YANG (Migration)

[2023] AATA 1214

YANG (Migration) [2023] AATA 1214 (14 February 2023)

DECISION RECORD

DIVISION:Migration & Refugee Division

APPLICANTS:  Mrs LI YANG
Mr XIANLING MENG
Mr QINGJIA MENG

REPRESENTATIVE:  Mr Alan Dino Duri (MARN: 1684393)

CASE NUMBER:  1913719

HOME AFFAIRS REFERENCE(S):          BCC2018/422999

MEMBER:Namoi Dougall

DATE:14 February 2023

PLACE OF DECISION:  Sydney

DECISION:The Tribunal remits the applications for Business Innovation and Investment (Provisional) (Subclass 188) visas for reconsideration, with the direction that the primary and second named applicants meet the following criteria for a Subclass 188 visa:

·     cl 188.211 of Schedule 2 to the Regulations.

Statement made on 14 February 2023 at 4:48pm

CATCHWORDS
MIGRATION – Business Skills (Provisional) (Class EB) visa – Subclass 188 (Business Innovation and Investment (Provisional)) – business or investment activities not generally accepted in Australia – bribery – sale of property to an official’s daughter at price below market value – 'irregular taxpayer' – provision of misleading/fraudulent information in relation to annual reports – failure to publicly notify changes in equity – decision under review remitted

LEGISLATION
Migration Act 1958 (Cth), s 65
Migration Regulations 1994 (Cth), Schedule 2, cl 188.211

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 Home Affairs on 15 May 2019 to refuse to grant the visa applicant a Business Skills (Provisional) Subclass 188 visa under s 65 of the Migration Act 1958 (Cth) (the Act).

2. The visa applicant applied for the visa on 25 January 2018. The delegate refused to grant the visa on the basis that the delegate was not satisfied that the primary applicant (the applicant) and her spouse, who is the second named applicant met the requirements of cl 188.211 because the delegate was satisfied that the applicant’s spouse had been involved in business or investment activities that are of a nature that is not generally accepted in Australia. In particular the delegate was concerned the applicant’s spouse was involved in the sale of property to him from a company where he was the legal representative and a shareholder and the sale of a unit by the same company to an official’s daughter at a price below the market value.

3. The applicant and her spouse, Mr Meng appeared before the Tribunal on 6 December 2022 to give evidence and present arguments. The Tribunal hearing was conducted with the assistance of an interpreter in the Mandarin and English languages.

4. The applicants were represented in relation to the review.

5. For the following reasons, the Tribunal has concluded that the matter should be remitted for reconsideration.

CONSIDERATION OF CLAIMS AND EVIDENCE

1. The issue in the present case is whether the applicant’s spouse was involved in business or investment activities that are of a nature that is not generally acceptable in Australia.

2. On 24 January 2018, the applicant was invited to apply for a Subclass 188 visa (annexure C).

3. On 25 January 2018, the applicants lodged their Subclass 188 visa application. The visa application indicated that the applicant’s spouse, Mr Meng from October 1990 to October 2011 was the general manager of Dalian Jilian Property Development Co Ltd (Jilian) and from October 2011 to January 2018 he was the general manager of Shanghai Kawen Investment Management.

4. In a statement provided with the visa application (annexure L) the applicant stated that she held a position in finance in the Shanghai Jifa Investment Co., Ltd (Jifa) from November 1998 and was promoted to sales director in 2004. The applicant further stated that throughout this period Mr Meng held the position of senior manager in Jifa.

5. On 22 November 2018, the Department requested additional information in support of the Subclass 188 visa as follows:

   ·     According to publicly available information on the internet, your spouse was the legal representative of Shanghai Huilian Property Agent Co., Ltd which was an 'irregular taxpayer' for October 2015. Please advise, with supporting evidence, the background of what happened, as well as whether and how the issue was resolved.

   ·     According to information submitted and available in the public domain, you are the shareholder and general manager of Shanghai Kawen Construction & Decoration Co., Ltd ("the Company"). The Company was noted by the Administration of Industry and Commerce as having provided misleading/fraudulent information in relation to its annual reports according to information from the National Enterprise Credit Information Publicity System. Please advise, with supporting evidence, the background of what happened, as well as whether and how the issue was resolved.

6. On 22 November 2018, the applicants responded to the adverse information set out above with a submission from the applicant’s then representative (the 2018 submission) and a statement from Mr Meng (the 2018 statement) and supporting documents. A summary of the 2018 submission and Mr Meng’s 2018 statement in relation to the Shanghai Huilian Property Agent Co Ltd (Property Agent Company) is as follows:

   ·Mr Meng held 90% and Ms Dinna Sun held 10% ownership of the Property Agent Company from March 2008. Ms Sun as the general manager was authorised to keep all company stamps and certification in custody and to take operational and legal responsibility. Provided in support was a power of attorney signed by Mr Meng to Ms Sun dated 4 March 2008.

   ·In February 2013 Mr Meng agreed to transfer his 50% ownership in the company and then in May 2013 Mr Meng agreed to transfer the remaining 40% to Ms Sun for a total consideration of RMB900,000. Provided in support were two sets of share agreements executed by Mr Meng and Ms Sun. The consideration was paid in cash and by bank transfer.

   ·After Ms Sun paid the consideration for the share transfer, Mr Meng suggested that they go together to the Industry and Commerce Bureau to register the change in ownership but as they did not have all of the required documents, they were told to return to provide the additional documents so as to complete the registration. However, once the documents were completed Ms Sun had a number of personal reasons as to why she could not go to the Bureau to complete the registration process. Due to his lack of legal awareness Mr Meng delayed the registration which he did not think could have caused issues later on.

   ·In the beginning of 2014, Mr Meng tried to find Ms Sun but could find no trace of her. He asked the finance accountant at the Property Agent Company to assist but she did not know where Ms Sun was. Mr Meng also stated that he was informed by the finance accountant that Ms Sun had the business registration certificate, company seal and all legal authorisation certificates with her. He also sought information on her location from relatives in her hometown.

   ·Mr Meng stated that he approached the Bureau on a number of occasions but was told that Ms Sun’s cooperation was required to complete the registration. He also engaged lawyers to convey his circumstances to the Bureau. Eventually the company’s registration certificate was suspended, and the change of ownership can no longer be registered.

   ·Mr Meng stated that he is a ‘so called’ shareholder and legal representative and is a victim in this matter due to Ms Sun’s lack of cooperation in completing the registration and her negligence for not completing the tax lodgement in 2015.

7. It was submitted in the 2018 submission that Mr Meng had made his best endeavours to request a change of equity be registered but failed due to the absence of the transferee. Further it was submitted that the Property Agent Company became an irregular taxpayer in circumstances beyond the control of Mr Meng.

8. It was submitted that Mr Meng did not have legal responsibilities of a company shareholder in relation to tax and operational responsibilities once he transferred his full ownership in the Property Agent Company. Provided in support of this submission was a legal advice obtained by Mr Meng from Shanghai Fanjin Legal Firm on 12 May 2018 which advises that there are no provisions under current Chinese legislation requiring the presence of shareholders for the registration at the Bureau for a transfer of equity to become validated and as the transfers were signed and the transfer payment had been made, Mr Meng was no longer a shareholder of the company.

