Archive for July, 2009

Friday, July 31, 2009

Namibia Graft Probe: “Defendants bought two Farms”

In absence of his clients, Teckla Lameck, her business partner and fellow member of Teko Trading CC, Kongo Mokaxwa, and Chinese national Yang Fan, defense lawyer Sisa Namandje asked for postponing a hearing for releasing the defendants on bail a week ago. All property of the defendants is currently confiscated, and there is therefore no money at the disposal of the accused for depositing bailment. The Prosecutor General asked the High Court on July 6 to issue a restraint order over an array of assets connected to the defendants, and judge president Petrus Damaseb granted the order. Defendents referred to the restraint order application as demented.

An investigator with the Anti-Corruption Commission (ACC), Nelius Becker, told the court on Friday last week that 55 million US-$ were paid for the equipment bought from Nuctech. The Namibian ministry of finance paid more 12 mn of it, while the Chinese government provided a loan of 42 mn US-$. Teckla Lameck’s and Kongo Mokaxwa’s Teko Trading CC allegedly acted as a go-between without knowledge of the ministry of finance which transferred the 12 mn US-$ to Nuctech as agreed – 4.2 mn of which Nuctech then transferred to a Teko Trading account, Namibia’s Allgemeine Zeitung wrote on July 23. According to the ACC’s investigator Becker as quoted by the paper, these 4.2 mn US-$ were shared between the three defendants who then started “a wild shopping orgy”, buying two farms, several vehicles and other possessions. Investigations were continuing, Becker announced.

General prosecutor Martha Imalwa was reportedly in Beijing recently to ask Hu Haifeng, Nuctech’s president until last year, to testify as a witness – not as a defendant – in the trial. Imalwa wasn’t available for comments, as she was on sick-leave, according to the Allgemeine Zeitung‘s report of last week.

Friday, July 31, 2009

Serve your Country – Become a Network Security Adviser

A special correspondent with Singapore’s United Morning News (联合早报) in Chongqing, Zhang Xiaozhongreports on online hacker schools in China. With the number of internet users now at 340 million (and therefore topping the numbers of all other countries worldwide), it has also become a global hacking superpower (世界黑客超级强国), with millions of young people having received training from hacker schools (“黑客学校”), writes the author. He states that there are more than 1,000 hacker schools in China now.

The report refers to them as sixth-generation hackers. Sixth-generation hackers (第六代的黑客) grew up with computers, he writes, and a good share of them is trying to grift money through the internet. However, the article also points out that not all hackers have such intentions. Many just want to prove their skills by hacking websites without damaging or manipulating the content. A hacking instructor describes the hacking students as young, with low educational attainment (so far, anyway – some haven’t qualified for university yet, due to their young age), and unaware of possible consequences (低龄化、低学历、不计后果). Many of those who only hack to boost their egos are unaware that this constitutes a crime already.

Sixth-generation hackers pursue clear economic purposes, writes Zhang. This doesn’t mean that they all want to earn money by manipulating financial transactions. Zhang logged himself into a hacking school and a participant told him that he wanted to become a soldier and become a professional hacker in the army. “I want to help the troops to destroy enemy networks.” The army pays close attention to the hacking scene and has recruited many outstanding hackers already, writes Zhang. A hacker referred to as Li Qiang who is running a hackers’ website named Blackhawk Network (黑鹰网)  is quoted as saying that the Defense Science and Industry Commission (科工委) and units of all big areas of command (各大军区等单位) frequently publish recruitment advertisements on his website. Li started cooperating with the government after he had been suspected of teaching cybercrime, writes Zhang.

In general, hacking schools don’t like to be referred to as hacking schools. A hackers base security adviser, Wang Xianbing (王献冰), recently told a paper quoted by Zhang that “we are a network security training school”.

To judge the soundness of the statistics used by Zhang Xiaozhong would be difficult. He bases at least some of it on data provided by those who opened accounts with the hacking schools. There are hacking schools which demand tuition fees, but I’m not sure if this applies to all of the 1,000 schools stated by Zhang. If some earn their money by hosting commercials rather than by fees from the learners, or if they are non-commercial, the common habit of using more than one account may inflate the numbers.

