WU (Migration)

[2018] AATA 1092

WU (Migration) [2018] AATA 1092 (9 March 2018)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Ms Liuweina Wu
Ms Meiyi Wang

CASE NUMBER:  1506408

DIBP REFERENCE(S):  BCC2014/2616042

MEMBER:Katie Malyon

DATE:9 March 2018

PLACE OF DECISION:  Sydney

DECISION:The Tribunal remits the application for a Business Skills (Provisional) visa for reconsideration, with the direction that the first named applicant has established that the assets nominated for making the complying investment are unencumbered and lawfully acquired. 

Statement made on 09 March 2018 at 1:08 pm

CATCHWORDS
Migration – Business Skills (Provisional) (Class EB) – Subclass 188 (Business Innovation and Investment) – Whether nominated assets are unencumbered and lawfully acquired – Lack of evidence provided to delegate – Evidence subsequently provided to Tribunal

LEGISLATION
Migration Act 1958, s 65
Migration Regulations 1994, r 5.19B(3), Schedule 2, cl 185.252(1)

CASES
Drake v MIEA (No 2) (1979) 2 ALD 634
Qiao v MIAC [2008] FMCA 380
Hneidi v MIAC [2010] FCAFC 20

STATEMENT OF DECISION AND REASONS

APPLICATION FOR REVIEW

1. This is an application for review of a decision made by a delegate of the Minister for Immigration on 24 April 2015 to refuse to grant the applicants a Business Skills (Provisional) Subclass 188 visas (Subclass 188 visa) under s.65 of the Migration Act 1958 (the Act).

2. The applicants applied for the visa on 7 October 2014.  Their applications were made in the Significant Investor stream of the Subclass 188 visa after having been invited by the Minister to apply for the visas. 

3. The delegate refused to grant the first named applicant, Ms Liuweina Wu, the visa on the basis she had not established that the assets she nominated for making the ‘complying investment’ were unencumbered and lawfully acquired, essentially because of the absence of any corroborating evidence. As a result, the delegate found that Ms Wu did not satisfy cl.188.252(1) of Schedule 2 of the Migration Regulations 1994 (the Regulations).  The delegate also refused the applications of the second named applicant Ms Meiyi Wang (Ms Wu’s 12 year old daughter) and Mr Shiliang Wang (Ms Wu’s husband) as they did not meet the secondary criteria to be members of the family unit of a person who held a Subclass 188 visa and, further, there was no evidence to indicate that they met the primary visa criteria in their own right.  A copy of the delegate’s decision was provided to the Tribunal.

4. On 21 October 2016, the Tribunal wrote to Ms Wu advising that it had considered all the material before it relating to the application but it was unable to make a favourable decision on that information alone.  The Tribunal invited Ms Wu to give oral evidence and present arguments at a hearing on 24 November 2016.It specifically requested that she provide any further documents or information on which she intended to rely by 17 November 2016.  On 28 October 2016, Ms Wu’s representative wrote to the Tribunal seeking an adjournment on the basis that Mr Wang could not attend the hearing to give evidence.  The Tribunal considered the request for a postponement.  It declined the request on the basis that the Tribunal was looking to receive independently verifiable documentary evidence to confirm that the assets nominated by Ms Wu for making the ‘complying investment’ are unencumbered and lawfully acquired and, in the circumstances, it decided Mr Wang could provide evidence to the Tribunal by way of telephone. 

5. Ms Wu appeared before the Tribunal on 24 November 2016 to give evidence and present arguments.  Mr Wang, who is not included in the review application, provided assistance to his wife by way of teleconference from Beijing, China.  The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.  The applicants (Ms Wu and her daughter, Ms Wang) were represented in relation to the review by their current representative, who also attended the hearing.

6. For the following reasons, the Tribunal has concluded that the decision under review should be remitted for reconsideration.  The Tribunal notes that it has the benefit of significantly more documentation than was originally provided to the Department as well as oral evidence from Ms Wu, Mr Wang and submissions from her current representative.  The Tribunal found Ms Wu to be a credible and convincing witness.