9. In relation to the payment of the consideration by Ms Sun to Mr Meng a clarification statement was provided by Ms Chunxiang Ma the office manager of Property Agent Company dated 27 November 2018. Ms Ma refers to Mr Meng as the general manager of the company. Ms Ma states in relation to the transfer of 50% of the shares to Ms Sun that as Mr Meng was away on a business trip, she became responsible for receiving a RMB400,000 transfer from Ms Sun into her account on 26 February 2013 and she then transferred that amount to Mr Meng on 28 February 20013. Copies of a transaction statement for Ms Ma’s bank account for 26 February 2013, a handwritten receipt for RMB400,000 to Ms Ma’s account and a transfer receipt from Ms Ma’s account to Mr Meng’s account were submitted. Also provided was a receipt for a cash payment from Ms Ma to Mr Meng for RMB100,000. In relation to the second transfer of shares in May 2013, Ms Sun gave two amounts of RMB200,000 in cash to Ms Ma which she then gave to Mr Meng. Provided were a transaction summary from Ms Ma’s account dated 15 May 2013 and a handwritten receipt for a cash payment from Ms Ma to Mr Meng for RMB400,000.

10. The Tribunal has concerns about the above explanation particularly in light of the Tribunal’s finding in relation to Mr Men’s credibility. The share transfers are not on letterhead or sealed. The cash payments were put through a personal account and the receipts are handwritten onto blank paper. For the February 2013 payment for the transfer of shares, the amount deposited into Ms Ma’s accounts which is claimed to be the transfer payment from Ms Sun does not match the amount transferred out of Ms Ma’s account which is claimed to be payment to Mr Meng. Further, the legal opinion is only based on the information provided to the solicitor by Mr Meng and is contradictory, as it states that there was no requirement that signatories to the transfer needed to be at the registration office. However, the Department’s file does not contain a copy of the publicly available information referred to in the natural justice letter so the Tribunal is no table to assess the scale or period of time that the Property Agent Company was considered an irregular tax payer. Therefore, the Tribunal is not satisfied that this activity establishes that the applicant’s spouse has a history of business or investment activities that are of a nature not generally acceptable in Australia.

11. Provided in relation to misleading/fraudulent information in October 2017 by Shangahi Kawen Construction & Decoration Co Ltd (Kawen Construction & Decoration Company) was a declaration by Mr Peifang Jiang, Finance Director of the company. A summary of the 2018 submission and Mr Jiang’s declaration is as follows:

    ·The changes of equity in October 2017 and February 2017 were registered with the Shanghai Xuhui District Market Supervision Administration but were not displayed publicly on the National Enterprise Credit Information Publicity System (the Publicity System).

    ·A designated investment in another company was only listed in the financial statements for the 2016 financial year as a long term shareholder ownership investment but was not displayed on the Publicity System.

    ·Mr Jiang declared that the above occurred due to his lack of knowledge of the requirements for public notices under the Publicity System as it was still new at the time. The notices were not displayed on time but there was no intention to deceive or mislead the public. The failure was classified as providing misleading/fraudulent information due to the limited categories of failure an officer could select.

    ·As soon as the company was notified of the failure it rectified the issue by placing updated information on the Publicity System and the abnormal category was removed by the Authority.

    ·The company has now adopted new procedures to update staff on new laws and regulations on a regular basis to avoid making the same mistake.

12. The Tribunal accepts that the failing to publicly notify the changes in equity was minor and an oversight which was corrected. Therefore, the Tribunal is not satisfied that this activity establishes that the applicant’s spouse has a history of business or investment activities that are of a nature not generally acceptable in Australia.

The natural justice letter

1. On 21 February 2019, the Department sent a natural justice letter to the applicants (the natural justice letter). The natural justice letter referred to the verdicts of Shanghai City Xuhui District People’s Court ((2016) Hu 0104 Chu No.309) (the verdict) and Shanghai No.1 Intermediary People’s Court ((2017) Hu 01 Xing Zhong no.753) (the appeal). When referring to the verdict and appeal together the Tribunal will use the verdicts. The natural justice letter stated that the facts set out in the verdicts was that Mr Meng was the beneficiary in two instances whereby the former head of Shanghai City Xuhui District Property Transaction Centre, Wenqian Zhang misused his position to approve, contrary to law, two transactions in relation to a development of Jifa. The development is known as the Zunyuan Project. The address of the Zunyuan Project is Lane 99, Caoxi North Road, Shanghai and the Tribunal in this decision will use either the Zunyuan Project or 99 Caoxi Road depending on the context. Further, the courts found that Mr Meng had provided a bribe to Mr Zhang in the form of a property sold to Mr Zhang’s daughter for RMB820,000 below the market value. The Tribunal subsequently obtained translations of the lower court verdict and appeal.

2. The natural justice letter also stated that as the above information indicated that Mr Meng had engaged in business activities that are not generally acceptable in Australia, the delegate may not be able to make a finding that cl 188.221 is met. The letter then asked the applicants to comment on the information.

3. On 16 April 2019, the applicants responded with a submission from the applicants’ representatives (the 2019 submission), a statement dated 14 April 2019 from Mr Meng (Mr Meng’s 2019 statement), as well as supporting information. Mr Meng’s 2019 statement was in Chinese, as was the supporting documentation. Translations were provided on 5 April 2022 after a request from the Tribunal.

4. The representative’s 2019 submission stated that Mr Meng maintains that he did not engage in any actions that are in the nature of bribery throughout his business career. In relation to the lower court verdict and the appeal, it was submitted in the 2019 submission that Mr Meng was named in the judgment as a witness and not as the person who had paid the bribe. It was further submitted that the trial of Mr Zhang was without a jury and in a closed court. The transcript of the lower court verdict states that the hearing was conducted in public. Further, Mr Meng was never asked to attend court and was not aware what was in the judgment.

5. Mr Meng stated in his 2019 statement, in relation to the verdicts, that Chinese law requires a perpetrator to give money to the bribe recipient to seek illegitimate benefits and he was only identified in the verdicts as a witness and not a bribe giver. Nor were any measures taken to investigate Mr Meng. He stated that he had no purpose or motive to seek something unrightful. He referred to not having a criminal record and provided a certificate from the Shanghai Security Bureau in support.

6. On 30 November 2022, the Tribunal was provided with a translated statement of Mr Meng (the November 2022 statement) and a submission from the applicants’ current representative (the November 2022 submission) together with supporting documents. The supporting documents included: the registration and deregistration of Jifa; construction permit and letter of permission to change the content of the planning permit in relation to 99 Caoxi Rd; example contracts for sale of units in the Zunyuan Project; and a translated copy of an Administrative Reconsideration Responsive Decision: Real Estate Registration (2017) No.12 (the Reconsideration Decision). The Tribunal will refer to the Reconsideration Decision in more detail below.

7. The November 2022 submission referred to the delegate finding that bribery falls within unacceptable business activities but then submitted that the concept of bribery becomes more nuanced when the offence occurs overseas. In support, the November submission refers to the defence against ‘bribing’ foreign public officials set out in the Criminal Code Act 1995 (Cth) of ‘facilitation payments’ for foreign officials. It was submitted that there is a degree of realism about the ways and means of overseas practices and although it was conceded that bribery may lead to an adverse finding it should only be after the full overseas context has been considered. The Tribunal has some concerns as to this submission but, in light of the Tribunal’s final findings, the Tribunal will not comment further.

8. On 6 December 2022, the hearing was held.

9. On 22 December 2022, the Tribunal forwarded to the applicants, English translations of the verdict and appeal and invited the applicants to comment on adverse information contained in the verdict which was set out in the letter.