Shanghai Eye describes the ambiguous attitude of Chinese authorities and media towards hacking in a post of July 24. Probably, the “cyberwar” between American and Chinese hackers in 2001, following the EP-3 incident did a lot to boost the Chinese public’s esteem for the trade.

Thursday, July 30, 2009

Nuctech Graft Probe: Statement by Mrs Lameck, no Statement by Finance Minister

A shortage of money prevented a bail application by Teckla Lameck, her business partner and fellow member of Teko Trading CC, Kongo Mokaxwa, and Chinese national Yang Fan, reports The Namibian, quoted by The Zimbabwean today. According to the same report, defence lawyer Sisa Namandje, who is representing all three detained suspects, told Magistrate Gerrit van Pletzen yesterday that whereas his clients’ bail application was supposed to start yesterday, one of them does not have funds to pay for his legal representation at this stage. Teckla Lameck is quoted as commenting on conditions in the female section of Windhook Central Prison that “the winter is bitterly cold and the cells have no hot water or electricity.” She stated in an affidavit that there had been “no contractual duty on Nuctech to inform the Finance Ministry that any sub-contractor had been appointed by Nuctech as an agent”. In an agreement of May 19 2008, Nuctech agreed to pay her company Teko Trading US$12,828 million – the exact same amount that the Finance Ministry had agreed five days earlier to pay Nuctech as a first payment under its agreement with the Chinese company – as a commission on the contract Nuctech and the Finance Ministry had signed.

Another Namibian paper, Informanté, by their own account tried to interview finance minister Saara Kuugongelwa-Amadhila by phone, but were told that she was “not a subject of Informanté. I am quite busy now”.

Thursday, July 30, 2009

Chinese Spying Cases: Unease is no Policy

An author at Frog in a Well feels disturbed about the way PRC policy .. sees overseas Chinese as intelligence and lobbying agents. There are good reasons for such feelings. Walter Opfermann, at the office for counter-intelligence for the state of Baden-Wuerttemberg, is apparently uneasy, too. “We’ve dealt with several cases of Chinese citizens on work experience in German companies who stole highly sensitive information from them,” Opfermann was quoted by the Sydney Morning Herald (via The Guardian) this month.

To a large extent, flows of know-how from advanced competitors to developing ones are inevitable, if not natural. The internet, data carriers, the benchmarking of exported products after arrival in their sales markets all account for a lot of it, and cooperation of Western with Chinese companies often involves legal technology transfer, in accordance with legal contracts. And both data and job losses should be seen in a wider context, where by far not every  such technology flows are illegal or even objectionable.

Also, intelligence reports per se need to be taken with a pinch of salt. Intelligence agencies are tax-funded and need to justify their costs – they must prove that they are needed. America’s intelligence reports on “weapons of mass destructions” in Iraq were a spectacular example, but there will be many less notable ones, too. Also, the numbers given are naturally not precise. But I have no doubt that Opfermann has it basically right when it comes to China. As for Russia, I have no experience of my own.

A Chinese volunteer in Baden-Württemberg quoted by the “Global Times” has never heard complaints from German business people. Of course not. If you complain, you hurt other peoples’ feelings and might lose business. The German reluctance to make complaints for such reasons may explain the term “panda-huggers”, which we have earned ourselves in the Middle Kingdom. And it may partly explain why rather unfavorable – and yes, sometimes biased – media coverage on China is now finding such a ready readership here in Germany, pretty much of a sudden. I’m sure that some of it is anger suppressed in connection with business, and only breaking out on in connection with different, mostly not business-related topics. No anger is as dynamic as previously suppressed anger – any fenqing may serve as evidence, and some Germans are making great fenqings of themselves. Unease is no policy. And without a policy, a lot of otherwise mature people can look surprisingly helpless.