   Issue

7. The issue in this case is whether Ms Wu can establish that the assets she has nominated for making the ‘complying investment’ are unencumbered and lawfully acquired as required by r.5.19B of the Regulations.  If so, this would enable her to satisfy cl.188.252(1) of Schedule 2 of the Regulations by demonstrating she has made a ‘complying investment’ of at least

   
   

   AUD 5,000,000. 

   Legislative and policy framework – the complying investment

8. Extracts from the Act and the Regulations as at the time of visa application and referred to in this decision are set out in the Annexure to the decision. Of relevance to this matter, r.5.19B(3) of the Regulations provides:

   (3)  The funds used to make the investment are:

   (a)  unencumbered; and

   (b)  lawfully acquired.

9. The terms ‘unencumbered’ and ’lawfully acquired’ are not defined in the Act of the Regulations. However, the Department’s immigration policy as set out in PAM 3, provides guidance on how decision makers ought to approach the question of being satisfied that the available funds are lawfully acquired and unencumbered. In exercising its powers, the Tribunal should have regard to policy as a relevant consideration. However, policy is not binding on the Tribunal.[1]  The overarching principle is that the Tribunal must make an independent assessment of the material before it with a view to reaching the correct or - in the case of the exercise of a discretionary power, not relevant here - the preferable decision.[2]

   [1] Re Drake v MIEA (No 2) (1979) 2 ALD 634; Qiao v MIAC [2008] FMCA 380  

   [2] See Hneidi v MIAC [2010] FCAFC 20 (Spender, Emmett and Jaocobson JJ) at [34]

10. In respect of Subclass 188 Significant Investor stream primary applicants, as at the time of the delegate’s decision on 24 April 2015, PAM 3 provided:

    Regulation 5.19B (3) is intended to provide a degree of discretion should officers have concerns that, despite supporting documentation:

    ·the funds were sourced from illegal activities or

    ·the funds were not wholly owned by the applicant or their spouse or de facto partner or

    ·the supporting documentation is not genuine.

    In assessing the ownership and source of funds used for a complying investment, officers may make enquiries into the source of funds for the complying investment.  If officers have concerns as to how the applicant accumulated funds for a bank deposit sufficient to fund the complying investment, they may make enquiries to satisfy themselves that the original funds were accumulated legally.

    Officers may request additional evidence to support ownership and/or source of funds for making the complying investment.  Evidence requested includes documents that assist in tracing investment funds back to legitimate business and investment activities.

11. There is no suggestion in the delegate’s decision that the funds used by Ms Wu have been sourced illegally or that non-genuine documentation was provided to the Department.  Rather, the delegate was not satisfied that, based on evidence provided, the source of funds for the nominated assets could be reasonably established.  As noted above, the Tribunal has had the benefit of significantly more documentation than was originally provided to the Department as well as oral evidence from Ms Wu, Mr Wang and submissions from her current representative.

    CLAIMS AND EVIDENCE

    Background

12. As noted in the delegate’s decision, Ms Wu indicated in a Statement of Assets and Liabilities Position (SALP) dated 9 September 2014 accompanying her Subclass 188 visa application, that the total value of assets to be used for her complying investment was

    
    

    AUD 5,007,422.45.  This represented: AUD 439,081 in cash deposits in China with the Bank of China (in Mr Wang’s name); 3 properties in Harbin City valued at AUD 3,063,030; and, funds in Ms Wu’s Chatswood CBA bank account of AUD 1,505,311.45.  Some documentation was provided in support of the application: however, the delegate made 3 requests for further documentation in support of the SALP. 

13. On 22 December 2014, Ms Wu’s former representative provided further documentation including a Statement on Source of Funds dated 1 December 2014 (SoF Statement).  Additional documentation was also provided on 19 March 2015.  Essentially, having regard to documentation provided, the delegate concluded that Ms Wu had not established through adequate evidence that the assets nominated for making the complying investment were unencumbered and lawfully acquired. 

