industrial!park.!!!!
2. The!factory!produces!mineral!water!from!a!750!foot!well!dug!on!the!property!in!1997.!(That’s!about!1.5!times!the!height!of!the!Washington!Monument.)!The!well!is!carefully!constructed!and!the!casing!is!lined!with!cement!to!prevent!ground!water!pollution.!Water!is!pumped!into!large!stainless!steel!settling!tanks!where!it!is!filtered!and!mixed!with!ozone!to!kill!any!bacteria.!The!water!is!then!bottled!for!distribution.!!
!3. The!water!factory!sits!within!a!larger!factory!compound!operated!by!Aleba!
Soya.!The!Joint!Venture!agreement!called!for!the!Chinese!JV!partner,!Aleba!Soya,!to!contribute!7!mu!of!land!to!the!Joint!Venture!to!accommodate!the!water!factory!operation!(Exhibit!B).!!
!4. The!US!Joint!Venture!partner,!Aleba!Water!Company!agreed!to!contribute!
capital!to!develop!and!launch!the!business.!Aleba!Water!Company!is!based!in!Shreveport,!LA.!!
!5. The!Lantian!government!did!not!issue!land!certificates!to!any!operations!in!
the!industrial!park,!because!they!had!not!received!approval!for!the!park!from!provincial!authorities.!This!problem,!common!across!China,!arose!because!the!pace!of!industrial!development!was!taking!place!more!rapidly!than!changes!in!land!regulation.!(The!Central!government!launched!the!2d!All!China!Land!Survey!in!2008!to!cure!these!problems.)!
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6. In!2006,!the!JV!Chinese!partner,!Aleba!Soya,!ran!into!financial!problems,!and!a!criminal!gang,!led!by!former!deputy!police!chief,!Sun!Junhong,!attempted!to!step!into!the!shoes!of!Aleba!Soya!as!the!Chinese!partner!for!the!Joint!Venture.!Sun!Junhong!tried!to!bribe!our!Chinese!manager!to!sell!out!the!U.S.!investors!for!$1.!In!return,!Sun!Junhong!promised!our!Chinese!manager!500,000!RMB.!Our!manager!refused!and!reported!the!incident!to!the!JV!Board.!!
!7. Under!the!JV!agreement,!the!Chinese!partner,!Aleba!Soya,!was!required!to!
offer!its!interests!to!the!US!partner!(Article!19!of!the!JV!Agreement).!!Aleba!Soya!did!not!make!this!offer.!!!
!8. Aleba!Water!refused!to!acknowledge!the!transfer!of!Aleba!Soya’s!JV!interest!
to!Sun!Junhong!and!Runjia.!Under!the!terms!of!the!JV!agreement!(Article!67!of!the!JV!Agreement),!the!US!partner,!Aleba!Water,!sought!an!order!from!the!China!International!Economic!&!Trade!Arbitration!Commission!in!Bejing!to!compel!specific!performance.!!Aleba!Water!received!a!favorable!decision!in!2006.!!Aleba!Soya!may!not!assign!its!obligations!under!the!JV!without!the!written!consent!of!Aleba!Water!(Article!66!of!the!JV!Agreement).!Aleba!Water!has!never!approved!any!transfer!to!Runjia.!!Neither!Lantian!Government!nor!the!Xi’an!Government!have!approved!any!transfer,!either.!Without!the!approval!of!these!two!governments,!any!alleged!transfer!has!no!legal!standing.!!
!9. In!2006,!Sun!Junhong!began!interfering!with!the!operation!of!the!business!by!
periodically!locking!the!gates!to!the!factory!driveway.!!The!factory!manager!made!numerous!appeals!to!local!police!to!prevent!this!harassment.!The!Lantian!police!have!done!nothing.!!
!10. At!the!time!Sun!Junhong!began!interfering!in!the!JV!business,!the!business!
served!30,000!customers!with!14!retail!shops,!80!employees,!and!an!inventory!of!over!100,000!bottles.!The!Xi’an!government!rated!the!JV’s!water!as!the!highest!quality!mineral!water!in!Xi’an.!!!!!