10. On 17 January 2023, after being granted an extension of time the applicants responded to the adverse information in a submission from their representative (the response submission), a further statement from Mr Meng (the response statement) and copies of two court decisions involving Ms Diane Sun. The submission states that Mr Meng denies any involvement in corrupt or other unacceptable behaviour. In summary it was submitted that: Mr Meng did not have involvement in or knowledge of any transactions between Mr Zhang and Ms Sun; the rezoning of 99 Caoxi Road was an arm’s length transaction between Jifa and the relevant Shanghai authorities; Mr Meng did not embezzle or cheat the Zunyuan strata holders; and he never bribed Mr Zhang. The Tribunal will discuss the submission in further detail below.

11. The Tribunal will discuss the evidence and findings set out in the verdict as they relate to Mr Meng, Mr Meng’s oral evidence at the hearing and all submissions and statements in further detail below.

    Mr Meng’s role in Jifa and shareholding in other companies

12. In the November 2022 statement, Mr Meng stated that he was the managing director of Jifa from September 1997 to September 2011. Originally, he worked for Jilian Property from the early 1990s as an employee and due to his work performance, he was promoted to the management level. In 1997 Jilian purchased the full title of a factory in Shanghai and founded Jifa. Jilian held 90% of Jifa’s shareholding and Dalian Economic and Technological Development Co Ltd (Dalian Economic and Technology) held the remaining 10%. Mr Meng was relocated to Shanghai to be the managing director and legal representative of Jifa.

13. Mr Meng stated in the November 2022 statement that after acquisition the factory was demolished and Jifa commenced a residential property development project on the land later named Zunyuan Compound. Mr Meng also stated that Jifa had the legal property title and legal propriety interests over the land. The Zunyuan Project consisted of 400 apartments, the construction of which was completed in 2003.

14. At the hearing the Tribunal asked Mr Meng how he became involved in Jifa and Mr Meng stated that in 1997 Dalian established Jifa and held 90% of shares and the other 10% was held by Jilian. After the company was established, he was appointed in charge of project development for the company which had bought land in Shanghai for development. He was asked to be in charge of the project. He was the manager of Jifa. The Tribunal sought clarification and Mr Meng stated he was general manager, and he was responsible for the development of the project. He did not hold shares in Jifa.

1. At the hearing the Tribunal asked if from 1997 he held shares in other companies and Mr Meng stated Shanghai Kaiyuan and Shanghai Huilian Real Estate Company. Mr Meng also added Shanghai Kawen Company. Mr Meng stated that from when he was involved from 1998 or 1999 in the Shanghai Kaiyuan Company, his daughter was managing the activities of that company around that time. He still holds shares in this company. In relation to the Huilian Real Estate Company, he obtained shares around 1999 and he still holds shares. He bought shares in Shanghai Kawen Company around 2000 and he still holds shares in this company. Mr Meng confirmed that he only owned shares in three companies from 1997 to now. Mr Meng stated that after Jifa closed in 2011 he started to work on the businesses of his three companies.

   Mr Meng’s relationship with Mr Zhang and Mr Zhang’s business dealings

2. It was submitted in the November 2022 submission that Mr Meng will give evidence that he had no personal dealings with Mr Zhang. The process of rezoning 99 Caoxi Rd was handled by Jifa’s staff.

3. At the hearing the Tribunal asked Mr Meng when he met Mr Wenqian Zhang and Mr Meng stated it was in 2005. He met Mr Zhang at an event held by the government about exchange of information and communication between business and government. He did not meet him again shortly after that. The Tribunal asked if he had an ongoing relationship with Mr Zhang and Mr Meng said no. Jifa was a property development company that helps people get the process of the property ownership done. It was a business relationship not a personal relationship. The Tribunal asked if he had an ongoing business relationship with Mr Zhang and Mr Meng stated no. The Tribunal asked if he saw Mr Zhang on a regular basis after the first meeting or if he met with him after the first meeting. Mr Meng stated he met him but not on a regular basis. The Tribunal asked what the meetings were about, and Mr Meng stated that he encountered him at the Trading Centre when he was helping a client transfer a property right.

4. At the hearing the Tribunal asked if Mr Meng discussed with Mr Zhang the transferring of property rights in the Zunyuan Project and Mr Meng stated no.

Mr Meng’s involvement in Huilian Real Estate Brokerage Co. Ltd (the Brokerage Company)

1. At the hearing the Tribunal asked if Mr Meng had any dealings with Mr Zhang or with Mr Zhang’s business dealings. Mr Meng stated ‘not personally’ but Jifa had dealings with the Property Transaction Centre. Any property company that wants to transfer property rights to clients had to go through the process at the Property Transaction Centre. Shanghai Xuhui Property Centre. He believes all exchanges with Mr Zhang were for normal business requirements. When he learnt his visa refusal related to Mr Zhang he was very confused. He has not done anything improper or illegal or that he should not have done.

2. At the hearing the Tribunal asked if Mr Meng had any dealings with the Brokerage Company and Mr Meng stated no. Mr Meng confirmed that he did not hold any shares in this company.

3. In the response statement Mr Meng stated that Huilian Real Estate Company and the Brokerage Company are separate companies and that he stated at the hearing that he still holds shares and is involved in the Huilian Real Estate Company not the Brokerage Company. As referred to above Mr Meng was asked about companies in which he was a shareholder from 1997 and he failed to mention that from 2008 until around 2012 he held shares in the Brokerage Company. Further, as referred to immediately above, Mr Meng at the hearing denied he had any dealings with Shanghai Huilian Real Estate Co. Ltd which was clearly incorrect as he was a shareholder and legal representative from 2008 until around 2012.

4. The verdict stated at p.7 is that an employee of the Market Company has been appointed as the legal representative of the Jinmanlou Real Estate Brokerage Office (Jinmanlou Office) and the Brokerage Company. After that Mr Zhang had asked Ms Sun to invest capital into the Jinmanlou Office and Mr Meng and Ms Sun to invest capital into the Brokerage Company. Employees of the Market Company were also assigned or served as the financial personnel of the two companies or management of the Brokerage Company.

5. At p.10 the verdict stated that in March 2008 Mr Meng served as the legal representative of the Brokerage Company. The Brokerage Company was a domestic joint venture limited liability company the business of which was real estate brokerage. Mr Xia transferred 100% of his stock rights (the registered capital being RMB1,000,000) to Mr Meng and Ms Sun. On 6 March 2010, Ms Sun transferred 40% of her equity in the Brokerage Company to Mr Meng for RMB400,000. The verdict referred to business cooperation agreement, financial vouchers and other material which proved that there were business and capital transactions between the Market Company and the Brokerage Company.

6. At p.26 the verdict stated that the management of the Brokerage Company was to help Shanghai Huilian Real Estate Co. Ltd where Mr Meng worked to acquire assets in the market at the Brokerage Company.

7. At p.27 the verdict states that in 2008 and 2009 under an arrangement with Mr Zhang, Mr Meng agreed that some of the employees of the Market Company would work with the Brokerage Company at their premises.

1. The verdict sets out the testimony of Mr Meng at p.27 as follows:

   ·     Huilian Real Estate had a registered capital of RMB10 million which was established in 2009. Mr Meng holds 99% of the shares and his daughter from a previous relationship, Ms Meng holds 1% of the shares.