14. In the SoF Statement, Ms Wu states she and her husband Mr Wang have been running a nightclub business and karaoke bar, Lao Wutong KTV (KTV), in Nangan District, Harbin since 2003 - it was a gift to her from her husband in anticipation of their wedding in 2004 - and that, after many years of business operations and investments, she and her husband have accumulated more than AUD 5 million net assets.  She identifies essentially 5 key sources of income for the funds which she and her husband plan to use to make their complying investment.  The accumulated assets of Ms Wu and Mr Wang, sources of income and their business KTV as set out in her SoF Statement as well as a supplementary Source of Funds Statement dated 18 March 2015 in Mandarin (Supplementary SoF Statement) are discussed below together with the delegate’s comments in relation to the evidence provided.  Ms Wu’s former representative did not provide a translation of the Supplementary SoF Statement: however, he did provide a submission which summarised the statement.

15. First, Mr Wang is a 60 year old businessman and has accumulated funds arising from his many business activities since the early 1980s.  Initially, he ran a business selling children’s clothes from 1980 to 1983 and then, from 1984 to 1989, he expanded to running a business manufacturing woollen clothing.  Having become a millionaire from his wool manufacturing business, he then invested in 1990 in the Meijianbao Lactose Factory and accumulated RMB 4.5 million. 

16. In 1994, using the funds accumulated over time from these earlier business activities, Mr Wang then founded the Harbin Longpeng Distribution Company (Longpeng) with registered capital of RMB 3 million RMB.  In her SoF Statement, Ms Wu says the business generated significant revenues of RMB 50 million before it was closed in 2000.  Evidence of Mr Wang’s involvement in Longpeng included: a Business Registration Certificate; confirmation letter from the former Mine Manager of Xinfa Coal Mine, the company that provided coal to Longpeng for distribution (Xinfa Coal); the General Ledger of Xinfa Coal indicating product payments received from Longpeng in 1999 and payment receipts of Xinfa Coal; and, a confirmation letter from the former Legal Representative of MuDanjiang Rail Administration Bureau confirming the scale of that company’s trading with Longpeng to be in the order RMB 24 million in the years 1994 - 1995 and about RMB 40 million each year from 1995 – 1999. 

17. The delegate recognised that, although there was limited evidence indicating business involvement and business levels to some extent, the actual business performance and profits claimed regarding Longpeng could not be readily established and, as a result, concluded there was insufficient evidence that Mr Wang had accumulated income of RMB 50 million from the business of Longpeng. 

18. Second, Mr Wang had an investment fund of RMB 10 million which he loaned to Harbin Taiping Recycling Company (Harbin Recycling).  This was funded by income from Longpeng.  The loan was in place from 1996 to 2007 and generated interest of RMB 5 million before the principal was repaid in October 2007.

19. Ms Wu’s former representative provided the business registration certificates for Harbin Recycling, accounting ledgers indicating the return of RMB 18 million in October 2007.  In her SoF Statement, Ms Wu states the funds were used to purchase the properties in Harbin discussed below at para [22] and buy financial products with the Bank of China (BOC) also discussed below.  In her Supplementary SoF Statement, Ms Wu states that the balance of monies were kept in a safe at home until BOC financial products were purchased.

20. The delegate requested evidence of the source of funds for the loan to Harbin Recycling as well as a copy of the loan agreement and relevant bank records confirming repayments.  Ms Wu advised that the loan funds and repayments plus interest were paid in cash and that relevant loan documentation had been destroyed after repayment of the loan in October 2007.  A statement was provided from the borrower, Ms Li Xiulan of Harbin Recycling confirming the loan agreement and repayment of principal plus interest.  Further, Ms Wu stated that the RMB 18 million was kept in a safe at home until the 3 properties in Harbin discussed below were purchased between 2009 and 2013, or until October 2011 when funds were placed on deposit at the BOC.

