EXCLUSIVE: Executives of US consulting firm Mintz leave Hong Kong after raid in China

HONG KONG/SHANGHAI (Reuters) – Some Hong Kong workers with US consulting firm Mintz left the city after Chinese police raided the company’s Beijing office in March, two people familiar with the matter said.

Investigations by Chinese authorities into Mintz, as well as US management consultancy Bain & Co and mainland advisory firm Capvision Partners, have sent a chill across companies that do business with China, with many red lines blurred as Beijing prepares to introduce tougher laws. Strict anti-spyware. in July.

Moving people quickly out of Hong Kong underscores how China’s crackdown has unnerved some companies in the global financial hub, many of which are still grappling with the national security law Beijing imposed on the city in 2020.

The transfers over the past two months are intended to be a temporary measure to ensure staff safety, given the uncertainty over the Chinese police investigation, the sources said, and involved about six staff including investigators and the head of the Hong Kong office. .

The company participated in corporate due diligence work to examine the potential use of forced labor in supply chains linked to China’s Xinjiang region up until this year, said a source familiar with the matter, and four other sources briefed by Mintz employees.

Reuters could not confirm whether the Chinese police investigation was initiated because of Mintz’s work in Xinjiang. But at least two other senior executives of international due diligence firms operating in China told Reuters that authorities had explicitly warned them against such work in recent months.

Many of Mintz’s Hong Kong employees are now in Singapore, said a source who dealt with Mintz in its business capacity, and there is no plan for them to return to Hong Kong until the investigation by Chinese authorities is completed.

No one was present when Reuters visited Mintz’s Hong Kong office during business hours, the doors locked and the lights on. An employee in the building management office said Mintz is still paying rent for her office but two employees in nearby offices said no one has been seen at Mintz’s residence in the past few months.

Several Mintz employee profiles have been removed from the Mintz website, according to a Reuters review of archived copies of the site. The role of all those who left was not clear.

Mintz declined to comment.

Mintz confirmed the raid on her Beijing office in late March, and said at the time that she had closed her operations there and was ready to work with Chinese authorities to “resolve any misunderstandings that may have led to these events.”

XINJIANG “Outside Boundaries”

While Chinese authorities have not detailed the scope of the investigation against Mintz, the raid on the office and the detention of five mainland Chinese employees, including the head of Mintz’s Beijing office, has rattled the professional advisory services industry within China, with ripples now in Hong Kong. Kong.

As a global financial centre, Hong Kong has a large pool of professional services talent, including in corporate investigations, with international firms including Kroll, Control Risks, McKinsey and FTI based there.

In recent years, following the enactment of the national security law imposed by China in 2020, the United States has revised its risk assessment for US citizens in Hong Kong, highlighting the increased risks of arrest, detention, expulsion, or prosecution.

Chinese and Hong Kong authorities reject Western criticism of the national security law, saying that human rights are respected and that all countries, including the United States, need such laws.

China’s Public Security Bureau did not respond to Reuters requests for comment. The Ministry of State Security could not be reached for comment.

China’s State Council Information Office, Foreign Ministry and Hong Kong and Macao Affairs Office did not respond to Reuters requests for comment.

The Hong Kong government said it did not comment on individual business decisions.

A raft of laws and regulations enacted during President Xi Jinping’s rule — including laws on cybersecurity, personal information protection, and data security, as well as an upcoming anti-espionage law that will prohibit the transmission of any national security information — has complicated matters. Landscape to comply.

Two executives of due diligence with international companies and extensive transactions in China said Chinese security officials have arranged meetings periodically in recent years to issue blunt warnings about areas to avoid in corporate investigations.

“They’ll tell us exactly what the no-go areas are,” said one executive. Xinjiang was one of those.

Rights groups accuse Beijing of abuses against the predominantly Muslim Uighurs in the western region of Xinjiang, including the mass use of forced labour.

The United States has compiled a list of companies sanctioned for using forced labor in Xinjiang and has passed a law that places a burden of proof on companies sourced from forced labor.

China denies abuses in Xinjiang, a major producer and supplier of cotton for solar panel materials.

Mintz’s chief in Asia, Randall Phillips, a former senior CIA official, co-authored an article posted on the company’s website last year about “punitive due diligence” under Xinjiang’s Uyghur Forced Labor Prevention Act, which has since been removed. That moment.

“For some suppliers,” Phillips writes, “public records and questionnaires may suffice; for others, independent verification, on-the-ground investigation, and interviews with industry sources may be required.”

Phillips declined to comment.

Additional reporting by James Pomfret in Hong Kong, Engin Than in Shanghai, and the Hong Kong Newsroom; Edited by Lincoln Feast

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