!11. Instead!of!putting!Aleba!Soya’s!land!up!for!public!auction,!the!Land!Bureau!
arranged!a!private!sale!to!Runjia.!This!sale!included!Aleba!Water’s!property.!The!proceeds!of!the!land!sale,!about!1.8!million!RMB,!ended!up!in!the!Lantian!Land!Bureau,!not!the!Lantian!Financial!Bureau.!Zhao!Ji!Di,!the!head!of!the!Lantian!Land!Bureau,!then!wired!these!funds!away.!Zhao!Ji!Di!used!the!proceeds!of!this!sale!to!purchase!his!current!position!in!the!Xi’an!Land!Bureau.!Lantian!Communist!Party!Secretary,!Li!Yi,!confirmed!this!account.!!
!12. In!2008,!China!launched!the!All!China!Land!Survey!to!cure!the!problems!
created!by!out!of!date!land!regulations.!Through!a!perversion!of!the!Land!Survey!by!the!Lantian!government,!Runjia!acquired!Aleba!Soya’s!land!interest!with!an!illegal!land!transfer!sanctioned!by!the!Lantian!Land!Bureau.!Here’s!how!the!confiscation!took!place:!!
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a. Under!the!Land!Survey,!all!existing!uses!were!supposed!to!be!documented!in!order!to!update!China’s!land!use!regulations.!The!State!Council!issued!an!order!prohibiting!the!fraudulent!preparation!of!documents!in!connection!with!the!Survey.!!!
b. Despite!repeated!requests!by!Aleba!Water!Company!to!be!included!in!the!Survey!as!the!registered!owner!of!7!mu!of!land,!the!Lantian!Land!Bureau!officials!refused!our!requests.!!
c. On!March!5,!2008,!the!Lantian!Land!Bureau!issued!an!internal!memorandum!to!review!the!transfer!of!property!from!Aleba!Soya!to!Runjia!(Exhibit!C).!!
d. On!March!28,!2008,!the!Lantian!Land!Bureau!issued!a!form!making!no!mention!of!Aleba!Water’s!continuing!occupancy!of!7!mu!of!land.!By!wiping!Aleba!Water’s!land!interest!clean,!the!form!indicated!that!Runjia!owns!all!of!Aleba!Soya’s!property,!including!Aleba!Water’s!7!mu!(Exhibit!D).!!
e. Despite!clear!evidence!to!the!contrary,!on!April!7,!2008,!the!Land!Bureau!and!Mayor!Li!Yi!certified!that!there!were!no!disputes!regarding!the!Aleba!Soya!property!and!that!the!property,!including!the!7!mu!of!land!on!which!the!water!factory!operated,!was!now!registered!under!Runjia.!!!
13. The!Lantian!Government!has!assigned!Vice!Mayor!Chen!Xiwen!to!handle!the!Aleba!controversy.!From!the!beginning!of!his!engagement!with!our!case,!Chen!Xiwen!has!consistently!advocated!the!position!of!Sun!Junhong!and!Runjia.!!He!supervised!the!construction!of!a!wall!that!completely!cut!off!access!of!the!factory!driveway!to!the!street.!He!has!repeatedly!misinformed!Xi’an!municipal!staff!that!the!Aleba!JV!is!a!“sham”!joint!venture!and!that!the!Aleba!Water!complaints!have!nothing!to!do!with!official!corruption.!Chen!argues!that!it!is!simply!a!dispute!between!private!parties!in!which!the!Lantian!government!has!no!role.!!!
14. Once!the!Lantian!Government’s!corrupt!officials!illegally!confiscated!and!sold!our!property!to!Runjia,!they!also!supervised!the!complete!blockage!of!our!factory!driveway!from!the!main!road.!This!blockade!included!paving!over!the!driveway!access!and!constructing!a!permanent!wall.!Once!this!complete!blockage!was!in!place,!our!business!collapsed.!The!JV!has!sold!off!its!fleet!of!vehicles,!eliminated!it!retail!shops,!and!dismissed!most!of!its!workers.!The!factory!now!sells!water!to!less!than!100!customers!in!a!relatively!small!geographic!area!around!the!factory.!!!!!