Writing and consuming unfavorable press articles on how China’s government suppresses people at home, as relevant as such information can be, won’t solve our problem. And our core problem in this context is that a big share of education, professional training, R&D, and the resulting know-how is tax-funded here, paid for by people like you and me, and gets into Chinese hands both illegally, and far too easily. So here comes JR’s some-billion-euros-question: is it wise to offer Chinese nationals working experience in a rather small-sized German company whose competitiveness stands and falls with their technological edge, unless they have reliable security procedures in place?

Yes, I can feel the cold creeping in even before the first accusations of discrimination and racism even arrive here on my hitherto beautiful blog. But before you accuse me, think of this: The Eastern Bloc’s capacity to adopt new technologies was probably much less developed than China’s today. But who in his or her right mind in the West would have employed a Soviet or East German citizen in a technologically sensitive area – be it in the 1960s, 1970s, or 1980s, without making sure that there would be no data theft?
The answer seems to be that when it comes to China in this globalized economy, the country is economically more attractive than the COMECON members ever were.

To be clear: legislation that would bar working contracts between German companies and Chinese nationals are not the answer. That would be unpractical, and most probably unconstitutional. There are some weaknesses an open society will have to live with, if it doesn’t want to betray its own standards. Our authorities can’t define state secrets the way it suits them. But I’m grateful for some recent open words here. Any boss who owns his or her company should bear them in mind when making decisions. Such decisions should also include an awareness that too much dependence on the Chinese market can make a company very vulnerable for coercion by Chinese authorities. An understanding of the way the Chinese Communist Party is ruling China, and the means it may apply to recruit both willing and reluctant spies, is important.  The damage would be much smaller if there were only willing victims of data theft here. However, naivety (and possibly some ill-advised political correctness) can be fatal.

I may lose some friends for posting this. But I’m advocating a clearer understanding of China. Ignoring the problem “because companies don’t want to admit their weaknesses and lose customers and [because] they don’t want to ruin business opportunities with China” will leave us with little to offer on the world markets in the future – Chinese markets included.

Civilized representations to the contrary are welcome.

Wednesday, July 29, 2009

“Reluctant to Face a Stronger China”

Mr Opfermann estimated that German companies were losing about €50 billion ($87 billion) and 30,000 jobs to industrial espionage every year. [...]

“Old-fashioned” methods were also rife, such as phone-tapping, stealing laptops during business trips or Chinese companies that regularly sent spies to infiltrate companies.

“We’ve dealt with several cases of Chinese citizens on work experience in German companies who stole highly sensitive information from them,” Mr Opfermann said.

Sydney Morning Herald, July 25, quoting Walter Opfermann, office for counter-intelligence for the state of Baden-Wuerttemberg, commenting on alleged industrial espionage, notably from Russia and China

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“Those numbers he brought up were ridiculous [...] Maybe there are some cases of stealing carried out by individuals or certain Chinese companies, but to say China depends on stealing from others is to discredit China’s 30 years of development. [...] Opfermann is either feeling the threat from Chinese manufacturers or is reluctant to face a stronger China.”

Ding Chun, director of the Germany Study Institute of China, quoted by the China Global Times

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Related: German-Chinese Diplomacy: No Business as Usual, July 17

Wednesday, July 29, 2009

Rebiya Kadeer in Japan: The Usual Procedures

World Uighur Congress chairwoman Rebiya Kadeer arrived in Japan for a three-day (BBC News) or five-day (Radio Australia News, July 28, 18:00 GMT) visit on Tuesday. Japan’s Foreign Ministry Press Secretary, Kazuo Kodama, said Mrs Kadeer had been granted a visa “based on the usual procedure”, so the visit should not cause any diplomatic problems. Meantime, Beijing has kicked off its own usual procedure.

Mrs Kadeer is likely to attend the Melbourne International Film Festival next week and she will give a televised speech there, reports the BBC. Beijing made repeated representations concerning her visit to Australia, too.