21. While acknowledging the difficulty of retrieving supporting evidence due to the passage of time, the delegate considered submitted evidence and concluded that, apart from the confirmation letter from Ms Li Xiulan, there is no independent verifiable evidence such as bank records in support of funds in Mr Wang’s possession available for making the loan to Harbin Recycling and a lack of evidence to corroborate the transfer of funds and subsequent repayment.  Furthermore, as the majority of funds had been kept at home, it cannot be reasonably established that the funds for the nominated assets in the SALP were from the source as claimed.

22. Third, Ms Lu and Mr Wang purchased 3 properties in Nangang District in Harbin in May 2009, December 2010 and June 2013 (the Harbin Properties) with part of the funds no longer used by Harbin Recycling.  One of the properties is leased to KTV.  Valuation reports were provided.

23. Essentially, for the reasons outlined above, the delegate was not satisfied as to the source of funds for the purchase of the Harbin Properties.

24. Fourth, Ms Lu provided evidence of 2 accounts with China Commercial & Industrial Bank (CCIB) as well as cash reserves with the BOC.  She provided evidence of RMB 10 million in Mr Wang’s name from 2008 to 2011 with CCIB and funds in her varying between RMB 2 – 5 million during the same period.

25. However, as noted by the delegate, despite claiming that $7 million had been used for investment purposes during 2007 – 2010, only 3 investments of RMB 443,000, RMB 447,587 and RMB 1 million in March 2008, June 2008 and December 2010 respectively were identified from the CCIB records. 

26. Evidence was provided of RMB 4.5 million and RMB 3.5 million being placed in October 2011 on deposit at BOC.  These products yielded RMB 500,000 and RMB 800,000 in 2012 and 2013 respectively.  The BOC funds were liquidated and later transferred to Australia through multiple friends and family members.  Ms Wu states this was necessary having regard to the Chinese government’s limitation on transfer of foreign currency US$50,000 per annum per person.

27. The delegate formed the opinion that, given the majority of the funds had been kept at home since October 2007, it cannot be reasonably established that the funds with BOC and later transferred to Australia were from the source as claimed.

28. Fifth, part of the repayment of RMB 18 million from Harbin Recycling kept in the safe at home was used to cover the cost of running, renovating and expanding KTV, the nightclub that Ms Wu owned and operated.  In 2008, she transferred the ownership to her mother, Mrs Liu Guirong, and it was agreed daily cash income would be deposited to Mr Wang’s bank account with BOC until the loan to KTV was repaid.  The loan to KTV was not repaid until October 2011 when Ms Wu’s mother repaid sums of RMB 4.5 million and RMB 3.5 million that were placed on deposit with BOC and eventually transferred to Australia.

29. The delegate observed that while historical bank records serve to demonstrate an applicant’s ownership of funds, the generation of such funds needs to be established and, having regard to comments referred to above, the delegate concluded that Ms Wu had not established through adequate evidence that such funds were unencumbered and lawfully acquired.

    Documentation provided before the hearing

30. On the day of the hearing, the new representative provided a detailed submission to the Tribunal together with a Statutory Declaration from Ms Wu dated 23 November 2016 which refers to tabbed documentation bundled in an accompanying A4 folder to be lodged with the Tribunal. 

31. Ms Wu’s Statutory Declaration states that following refusal of a Subclass 188 visa application she and her husband moved to New Zealand.  She outlines: the couple’s current assets: the history regarding their ownership of KTV and current arrangements whereby they have engaged a Manager to operate the business in their absence; purchase of 3 properties in Harbin; and, transfer of funds totalling A$4 million to Australia in June-July 2015 in anticipation of grant of the Subclass 188 visa properties.  Ms Wu also states that following refusal of the Subclass 188 visa application, she and her husband decided to go ahead and partner with proposed business partners Mr Hong Wang and his wife Jun Zhang for property developments in Redfern, Pyrmont and Killara.  She outlines part repayment of loans to Mr Wong and Ms Zhang as well as transfer of$2.2 million dollars to New Zealand to enable purchase of their home there in July 2016 following refusal of the Subclass 188 visa application. 