   ·     The company’s main business was to invest in foreign projects, mainly some nuclear power camp projects in other provinces or cities.

   ·     As general manager of Jifa, Mr Meng often went to the District Real Estate Trading Centre to handle or consult related businesses, so he became familiar with Mr Zhang.

   ·     Mr Zhang mentioned the Brokerage Company and it was Mr Meng’s opinion that the Brokerage Company had a cooperation with the Market Company at that time and, if he injected capital into the Brokerage Company, he could earn some income.

   ·     In 2009, Mr Meng negotiated with Mr Zhang and Ms Sun of the Brokerage Company, and it was decided that Mr Meng and Ms Sun would inject 50% each of the capital, RMB500,000.

   ·     As Ms Sun was the manager of the Brokerage Company who comprehensively managed the daily business of the Company, Mr Meng believed he had no right to know or speak about the business process between the Brokerage Company and the Market Company, therefore, at Ms Sun’s suggestion Mr Meng invested 40% more capital to hold 90% of the shares while Ms Sun held 10% of the shares.

   ·     Despite the increase in his shareholding Mr Meng still did not have any right to speak and he did not receive any dividend income, so he proposed to Mr Zhang and Ms Sun to cancel the cooperation in 2012.

   ·     A Memorandum of Termination of Cooperation and an Equity Transfer Agreement were signed by Ms Sun and Mr Meng whereby Mr Meng transferred his equity to Ms Sun.

   ·     Mr Meng had invested RMB900,000 in the Brokerage Company. When the Real Estate Company had been established Mr Meng could not establish a one-person sole proprietorship company, so Ms Sun invested 1% of the capital, RMB100,000. After the termination of cooperation with the Brokerage Company, Ms Sun transferred 1% to Mr Meng’s daughter Ms Meng, and then Ms Sun transferred RMB1.8 million to Mr Meng. (The Tribunal accepts the submission in the response submission that this is a translation error and the amount transferred should be RMB800,000).

1. In his response statement, in relation to how Mr Meng came to invest in the Brokerage Company, Mr Meng stated that it is not true that he was induced to invest by Mr Zhang. Mr Meng then states that he invested in the company because of his daughter, Ms Meng who had met Ms Sun shortly after graduation from university. Mr Meng stated that he does not know how they met or how close they were, but he does remember that Ms Sun was a few years younger than his daughter.

2. In the response statement Mr Meng stated that his daughter told him in 2008 that she and Ms Sun had a business idea of establishing a real estate brokerage company for which she needed RMB300,000 to RMB500,000 to start. His daughter also asked him to be the legal representative as he was more reputable in the industry. Mr Meng agreed as he considered it a good opportunity for his daughter to get involved in business. Mr Meng also stated that he trusted his daughter to communicate with Ms Sun independently.

3. Mr Meng stated in his response statement that soon after the first investment his daughter told him that she had no control over the company’s operations and did not know what Ms Sun was doing with the business. His daughter suggested that this may be because they had not invested enough capital in the company. He then stated that he intended to let his daughter get more involved in the business, so he invested more capital.

4. Mr Meng stated in his response statement that after he increased the investment in the company, communication between his daughter and Ms Sun was still not effective. It was Mr Meng’s understanding that Ms Sun had no capacity to grow and develop the business and therefore, she was hiding business information from his daughter. He believed that there were no business activities to be disclosed to his daughter. He also stated that he did not receive any dividends or renumeration from the company and, to the best of his knowledge, his daughter did not receive benefit from the company.

5. Mr Meng stated in his response statement that in about 2011 his daughter told him that Ms Sun and Mr Zhang were close, and he felt that something was off about the company, so he told his daughter to pull out and get their money back. Mr Meng stated that they told Ms Sun this and it took almost two years before Ms Sun paid them back in full in 2013.

6. Mr Meng stated in his response statement that he has never been close to Ms Sun or Mr Zhang.

Creditability finding in relation to Mr Meng’s claim that he did not know Mr Zhang and Ms Sun

1. The Tribunal is concerned that Mr Meng’s claims that he has never been close to Ms Sun or Mr Zhang are untruthful in light of the contradictory statements made by him.

2. At the hearing Mr Meng stated that he met Mr Zhang in 2005 at a government function for businesses but he did meet him shortly again after that. When asked if he had an ongoing relationship with Mr Zhang, Mr Meng stated no.

3. At the hearing when asked if he had any dealings with the Brokerage Company Mr Meng stated no and confirmed he did not hold any shares in this company. Later, at the hearing when asked about the companies in which he held shares from 1997, Mr Meng failed to mention the Brokerage Company and that he held shares in that company from 2008 to 2012.

4. In contradiction to the above is Mr Meng’s evidence given to the prosecutors of Mr Zhang which is set out in the verdict. Mr Meng’s own evidence was that he often went to the District Real Estate Trading Centre to handle or consult on related businesses, so he became familiar with Mr Zhang. Further, Mr Meng stated that Mr Zhang mentioned the Brokerage Company and it was Mr Meng’s opinion that this company cooperated with the Market Company and if he injected capital into the Brokerage Company, he could earn some income. Mr Meng then went on to state that he negotiated with Mr Zhang and Ms Sun in 2009 as to the amount of capital he and Ms Sun would inject into the company. The Tribunal places weight on the evidence provided by Mr Meng to the prosecutor as it is closer in time to the events and in circumstances where Mr Meng would want to distance himself from Mr Zhang and Ms Sun as they both were to be prosecuted.

5. Further in relation to Ms Sun, Mr Meng did not mention in his response statement that he and Ms Sun held shares in the Property Agent Company from March 2008 until February/May 2013. The Tribunal notes that Mr Meng only sold his shares in this company after he sold his shares in the Brokerage Company.

6. In light of the above contradictions in Mr Meng’s statements, the Tribunal finds that Mr Meng is not a credible witness in relation to his dealings with and ongoing relationship with Mr Zhang and Ms Sun. Further, for the same reasons the Tribunal is not satisfied that Mr Meng became involved with the Brokerage Company due to the instigation of his daughter who was not mentioned in his evidence to the prosecutors and that he was so hands off as the legal representative and primary shareholder so as to not be aware of the activities of the Brokerage Company.

Unlawful dealings of the Brokerage Company

1. At p.1 of the verdict, it was stated that Mr Zhang instructed relevant personnel in the District Real Estate Trading Centre to transfer the service fee to the Brokerage Company, and then embezzle the money by transferring it to Shanghai Shibo Travel Agency Co., Ltd. (Shibo Travel Agency) for cash of more than RMB2.52 million. These fees were charged by the District Real Estate Trading Centre and the Market Company for providing services such as house leasing intermediary, mortgage registration of projects under construction, cancellation registration of bank mortgage, calculation of building area of houses and house buying and selling agent to the following units:

   ·     Shanghai Astronomical Technology Development Co., Ltd.,

   ·     Shanghai Bentie Steel Trade Co., Ltd,

   ·     Shanghai Qiaoxian Real Estate Development Co., Ltd.,

   ·     Shanghai Yulian Water Supply Engineering Co., Ltd.,

   ·     Shanghai Petro China Dagang Oil Products Sales Co., Ltd.,

   ·     Shanghai Zhongjing Real Estate Co., Ltd.,

   ·     Shanghai Huaxing Investment Co., Ltd.,

   ·     Shanghai Zhongxing (Group) Co., Ltd.,

   ·     China Aviation Technology Shanghai Co., Ltd Shanghai Tiannan Industrial Co., Ltd).