While the Chinese government wasn’t successful in blocking Mrs Kadeer’s visits to Japan and Australia, Beijing did initially succeed in persuading South Africa’s government not to allow the Dalai Lama to visit the country earlier this year. More or less informal Chinese organizations such as the United Chinese Association in New Zealand also lobbied against a visit by the Dalai Lama, but were less successful. Less than two months after the Tibetan spiritual leader’s visit to South Africa had been blocked, the country’s new government under president Jacob Zuma reversed the decision and said that the Dalai Lama could visit South Africa anytime. The Dalai Lama also visited France, Iceland, and the Netherlands in June this year.

India has apparently heeded advice from China’s government and denied a visa to Mrs Kadeer, while  Turkey intends to grant her one.

So long as Beijing’s representations stand a chance of being successful, even if only in some cases, they will probably remain a regular feature of international diplomatic routine.

Monday, July 27, 2009

Namibia: No Free Lunch

The Export-Import Bank of China’s (EXIM) terms of credit were unfavorable, Calle Schlettwein, permanent secretary in Namibia’s Ministry of Finance said on July 20 [Update: link]. So was the China National Machinery & Equipment Import and Export Company’s quotation for the installation of a railway link to Oshikango, an Angolan border town, reports South Africa’s Mail & Guardian Online. The $ 100 million credit line which was suspended by the Ministry of Finance late last year had been offered by China’s state chairman Hu Jintao during his visit to Namibia early last year, reports the South African paper. The three suspects held in connection with the alleged Nuctech bribes were to appear in Windhoek Magistrate’s Court to apply for bail has been postponed to Tuesday by their lawyer, Sisa Namandje. Namibian prosecutor-general Martha Imalwa was in China some time ago to discuss the Nuctech case and another, so far unknown case with Beijing officials.

Critics of African-Chinese relations sometimes accuse China to happily support repressive African regimes. But when it comes to graft probes, there are apparently governments in Africa who are willing to carry out genuine probes.

China hosted a Sino-African summit attended by 50 African leaders in November 2006. But one of them, then South African president Thabo Mbeki, warned that Africa could get into a colonial relationship with China. “If Africa continues to just export raw materials to China while importing Chinese manufactured goods, the African continent could be condemned to underdevelopment”, similar to its historical relationship with its former colonial powers, Mbeki told a student congress in Cape Town soon after the summit, according to The Namibian. The Namibian also quoted an EU diplomat stationed in Namibia who commented on China’s announcement that “no strings were attached” to Chinese development aid. “There is no free lunch”, the unnamed diplomat told the paper.

There may be a mix of motivations for the current investigations. Mere power struggles within Namibia, or a mere desire for good governance. That plus an evolving new development strategy – an unfriendlier label might be protectionism (no trade block or big economic power, may it be America, the EU, or China, has proven itself immune against it after the beginning of the global financial crisis). Maybe Thabo Mbeki’s warnings, with some delay, arereaching a more receptive audience these days. China gives African countries a great opportunity to play a Chinese card in negotiations with the fully industrialized nations. If the African people benefit from that altogether, African relations with China may turn out to be very useful.

That of course is no small “if”.

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Related: China in Africa, Hearts and Minds, Febr 13

Monday, July 27, 2009

Hu and Ma exchange Direct Messages

Chinese state chairman and CCP general secretary Hu Jintao (胡锦涛) sent a congratulatory telegram to Taiwanese President Ma Ying-jeou (馬英九) after Ma’s election as chairman of the ruling party KMT on Sunday. Ma responded that they had “put aside disputes”, a KMT statement said.

The Guofu and His successor

The Guofu and His successor?

BBC correspondent Cindy Sui wrote on Sunday that in his capacity as the KMT’s chairman, Ma Ying-jeou would be able to meet Hu Jintao personally. Beijing claims Taiwan as Chinese territory and doesn’t recognize Mr Ma’s presidency. Ma is in no hurry to visit China, but it is believed that his KMT chairmanship will strengthen his influence in Taiwan’s dealings with China.

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Related:
Lee Teng-hui: ECFA “Most Serious Mistake”, May 17
The Ma-Wu-Chiang Drama, May 8

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