Two years ago NLPC presented numerous shareholder proposals at major U.S. companies that sought a “China Risk Audit,” calling upon boards and executives to deliver greater disclosures about the many risks they face related to the extent their business operations depend on the communist nation. Here is one example, our proposal for General Motors — all our China audit proposals were worded similarly.
Part of the case we made in support of the proposals — in filings with the Securities and Exchange Commission — was to call attention to China’s routine violations of human rights and security, which include the Communist Chinese Party’s monitoring and control of the Internet in China; the CCP’s abusive trade practices meant to dominate key U.S. industries; and the CCP’s wrongful detainment of U.S. citizens. Related to the last point, in our proxy memos submitted to the SEC and in our presentations at annual meetings, we noted how increasingly “companies’ executives are afraid to go [to China], for fear of not being allowed to leave, due to exit bans.”
This problem has not abated, as the Wall Street Journal reported on Friday:
A U.S.-based Wells Fargo banker who works in trade financing has been blocked from leaving China after traveling there recently, people familiar with the matter said.
Chenyue Mao, a Shanghai-born and Atlanta-based managing director at Wells Fargo, was subjected to an exit ban after she entered China sometime in recent weeks, according to the people….
“The Chinese government has, for many years, imposed exit bans on U.S. citizens and other foreign nationals in China, often without a clear and transparent judicial process for resolution. We monitor exit ban cases that are brought to our attention and provide appropriate consular assistance,” a spokesperson at the U.S. Embassy in Beijing said, declining to comment further due to privacy and other considerations.
The Journal updated the story today:
China blocked Wells Fargo banker Chenyue Mao from leaving the country because she is required to assist in a criminal probe, China’s Foreign Ministry said Monday, marking Beijing’s first confirmation of the exit ban.
Chinese law-enforcement authorities have imposed exit restrictions on Mao, who “is involved in a criminal case” currently under investigation, Foreign Ministry spokesman Guo Jiakun said.
Guo didn’t give details of the case or elaborate on the nature of Mao’s involvement. Mao “can’t leave the country for the time being, and has an obligation to cooperate with the investigation,” Guo said…
Wells Fargo has suspended all travel to China after Mao’s exit ban, the Journal reported.
True to the CCP’s reputation, due process and transparency are concepts that don’t exist in their detainment toolbox:
Most exit bans aren’t imposed on people accused of crimes. Most bans have been slapped on those involved in civil litigations such as business disputes.
In other cases, the bans are implemented to facilitate criminal probes, intimidate dissidents or even create leverage in disputes with foreign companies and governments. Exit bans can last for months or years as the investigations that prompted the restrictions drag on.
Western officials and human-rights groups say the use of exit bans has become increasingly common in China, where authorities have imposed such measures on people who were being investigated or asked to assist with government probes. Often, people targeted don’t know that they are subject to such bans until they try to leave mainland China.
As NLPC told multiple companies in 2023 (Wells Fargo wasn’t one of them, but the principle still applles for those we did warn), the increased chances that your executives or employees are prevented from leaving the communist nations where you operate ought to be reported as part of your risk disclosures to shareholders. Unfortunately big asset managers like BlackRock — many which also have extensive business interests in China — didn’t agree with us and voted against the proposals.
While the delay or disappearance of an individual employee may not warrant a SEC disclosure that affects the bottom line, if the CCP is using the process to extort or intimidate a U.S. corporation, that’s another story.
(Image above created via ChatGPT)