2. The verdict at pp.10–18 also sets out corrupt behaviour of the Brokerage Company during the period Mr Meng held 40% and then 90% of the share capital, 2008 to 2012 as also referred to in the above paragraph. The unlawful behaviour included intermediary fees, service fees and business funds being paid to the Brokerage Company by companies (listed above) whose representatives were either not aware of the Brokerage Company or counterpart contracts were not exact replicas of each other. The Brokerage Company had been added as a party to one counterpart only and/or all the work was completed by the Market Company, but payment made to the Brokerage Company.

3. At p.28 of the verdict Mr Xia’s evidence was that in 2008 he resigned as the legal representative of Jinmanlou Office and the Brokerage Company and under the instruction of Mr Li transferred the Brokerage Company to Mr Meng. At p.29 Mr Wu gave evidence that Mr Meng was the legal representative of the Huilian Brokerage Company. Mr Sun gave evidence that the bosses Mr Meng and Ms Sun travelled four to five times a year organised by Shibo Travel Agency. Money from Huilian Brokerage Company was transferred to Shibo Travel Agency. (Mr Meng in his response statement denied he travelled with Ms Sun but the Tribunal understood the verdict to state that each of Mr Meng and Mr Sun travelled four or five times a year but not together).

4. The verdict on p.29 stated that the Market Company and District Real Estate Trading Centre handled, from May 2009 to September 2012:

   …property leasing intermediary services, property certificate and property right changes, mortgage advance notice registration services for projects under construction, bank mortgage cancellation registration business, housing building area calculation and housing sales agency for the companies listed in the paragraph above. However, Huilian Brokerage Company actually signed the agreement as the trustee and charged 3.43582980 million of consulting service fees. Some of them were directly withdrawn from the company's account, and RMB 1.53636 million was transferred from the company's account to Shibo Travel Agency, and RMB 1.337907 million was cashed out through the travel agency.

5. Also, at p.29 of the verdict it stated that Mr Zhang asked management in Huilian Brokerage Company to assist Shanghai Huilian Real Estate Co. Ltd where Mr Meng worked to acquire assets in the market at the Brokerage Company.

6. At pp.31–32 of the verdict it stated that the evidence of Mr Zhang, special manager for low rent housing in the Market Company from 2011 and tour guide in Shibo Travel Agency from 2008 to 2011 was that the cheque signatory of the Brokerage Company was Mr Meng or Ms Sun.

7. At p.33 of the verdict the testimony of Ms Sun a cashier of the Brokerage Company and the Market Company is set out and is that Jinmanlou Office and the Brokerage Company belonged to two units but had the same team. The bosses Mr Meng and Ms Sun travelled four or five times a year, basically organised by Shibo Travel Agency.

Additional arguments raised in the response submission

1. The response submission argues that as Mr Meng did not receive a profit from the Brokerage Company but only received his investment back underscores the point that Mr Meng was not involved in any of the arrangements between Ms Sun and Mr Zhang.

2. In relation to the above argument the Tribunal has found that Mr Meng is not a witness of truth in relation to his dealing with Mr Zhang and Ms Sun and that Mr Meng has not been truthful in relation to his involvement with them so as to distance himself from their unlawful and corrupt behaviour, as well as, the unlawful conduct of the Brokerage Company.

3. The submission further argued that the court verdict at face value implicates only Mr Zhang and Ms Sun as culpable parties acting outside the scope of the respective business. The verdict concerns Mr Zhang’s actions and the Brokerage Company was never charged let alone convicted of an offence. There is no evidence to support this statement and even if it is correct that the company was not convicted of an offence, this does not of itself mean that the company was not involved in unlawful behaviour.

4. The use of the words ‘corrupt behaviour by the Brokerage Company’ in the Tribunal’s letter pursuant to s 359A of the Act is stated to be beyond what the evidence actually provided because the heading ‘Evidence of Corruption’ is about Mr Zhang’s activities. The Tribunal accepts that ‘unlawful behaviour’ would have been a better description of the conduct of the company, as indicated above, the unlawful behaviour included intermediary fees, service fees and business funds being paid to the Brokerage Company by companies (listed above) whose representatives were either not aware of the Brokerage Company or counterpart contracts were not exact replicas of each other as the Brokerage Company had been added as a party to one counterpart only and/or all the work was completed by the Market Company, but payment made to the Brokerage Company.

5. It was also submitted that extrapolating the finding that Mr Meng was involved in corrupt behaviour by the Brokerage Company goes beyond the verdict and is highly speculative. Ms Zhang and Ms Sun were the guilty parties. Provided to the Tribunal were two court decisions in relation to Ms Sun which it was submitted indicated Mr Zhang and Ms Sun in June 2012 embezzled RMB360,00 through a fabricated ‘Living Home Project’ and Mr Zhang transferred that money to the Brokerage Company, after which Ms Sun transferred the money to the Shibo Travel Agency. The decisions are:

   ·Shanghai Xuhui District People’s Court Criminal Verdict (2019) Shanghai 0104 Xingchu No. 1314 (dated 21 December 2019); and

   ·Shanghai No.1 Intermediate People’s Court Criminal Verdict (2020) Hu 01 Xing Zhong No. 257 (dated 1 June 2020).

6. The response submission then goes on to argue that while the Brokerage Company was a vehicle for money laundering, the verdicts in relation to Mr Zhang and Ms Sun do not suggest that the activity of money laundering was an activity of the Brokerage Company in the sense envisaged by cl 188.221. That is there is no evidence or suggestion that the conduct of Mr Zhang or Ms Sun was a part of the operations or a business activity of the Brokerage Company.

1. However, as referred to above, the company was involved in more unlawful conduct than just money laundering.

2. It was further submitted that there is no evidence or suggestion that Mr Meng has direct knowledge or involvement in the dealings between Mr Zhang and Ms Sun. If the Chinese authorities did not take action against Mr Meng in the Brokerage Company matter, then it suggests that Mr Meng and the Brokerage Company did nothing wrong. However, there could be a number of reasons why the Chinese authorities did not pursue Mr Meng including thathe had transferred his interest in the Huilian Brokerage Company in 2012 before Mr Zhang and Ms Sun were prosecuted and he cooperated with the prosecution.

3. The submission concedes that Mr Meng was a shareholder but then states:

   However, as the court verdict made clear, Mr Meng “had no right to speak”

4. The use of the above quote is misleading as the full quote from the verdict is as follows:

   Mr Meng “had no right to speak about the business cooperation between Huilian Brokerage Company and the Market Company”

5. The submission argues that Mr Meng was an innocent bystander and quotes the following extract from p.48 of the verdict:

   (1)Sun 3 and Meng 1 were both instructed by Wenqian Zhang to invest in Huilian Brokerage Company. Without knowing about the business and income of Huilian Brokerage Company, they only signed and sealed the financial affairs of Huilian Brokerage Company in name. (2) The business of Huilian Brokerage Company was managed as a whole by the deputy general manager of the Market Company, and the finance was also controlled by the personnel assigned by the Market Company. Wenqian Zhang decided and controlled the capital inflow and outflow and financial status of Huilian Brokerage Company. (3)After the above-mentioned business funds entered Huilian Brokerage, Wenqian Zhang instructed Sun 3, Zhang 1, his daughter, and Sun 2, his classmate, to cash out in different ways, and the cash out was handed over to Wenqian Zhang or Wenqian Zhang's designated person. To sum up, Wenqian Zhang took advantage of his power, and through his manipulation, the public funds of the Market Company were transferred from the unit to Huilian Brokerage Company under his personal control, and instructed the personnel to cash out in different ways so as to embezzle the public funds, which constituted a crime of corruption.