15. Sun!Junhong!and!his!gang!has!repeatedly!assaulted!Aleba!staff.!The!latest!assault!came!on!March!5,!2013.!Despite!regular!requests!for!protection,!the!Lantian!police!have!done!nothing!to!protect!Aleba!personnel!or!property.!!!
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16. After!Ambassador!Locke’s!engagement!in!this!issue,!we!were!able!to!arrange!a!meeting!with!Wang!De!An,!the!Chief!of!Staff!to!the!Mayor!of!Xi’an.!In!our!meeting!on!June!1,!2012,!we!made!five!demands:!!
!a. Remove!the!obstructions!to!our!factory!operation!and!protect!the!
safety!of!our!factory!staff;!!b. Register!Aleba!Water!under!the!2d!All!China!Land!Survey!in!
accordance!with!China’s!Land!Control!laws.!!c. Issue!a!land!certificate!to!the!Joint!Venture!to!cover!the!7!mu!of!land!
on!which!we!have!been!operating!continuously!since!1998.!!d. Investigate!and!punish!officials,!including!Zhao!Ji!Di!and!Chen!Xiwen,!
who!have!been!responsible!for!falsifying!Land!Bureau!documents!in!violation!of!the!Sate!Council’s!Order!518!and!using!their!public!office!for!private!gain.!Former!Lantian!Communist!Party!Secretary!Li!Yi!reached!this!conclusion!in!his!investigation,!but!this!investigation!was!halted.!!
e. Compensate!the!Joint!Venture!and!Aleba!Water!for!the!loss!of!business!for!over!seven!years.!!
!17. !We!requested!action!in!thirty!days.!Wang!De!An!and!his!staff!requested!more!
time!to!resolve!the!issues!we!raised.!We!agreed!to!show!patience,!as!long!as!we!were!confident!that!action!was!being!taken.!!In!September,!the!Lantian!Government!reconnected!the!factory!driveway!to!the!street.!!!
18. On!February!21,!2013!–!8!months!after!the!June!meeting!–!the!Lantian!Government!removed!the!last!lock!on!the!factory!gates!to!provide!full!access!of!the!factory!to!the!road.!!!
!19. The!Xi’an!government!has!taken!no!steps!to!resolve!the!other!issues.!Despite!
their!promise!to!contact!our!China!representative!to!discuss!a!resolution,!they!failed!to!contact!our!representative.!!!
20. On!March!5,!Sun!Junhong’s!gang!assaulted!our!factory!manager!as!he!worked!to!repair!the!factory’s!door!to!the!driveway.!!
!Next!Steps!!We!request!the!Embassy’s!assistance!in!the!following!ways:!!!
1. We!need!your!assistance!to!have!our!company!properly!registered!under!the!2008!All!China!Land!Survey.!This!request!follows!State!Council!Order!518!regarding!the!All!China!Land!Survey;!China!Ministry!of!Land!and!Resources!Order!45!regarding!the!All!China!Land!Survey;!and!Shaanxi!Provincial!Government!Document!34!regarding!the!All!China!Land!Survey.!!
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2. We!need!your!assistance!in!protecting!our!property!and!employees.!We!request!your!assistance!to!inform!the!Lantian!Police!of!their!obligation!to!protect!our!employees!and!property!according!to!international!law.!!!
3. We!would!like!your!assistance!in!filing!a!letter!of!complaint!against!Zhao!Ji!Di!to!the!Chinese!Communist!Party’s!Discipline!Committee!for!misusing!his!public!office!for!private!gain.!Zhao!Ji!Di’s!corruption!has!cost!us!over!five!years!of!business!losses,!as!well!as!imposing!great!losses!on!the!citizens!of!Lantian!County.!!
4. We!would!like!your!guidance!in!moving!this!issue!to!Washington.!We!are!interested!in!requesting!hearings!on!this!matter.!!
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