    Hearing

32. The applicants’ representative explained at the outset that there had been some difficulty in preparing documentation to provide to the Tribunal in anticipation of the hearing owing to the fact that Ms Wu and Mr Wang live in New Zealand but documentation, for the most part,  is held in China.  As a result, the representative requested additional time to provide supporting documentation.  Following the hearing, 3 large bundles of documentation were provided to the Tribunal as discussed below.

33. During the course of the hearing, the Tribunal discussed the nature of the delegate’s concerns that insufficient evidence had been provided to establish that the assets nominated for making the complying investment were unencumbered and lawfully acquired.  The Tribunal noted the representative’s submission that the Department should focus only on the time since KTV was established in 2003.  It added that, as required by law, it is necessary to consider where funds for the purpose of investing in KTV had been sourced as well as funds to invest in the couple’s other assets such as the Harbin Properties and BOC.  Accordingly, the Tribunal would be considering whether funds to invest in these assets had been lawfully acquired whilst, at the same time, recognising that the passage of time meant there may be some difficulty in retrieving supporting evidence.  The Tribunal noted it may need to have a further hearing after considering all documentation that Ms Wu’s representative said he would provide.

34. Ms Wu explained to the Tribunal that it was her first representative who misled her by telling her that all she really needed to do was describe how it was that she came by her ‘first bucket of gold’.  She explained that her husband had created the business of KTV - it was an early wedding gift to her (the couple married in December 2004) and, as she was the primary applicant, details had been provided about running the business since 2003.  Prior to this, Ms Wu explained that she was a dance teacher and, so, running a business the size of KTV really felt like she had been given ‘a bucket of gold’.  She said she did not think too much about it because she knew her husband came from a prosperous family and had been involved in lots of businesses prior to starting their nightclub and karaoke bar together. 

1. Further, Ms Wu apologised for the absence of documentation and explained she and her husband were currently living in New Zealand and in the process of collating documentation from China, Australia and New Zealand for the Tribunal’s consideration.  She expressed gratitude to her new representative, a barrister, who had given guidance in this regard: her first representative had misled her about requirements.  Ms Wu added that some documentation, for example bank statements, can only be provided in person by the bank so, hence, her husband was back in China to obtain documentation for the Tribunal.  In relation to the delegate’s comments regarding funds retained at home in the safe, Mrs Wu explained that the funds were used to run KTV including paying workers and making loans to various friends as well as investing in the Harbin Properties and then being deposited with BOC.    

2. Asked whether, upon his divorce, Mr Wang had prepared a SALP to discuss with his former wife such that their combined assets could be divided between them, Mr Wang told the Tribunal that his divorce came as a total shock.  His wife had left him for 3 months before even he realised what was going on.  They mutually agreed on a settlement.  He explained it was a big humiliation for him and adversely affected his reputation.  His former wife moved back with her family and took his son with her. 

   Documentation provided after the hearing

3. As noted above, extensive documentation was provided to the Tribunal after the hearing.  The first bundle of documentation was received on 17 February 2017 and included a detailed submission from the new representative together with extensive evidence of the following:

   ·purchase and valuation of assets in New Zealand, Australia and China totalling A$9,955,523;

   ·source of funds for assets in New Zealand, Australia and China;

   ·earnings for KTV since 2003; and,

   ·Mr Wang’s interests in the businesses Harbin Longpeng Supplies Sales Agency (formerly translated as Harbin Longpeng Distribution Company), Harbin Jianbaole Beverage and Food Factory (formerly translated as Meijianbao Lactose Factory) and information about his general business background including English translations where relevant.

4. After reviewing documentation received, the Tribunal contacted the applicants on 7 June 2017 and requested further documentation to address omissions identified in the first bundle of documents received after the hearing.  This included evidence of tax returns, business registration for KTV, financial statements for KTV, evidence of payment of the KTV Management fee , ASIC searches for corporate parties referred to in loans to Australian borrowers, copies of Deeds of Agreement with any Australian borrower and evidence of registration of caveats to protect Ms Wu’s interests secured over property, where relevant.