6. The submission argues in relation to the above that point 1 makes it clear that Mr Meng had no direct knowledge of the Brokerage Company’s operations and that Mr Meng insisted that his involvement in the company was at the instigation of his daughter. However, using the same logic in the submission, Ms Sun should not have been prosecuted as point 1 relates equally to her. Further, the Tribunal has stated above the reasons as to why the Tribunal is not satisfied that Mr Meng became involved solely at his daughter’s instigation.

7. The submission argues in relation to point 2 above that the money laundering via the Brokerage Company was directed and controlled by Mr Zhang. However, this does not mean that Mr Meng was not aware of the money laundering and as stated above the Brokerage Company was also involved in other unlawful activities.

8. The submission argues in relation to point 3 above that Mr Meng unlike Ms Sun was not involved in the financial transactions. However, other evidence set out in the verdict and above indicates that Mr Meng was a cheque signatory of the Brokerage Company and the above does not mean that Mr Meng was not aware of the activities.

Finding in relation to Mr Meng’s involvement in the Brokerage Company

1. Mr Meng during the time he was involved in the Brokerage Company was an experienced businessman both as a general manager, legal representative and shareholder in a number of companies. Further, for the reasons stated above the Tribunal is not satisfied that Mr Meng was so hands off that he was not aware of some of the unlawful activities of the Brokerage Company.

2. However, there is no statement in the verdict or any direct evidence that the applicant participated in the conduct Mr Zhang or Ms Sun was prosecuted for. Further, being aware of conduct of principles of a business that the applicant’s spouse is also involved in, in circumstances where the Tribunal cannot state when the applicant’s spouse became aware, is not enough to find that the applicant’s spouse has a history of involvement in business or investment activities that are of a nature not generally acceptable in Australia.

Jifa’s purchase of 99 Caoxi Road

1. The 2019 submission submitted that the two instances referred to by the delegate in the decision were:

   1.Jifa had lawfully applied for and was issued with the ‘Construction Engineering Planning Permit’ by the Municipal Planning and Management Department on 28 November 2003.

   2.Jifa applied and was permitted to change the contents of the registration on 2 November 2005.

2. It was further submitted in the 2019 submission, however, that the above two transactions/approvals were ‘not of any nature that are contrary to law or government regulations in China. Jifa paid a consultancy fee of RMB7,000 to the Real Estate Registry Department to make sure that Jifa had stayed compliant with laws and regulations within the property market’. Further, it was submitted that Mr Meng never had any intention to provide a bribe to Mr Zhang nor did Mr Zhang ask Mr Meng to pay a bribe. It was also submitted that the government department where Mr Zheng worked was not the government department that approved the rezoning application and, therefore, there had been no unlawful activity and if there had been then the asset would have been taken away from him by the government.

3. Mr Meng stated in his 2019 statement that Jifa obtained the property rights of the complex building in 99 Caoxi Road, and he had no motive or purpose to seek an illegitimate benefit. Mr Meng further stated that Jifa was issued a Construction Project Planning permit by the Municipal Planning Management Department. This allowed Jifa to construct at 99 Caoxi Road a 303 m² gatekeeper and a comprehensive property building and a 30 m² garbage room. The name of the project was ‘Supporting House’. The initial registration of the Zunyuan Project constructed at 99 Caoxi Road was made by the Xuhui Registration Office on 15 June 20004. A 304.76 m² doorman, property room was noted on the title certificate. Mr Meng then stated that all houses are registered under the name of the construction unit Jifa.

4. In the November 2022 statement Mr Meng stated that originally there were about 300 square metres of empty land in the Zunyuan Project, the purpose of which was undecided. Jifa decided to build a showroom for real estate marketing and administrative purpose. A temporary permit was obtained, and construction was completed in 2003. Mr Meng stated that the building was never planned to be for a strata and/or gate keeper’s office and there was a strata and/or gate keeper’s office planned and built on another location in the Zunyuan Project. Jifa obtained the Construction Engineering Planning Permit (Shanghai Construction [2003] No. 0334) on 28 November 2003 from the Department of Shanghai Civil Planning and Management.

Change to the contents of the Planning Permit for 99 Caoxi Road

1. In his 2019 statement Mr Meng stated that on 2 November 2005 a letter approving the change of the contents of the Construction Project Planning Permit was issued on 2 November 2005 whereby the guardian comprehensive property building was changed to ‘office supporting room’. This change was registered by Jifa in January 2006.

2. In his November 2022 statement Mr Meng stated that in 2004, between 90% and 95% of the units had been sold in the Zunyuan Project and the showroom was not needed, however, Jifa decided to keep the building. He further stated that Jifa was registered as the legal proprietor of the property. In 2005, Mr Meng decided to purchase the property from Jifa but was advised by the Registration Office that the property could not be registered as the purpose of the property was the doorman’s office. Mr Meng stated that this was the first time he and Jifa had heard this, and he believed there had been a mistake made by the Department, as to the best of his knowledge Jifa lodged the application for the property construction as a supporting room. A consulting agency fully owned by the Shanghai Xuhui District Real Estate Registration Office (the consulting agency) was approached. The consulting agency provided services to individuals and businesses regarding real property laws and rules and Mr Zhang was one of the managers.

3. Mr Meng stated in his November 2022 statement that three of Jifa’s staff attended the consultation and Jifa was charged RMB7,000 for the service. Jifa was advised by the consulting agency to lodge a purpose amendment application to the Department of Shanghai Civil Planning and Management and once Jifa obtained the letter of amendment approval, the Registration Office would be able to proceed with the registration of changing the purpose of the property to a supporting room. The Department of Shanghai Civil Planning and Management issued the Letter of Permission to Change the Relevant Content of the ‘Construction Project Planning Permit’ on 2 November 2005. The Registration Office then completed the registration of the new purpose of the property in 2006.

4. It was submitted in the November 2022 submission that the Chinese court in the verdicts found that 99 Caoxi Road was common property, and the status of the property could not be changed without the consent of the strata holders and, therefore, the Court found that Mr Zhang had abused his power. The submission then submitted that there is evidence that Jifa and Mr Meng believed that the property was not common property.

5. The November 2022 submission refers to the Construction Planning Permit approved on 28 November 2003 and that this document refers to a ‘supporting room’ and not a doorman’s office. It was submitted that this indicates that Jifa sought zoning approval for a supporting room and only became aware of the error in 2005. It was further submitted that the decision to approve the rezoning back to ‘office supporting room’ made on 2 November and 7 December 2005 by the Shanghai Urban Planning Administration specifically references the 2003 application. It was submitted that this indicates the 2005 decision by the Shanghai Urban Planning Administration simply administratively rectified the zoning to the original intention of the 2003 application.

6. It was further submitted that there is no evidence that Mr Zhang worked for the Shanghai Urban Planning Administration as he worked for Xuhui District Property Transaction Centre which only advised Mr Meng to lodge an application to the Planning Bureau. It was further submitted that Mr Zhang and his office were not the relevant authority to approve the rezoning. In relation to the RMB7,000 consulting fee it was submitted that the verdict did not include an adverse inference in relation to the fee.

7. The November 2022 submission referred to the Reconsideration Decision which related to an application made on 8 June 2017 by the Shanghai Zuhui District Zunyuan Owners Committee and others for an administration reconsideration to the Shanghai Real Estate Registration Bureau regarding the 2008 sale to Mr Meng of 99 Caoxi Road (the Reconsideration Decision). The application was made shortly after Mr Zhang’s conviction and the submission refers to the statement in the decision that 99 Caoxi Road was: “never a strata management office, hence it is not strata management property owned by the owners…”

8. The verdict stated at p.2 in relation to the crime of abuse of power, that in February 2006 Mr Zhang as the director of the Trading Centre examined and approved in violation of regulations and confirmed that Jifa change the use of ‘guard room and property room’ in the Zunyuan Project to an ‘office supporting room’.

9. The verdict recorded the defence case at p.5 and stated as follows in relation to the crime of abuse of power that Mr Zhang exercised all of his functions entrusted by the statutory housing registration authority without breaking the law of abusing his powers. The prosecution incorrectly applied the Property Management Regulations when they should have applied the Real Estate Registration Regulations which the Trading Centre had correctly implemented. The Trading Centre review submitted documents and if they are consistent then they are ‘handled unconditionally’. Questioning submitted documents is administratively wrong, so the registration of the change documents, after they had been submitted to the Planning Bureau as a lawfully, complies with the legal provisions.

10. The verdict stated at p.7 that after the trial it was found out that in February 2006, Mr Zhang took advantage of his position as the director of the Trading Centre and approved in violation of regulations and confirmed that Jifa changed the use of the ‘guard room and property’ at 99 Caoxi Road to ‘office supporting room’. The verdict then stated that these facts were confirmed by the following evidence.

11. Later in the verdict at p.39 it states that Mr Meng provided evidence which proved that:

    ·     In 2006, when the Zunyuan Project went through the procedures for changing use of the house at the District Real Estate Trading Centre, he was informed by the window staff that the building was a guard and property complex building. Further, he was informed that according to the relevant laws and regulations, the guard and property facilities were shared by all owners, so it was impossible to apply for the property rights certificate in the name of Jifa and the materials were returned to him.

    ·     Later Mr Meng was informed by a Deputy Director of the District Real Estate Trading Centre that the complex was undivided and that the ownership was also owned by all owners so it could not be changed.

    ·     Further, Mr Zhang also informed Mr Meng that the property complex was jointly owned by the owners and that the District Real Estate Trading Centre was unable to handle the change of house use. However, Mr Zhang suggested to Mr Meng that he go to the planning department, and then Mr Zhang would apply for the property rights certificate for Mr Meng. Mr Meng paid thousands of yuan in consulting fees and the Market Company under the District Real Estate Trading Centre issued an invoice. After coordination and explanation, the planning Bureau sent a letter to Jifa agreeing to change the original plan from ‘guard room and property complex building’ to office supporting room.

    ·     Later Mr Zhang informed Mr Meng that the materials were completed, and he could go to the window at the District Real Estate Trading Centre to handle the property rights.

    ·     Subsequently Mr Meng obtained the property rights certificate of the complex building at 99 Caoxi Road. The column of headed ‘house use’ indicated ‘special use’ and the remarks indicated that ‘the complex building was an area of 304.76 square metres was a supporting office building’. The complex is owned by Mr Meng.

    ·     In 2008 the building was purchased by an individual, with the purchase price of around RMB10,000 per square metre. At the time ‘in view of internal business of the company, the price was lowered’.

12. The verdict recorded the evidence of Mr Yuan, who worked in the Registration and Audit Department of the District Real Estate Trading Centre at pp.40–41. Mr Yuan was responsible for the preliminary review of property rights registration of Jifa in relation to 99 Caoxi Road. The last page of the document contains a correction notice and signature of Mr Yuan. During his audit Mr Yuan found the original ownership certificate which stated that the suite was a guard room and property room which according to regulations should be jointly owned by the owners. Therefore, he raised an objection to the qualification of the registration application on the notice of supplementation and correction stating, ‘garbage room and property room should be shared by all owners.’ A few days later Mr Zhang asked Mr Yuan to directly register the property owner in accordance with the contents of the letter on Consent to Change the Relevant Contents of the Construction Project Planning Permit issued by the Shanghai Municipal Urban Planning Administration in the archives. When Mr Yuan stated there would be no guard room if the property was changed to a ‘supporting office building’ Mr Zhang informed him that there was a guard room in the northwest of the community. Mr Yuan then found there was a guard room and went through the housing change formalities for Jifa according to Mr Zhang’s instructions and transferred the materials to Mr Liu.

13. The verdict went through the legal process for changing the use of the property and the relevant regulations. It then stated that Mr Yuan believed that the application of Jifa must have provided the opinions of all owners. Mr Liu, a staff member of the Registration and Review and the Legal Department of the District Real Estate Trading Centre is stated to have given evidence that the property rights registration was reviewed by him, but Mr Zhang was the final judge. The material came from Mr Yuan in a material bag with the correction notice on the outside and he signed the notice to agree. As Mr Zhang was in a leadership role when he asked Mr Liu to pass the review and transfer the materials to Mr Zhang, Mr Liu issued his opinion as ‘agree’ on the approval form.

14. The verdict on pp.41–42 referred to the evidence of Mr Niu, vice president and secretary general of Shanghai Planning Industry Association, who was in charge of drafting relevant letters. In relation to HGC [2005] No.987 Letter on Consent to Change the Relevant Contents of the Construction Project Planning Permit, Jifa applied to change the ‘guard room and property complex building’ to office supporting room’. The application was only for a change of purpose and did not involve the change of the nature of land rights.

15. The Shanghai Housing Administration Bureau and the district/county housing administrations were responsible for handling confirmation and change of housing and land property rights certificates. The letter issued to Jifa by the planning department was only the change of use of the house as the concept of ‘supporting housing’ refers to public buildings built in the community, such as property management and neighbourhood committees which are public and should be used by residents for public use.

16. The evidence of Mr Zhao, who was in charge of the property of Zunyuan Project was that the developer used the whole floor of 99 Caoxi Road as a supporting room for the community owners, but later Jifa sold the whole floor of building 1.

17. On pp.42–43 the verdict sets out the documentary evidence supporting the testimony of witnesses. Then at p.50 the verdict states that the approval for the change of use of the complex building by Mr Zhang in 2006, violated the Shanghai Residential Property Management Regulations. Jifa should not have been able to change the use of the complex without the consent of the  owner’s meeting.

Mr Meng’s evidence at the hearing on the change of use of the ‘supporting room’

1. At the hearing, the Tribunal stated that in relation to 99 Caoxi Rd, Mr Meng’s statement refers to obtaining a Construction Engineering Planning Permit was obtained in November 2003 for a ‘supporting room’. The Tribunal asked what the permit allows to be built and Mr Meng stated that it is the confirmation of a building which is called a strata complex building and confirmed further that it is a small building. The Tribunal referred to the construction project name as being ‘supporting room’ and Mr Meng stated that in Chinese it is some rooms for the complex where business will be run. The Tribunal asked what the use of the building was, and Mr Meng stated that they can be multifunctional and can be used for offices or for business purposes. The Tribunal asked what the ‘supporting room’ was used for and Mr Meng stated in most cases for business purposes and provided business services for people. The Tribunal asked if Mr Meng meant for the community of the project or for Jifa and Mr Meng stated that it was for the society including communities. The Tribunal asked if he meant people from that area of Shanghai or the Zunyuan Project and Mr Meng stated everyone could use it including the Shanghai area. The Tribunal asked if Mr Meng meant that the owners of the Zunyuan Project did not have exclusive use of the supporting room and Mr Meng stated that this was correct. When it was first built up it was an office for real estate selling.