5. In an effort to explore further the source of Mr Wang’s claimed business income before 2003, the Tribunal wrote to the applicants on 8 June 2017 requesting clarification of the following arising from its examination of the first bundle of documents – in particular, the document at Tab N dated 1 December 2014 and which was also provided to the Department by the applicants’ former representative - lodged with the Tribunal outlining Mr Wang’s business income:

   (a)the document dated 1 December 2014 states that from 1981 – 1983 Mr Wang was running (an) individual daily goods business earning 30,000 RMB through selling children’s game class balls, scarfs, clothes, shoes, caps and accessories.  However, when commenting on Mr Wang’s appointment as factory director to the Harbin Jianbaole Beverage and Food Factory, the Legal Representative of that factory states that, in the period 1977 –  1987, Mr Wang worked in the Harbin Enamel General Factory;

   (b)the document dated 1 December 2014 states that, from 1984 – 1989, Mr Wang started (a) knitting wool wholesale (business) and also making (sic) sweaters.  However, the Legal Representative of Harbin Jianbaole Beverage and Food Factory states that in the period 1977 – 1987, Mr Wang worked in the Harbin Enamel General Factory and then, from 1987 – 1993, he ran a food business in Harbin;

   (c)the document states dated 1 December 2014 that, from 1990 – 1993, Mr Wang invested in a company with the registered name the Meijianbao Lactose Factory.  However, documentation provided in relation to a beverage and food factory is in relation to Harbin Jianbaole Beverage and Food Factory operating at Yingxin Street, Harbin.  This includes a Capital Verification Report dated 22 June 1993, a Letter of Business Funding Agreement for the Establishment of Harbin Jianbaole Beverage and Food Factory dated 8 June 1993, an Employment Certificate of Enterpise (sic) Legal Representative and statement from the Legal Representative of the Enterprise Harbin Jianbaole Beverage and Food Factory dated 20 July 1993 in relation to Mr Wang’s appointment as the legal representative; and,

   (d)the document dated 1 December 2014 states that, from 1994 – 2000, Mr Wang founded the Harbin Longpeng Coal Distribution Company (also known as Harbin Longpeng Supplies Sales Agency), a company that acts as a sales representative in selling coal to heating, electricity and paper companies in Harbin and Qiqihar Creek and that the registered capital is RMB 3 million.  However, documentation provided as evidence of Mr Wang’s investment in this company reports the registered capital to be RMB 700,000 and suggests that the business did not start until mid-1997.  These documents include the Business Licence dated 19 June 1997, Registration Items of Application for Enterprise Establishment dated 12 June 1997 and Private Enterprise Annual Inspection Reports dated 28 April 2000 and 6 March 2001.

6. On 10 July 2017, the Tribunal received a signed Statutory Declaration dated 10 July 2017 from Mr Wang in which he addresses the Tribunal’s concerns outlined in the paragraph above.  The Tribunal notes that the Statutory Declaration was sworn in Auckland, New Zealand and contains a statement from the applicants’ Chinese speaking solicitor (who is assisting the applicants’ representative) that he is fluent in both English and Mandarin, spoke to the declarant in Mandarin having established this is Mr Wang’s customary language and, before Mr Wang signed the Statutory Declaration, the solicitor/interpreter truly interpreted to the best of his skill and ability the contents of the Statutory Declaration.  In the circumstances, the Tribunal is satisfied that Mr Wang understood the contents of the Statutory Declaration sworn by him on 10 July 2017.  Mr Wang’s comments in his Statutory Declaration are discussed below.    

7. On 24 July 2017, the Tribunal received a further submission from the applicants’ representative together with assorted documentation including, relevantly, the following:

   ·Ms Wu’s Chinese tax returns from 2006 – 2011, Australian tax returns 2013 – 2017 and ATO assessment notices;

   ·KTV’s business registration documentation and financial statements from 2010 – 2014;

   ·KTV Management Contract in Mandarin together with evidence of payment of management fee;

   ·ASIC searches for corporate borrowers;

   ·evidence of loan agreement for A$3 million to Hong Wang and Zhang Pty Ltd guaranteed by Jun Zhang – as noted above, Ms Wu has said she and her husband plans to do business in Australia with Hong Wang and Ms Wang should their Subclass 188 visas for Australia be granted; and,

   ·evidence of payment and repayment of loans to Australian borrowers.