1. Also, at p.52 the verdict stated that the appraisal report provided by the defence was not a judicially entrusted appraisal agency unlike the agency used by the prosecution.

Mr Meng’s evidence at the hearing on the purchase of the unit by Ms Zhang in the Zunyuan Project

1. At the hearing Mr Meng stated that in 2009 when Zunyuan was nearly complete there were three or five units left, those units were listed on an agency website for selling. Ms Zhang learnt this information from the agency and that agency took her to the unit and she bought one of the units that was left. Mr Zhang’s daughter agreed with Jifa’s staff on a price of RMB20,000 per square metre and signed the documents. Mr Meng stated that he did not speak with Mr Zhang or with his daughter throughout this process. After the purchase, Mr Zhang called Jifa and asked to speak with Mr Meng and they discussed if Mr Meng was aware that his daughter had bought a unit from Jifa and Mr Meng stated that his daughter had already signed a contract with one of Jifa’s staff for the unit and the staff member had reported this to Mr Meng. Mr Meng also told him that the unit had been left for a long time and had a lot of imperfections and was not suitable for living. Mr Meng asked Mr Zhang to tell his daughter and let her make the final decision. Mr Zhang stated that the decision to purchase the unit was made by his daughter. He was at a meeting and his employee asked him to take the call. The Tribunal asked what Mr Zhang wanted from the call and Mr Meng stated that he did not know the purpose of the phone call and he actually called the company phone. The Tribunal asked what phone Mr Meng expected Mr Zhang to call on and Mr Meng did not expect anything, and he had a very short conversation. Mr Meng confirmed that he did not have any further contact with Mr Zhang after the call.

Finding in relation to the sale of the unit to Mr Zhang’s daughter

1. The Tribunal accepts that the Chinese Court in the verdict dismissed the evidence from Mr Zhang’s defence in relation to the value of the unit sold to Ms Zhang without considering that evidence. The applicants have provided evidence indicating a range of values for units similar but not exactly the same, purchased in a period of time either side of when Mr Zhang purchased the property. On this evidence the Tribunal is satisfied that, even if there was a small discount, the price paid for the unit was within a range paid by other purchasers. Therefore, the Tribunal is not satisfied that this activity establishes that the applicant’s spouse has a history of business or investment activities that are of a nature not generally acceptable in Australia.

Court matters

1. At the hearing the Tribunal referred to the court proceeding where Mr Zhang was prosecuted and asked if Mr Meng participated, and he stated no. Mr Meng further stated that he did not appear as a witness. The Tribunal asked if he spoke with the prosecuting authorities about Mr Zhang and Mr Meng stated yes he did, in 2005. The Tribunal asked if he was aware that what he told the prosecuting authorities appears throughout the verdict against Mr Zhang.

2. Mr Meng stated he was not aware of what was said as he did not participate in the trial. Mr Meng confirmed that the prosecutors spoke with him once. The Tribunal stated that Mr Meng is referred throughout the decision. A critical point is his involvement with the Brokerage Company, a company the verdict listed which the Tribunal indicated it would include in a letter for Mr Meng to comment on.

3. The November 2022 submission and the response submission both raise concerns as to the integrity of the Chinese legal system and submit that the system is used from time to time inappropriately to punish officials particularly using anti-corruption cases. A number of articles and country information are referred to in both submissions.

4. The response submission submitted that the role of the prosecutor or procuratorate in China is different from Australia as the police, courts and procurators are referred together with a single word ‘gongjinfa’. It was submitted that this term reflects the reality that the agencies of the state act in a coordinated fashion to implement state and party justice policies. Further, it was submitted that the procuratorate is a special organ capable of exercising some degree of judicial power. The submission did not provide any substantiating country information or other evidence to support these statements. Further, there are a number of different legal systems around the world which have procurators with more investigative and other powers.

5. It was submitted in the response submission that witnesses do not appear in court and that their evidence is not subject to cross examination. The Tribunal will take the lack of cross examination into account when considering the evidence and conclusions in the verdict, however, the Tribunal notes that there is considerable substituting evidence in the verdict. Further, Mr Meng provided a statement and has not in his response submission stated that what he stated in his statement to the court was incorrect.

6. It was submitted in the response submission that heavy handed methods are used by procuratorate to obtain evidence and that prosecutors have quotas to fill for anti-corruption cases. Country information is referred to support this submission in particular in relation to the use of torture to extract confessions. The Tribunal notes that there is nothing in any of the material provided to the Department or the Tribunal to indicate that torture or heavy handed tactics were used in Mr Zhang’s prosecution. Although the submission response summarised this point by saying that heavy handed measures were used on suspects and witnesses, the country information relied on in the submission relates to extracting confessions which would be made by a suspect and not necessarily witnesses.

7. The submission response stated in summary that there is a strong possibility that Mr Zhang was caught up in a political purge and the charges are ‘hogwash’ as it is submitted that contemporaneous documentary evidence has been provided that contradicts some of the findings in the verdict. Even if there are some mistakes in the findings in the verdict and appeal that is not evidence nor is it sufficient to indicate a strong possibility that Mr Zhang was caught up in a political purge or the charges are ‘hogwash’.. Further, the November 2022 submission does concede that not all corruption convictions in China are politically motivated. Further, there is nothing on the face of the verdict or the appeal or the submissions and accompanying documentation that indicates that, the prosecution of Mr Zhang and the court decisions in relation to Mr Zhang are politically motivated.

8. The response submission also stated that the witness statements were not tested in court and the Tribunal accepts this but that of itself does not mean that the statements are incorrect or wrong. The Tribunal will take into account that the statements were not subject to cross examination when considering what was said. The response submission then stated that the procuratorate uses torture on suspects and witnesses. As referred to above the country information relates to confessions which would be from perpetrators and not witnesses and there is nothing to indicate that heavy handed measures were used in Mr Zhang’s prosecution

9. In light of the Tribunal’s findings made above, the Tribunal will not comment on these submissions further.

10. On all of the above the Tribunal is satisfied that there is no evidence that Mr Meng or the applicant has a history of business or investment activities that are of a nature not generally acceptable in Australia. Therefore, the Tribunal finds that the requirements of cl 188.211 are met.

11. In support of the above the Tribunal notes that Mr Meng’s ’s police clearance states that he has no criminal record and Departmental records indicated that he has travel to China and returned to Australia on numerous occasions since September 2015.

12. The Tribunal finds that as the second and third named applicants applied on the basis of being family unit members of the first named applicant, their applications will be determined by reference to the outcome of the first named applicant’s application on remittal to the Department for reconsideration.

13. Given these findings, the appropriate course is to remit the visa applications to the Minister to consider the remaining criteria for the visa.

DECISION

1. The Tribunal remits the applications for Business Innovation and Investment (Provisional) (Subclass 188) visas for reconsideration, with the direction that the primary and second named applicants meet the following criteria for a Subclass 188 visa:

   ·cl 188.211 of Schedule 2 to the Regulations.

Namoi Dougall
Member