8. Finally, on 25 August 2017 the Tribunal received certified copy translations of documentation previously provided to the Tribunal. 

   CONSIDERATION OF CLAIMS AND EVIDENCE

9. The Tribunal has carefully considered the evidence provided to assess whether the ownership and source of funds proposed to be used for Ms Wu’s complying investment have been lawfully acquired and are unencumbered.  The Tribunal acknowledges the shortcomings in documentation provided to the Department at the time of the delegate’s decision.  The Tribunal also accepts that, consistent with immigration policy, it is appropriate to seek information on which to reasonably make a decision as to the source of ownership of the couple’s assets and that documentation covering the most recent source of funds would generally be enough unless there are reasonable suspicions that the assets are not legally owned.[3] 

   [3] >

   Ms Wu has provided the Tribunal with a detailed statement in her Statutory Declaration of 23 November 2016 as to how the assets in her SALP have been acquired.  This has been updated by her new representative as at July 2017.  Based on documentation provided, the Tribunal is satisfied that the investment funds of Ms Wu and Mr Wang can be traced back to legitimate business and investment activities of the couple since at least 2003. 

10. Mr Wang has also provided a detailed Statutory Declaration dated 10 July 2017 in which he addresses the concerns raised by the Tribunal in its letter of 8 June 2017.  In this regard, the Tribunal notes Mr Wang declares that, in his first statement to the Department dated
    1 December 2014 about how he earned his wealth through concentrating on his business career, he omitted to refer to his positions as an employee.  He declares that, from 1977 to 1987, he worked in the Harbin Enamel General Factory, a government enterprise: however, in the late 1970s when restrictions on doing business were gradually loosened in China, he started his own small business in 1981 (selling clothes, shoes and accessories) taking leave of absence to do so, just in case the business failed.  Then, for 5 years from 1984 to 1989, he operated a wool wholesale business while still being ‘on the books‘ at Harbin Enamel General Factory.  The Tribunal observed during the hearing that Mr Wang clearly has an entrepreneurial drive and accepts his explanation of the inconsistency in evidence to the Department and the Tribunal.

11. In relation to the apparent confusion regarding his statement dated 1 December 2014 that from 1990 – 1993 he invested in the Meijianbao Lactose Factory whereas documentation provided by Ms Wu’s new representative to the Tribunal refers to Jianbaole Beverage and Food Factory, the Tribunal accepts Mr Wang’s explanation that this is a translation issue.  He explains the timing issue as the initial start-up phase, especially having regard to the fact the factory was built on government land.  The Tribunal accepts Mr Wang’s explanation.

12. Mr Wang has also explained, to the Tribunal’s satisfaction the timing difference in relation to his involvement with Harbin Longpeng Coal Distribution Company (also known as Harbin Longpeng Supplies Sales Agency) due to grant of a temporary licence in the company’s first 3 years of operation, in what is a highly regulated industry.  However, the Tribunal had some concern in relation to evidence that Mr Wang’s investment in this company was reported to be RMB 700,000 and yet he claimed he held RMB 3 million.  Mr Wang acknowledges the documentation provided to the Tribunal shows capital investment totalled RMB 2.2 million (RMB 700,000 registered capital, RMB 1 million fixed capital and RMB 500,000 working capital) and admits that he mistakenly rounded his total investment up.  Whilst the Tribunal accepts documentation provided confirms total capital investment of RMB 2.2 million, Mr Wang’s explanation for ‘rounding up’ his investment in Harbin Longpeng Supplies Sales Agency remains the Tribunal’s residual concern in relation to his inconsistent evidence to the Tribunal.  However, having regard to current immigration policy referred to above that documentation covering the most recent source of funds would generally be enough unless there are reasonable suspicions that the assets are not legally owned, the Tribunal gives no weight to this inconsistency.  Furthermore, the Tribunal observes that Mr Wang’s confusion about his interest in Harbin Longpeng Supplies Sales Agency dates back almost 2 decades.  Moreover, the Tribunal is satisfied that Ms Wu has demonstrated the source of funds she has nominated for making the complying investment have been lawfully acquired through her interest in KTV.

13. Having carefully reviewed all documentation provided by the applicants’ new representative and, with the benefit of oral evidence provided at the hearing from both Ms Wu and Mr Wang as well as the new representative’s submissions, the Tribunal is satisfied that the investment funds can be traced back to legitimate business and investment activities of both Ms Wu and Mr Wang.   

14. Accordingly, the Tribunal finds that Ms Wu has established that the assets she has nominated for making the ‘complying investment’ are unencumbered and lawfully acquired.  As the second named applicant applied on the basis of a being member of the family unit of the first named applicant, her application will be determined by reference to the outcome of the first named applicant’s application on remittal to the Department for reconsideration. 

    DECISION.

15. The Tribunal remits the application for a Business Skills (Provisional) visa for reconsideration, with the direction that the first named applicant has established that the

    assets nominated for making the complying investment are unencumbered and lawfully acquired. 

    Katie Malyon

    
    Member

    Annexure

    Extracts from the Migration Act 1956

    s.134  Cancellation of business visas

    ….

    s.134(10)      In this section: …

    ownership interest in relation to a business, means an interest in the business as:

    (a)      a shareholder in a company that carries on the business; or

    (b)      a partner in a partnership that carries on the business; or

    (c)      the sole proprietor of the business;

    including such an interest held indirectly through one or more interposed companies, partnerships or trusts.

    Extracts from the Migration Regulations 1994

    r.5.19B  Complying investment

    (1)  An investment by a person (the investor) is a complying investment if all of the requirements in this regulation are met.

    (2)  Description The investment must consist of one or more of the following:

    (a)  an investment in a government bond (however described) of the Commonwealth, a State or Territory; or

    (b)  a direct investment in an Australian proprietary company that meets the following requirements:

    (i) the company is not listed on an Australian stock exchange;

    (ii)  the company has not been established wholly or substantially for the purpose of creating compliance with this paragraph;

    (iii)  the investment is an ownership interest in the company; or

    (c) an investment in a managed fund (directly or through an investor directed portfolio service) for a purpose specified by the Minister in an instrument in writing for this paragraph.

    (3)  The funds used to make the investment are:

    (a)  unencumbered; and

    (b)  lawfully acquired.

    (4)  InvestorThe investor must be an individual.

    (5)  The investor must make the investment:

    (a)  personally; or

    (b)  with the investor’s spouse or de facto partner; or

    (c)  by means of a company that has issued shares and in which:

    (i)  the investor holds all of the issued shares; or

    (ii)  the investor and the investor’s spouse or de facto partner hold all of the issued shares; or

    (d)  by means of a trust:

    (i)  that is lawfully established; and

    (ii)  of which:

    (A)  the investor is the sole trustee; or

    (B)  the investor and the investor’s spouse or de facto partner are the sole   trustees; and

    (iii)  of which:

    (A)  the investor is the sole beneficiary; or

    (B)  the investor and the investor’s spouse or de facto partner are the sole beneficiaries.

    (6)  If:

    (a)  an investor withdraws money from a complying investment, or cancels the investment; and

    (b)  the investor makes an investment of at least the value of the withdrawn money or cancelled investment in one or more other investments mentioned in subregulation (2); and

    (c)  no more than 30 days passes between the events mentioned in paragraphs (a) and (b).

    the investment is taken not to have ceased to be a complying investment during the period between the events mentioned in paragraphs (a) and (b).

    …

    Extracts from Part 188 of Schedule 2 of the Migration Regulations 1994

    SUBCLASS 188 –  BUSINESS INNOVATION AND INVESTMENT (PROVISIONAL)

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    188.252 (1) The applicant has made a complying investment of at least AUD 5,000,000.

    Note: A complying investment may be based on one or more investments.

    (2) The applicant has a genuine intention to hold the complying investment for at least 4 years.

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