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China's billionaire Red Capitalist seen as security threat to U.S.

Special to World Tribune.com
GEOSTRATEGY-DIRECT.COM
Wednesday, August 28, 2002

Li
Does the U.S. really want to entrust a billionaire closely tied to China's communist leadership and military, with port security in post-9/11 America? . . .

Li Ka-shing
  • Age: 74
  • Corporate holdings: Hutchinson-Whampoa Ltd., Cheung Kong (Holdings) Limited, Hutchison and Singapore Technologies, China International Trust and Investment Corporation [CITIC], COSCO.
  • Business and prsonal connections: Chinese President Jiang Zemin, the People's Liberation Army, China's intelligence agencies.
        Li Ka-shing, Hong Kong billionaire and one of the richest men in the world, is about to bite off another piece of the U.S. economy ø that is, if some worried American conservative activists and government officials donÕt block him.
        LiÕs Hutchinson-Whampoa Ltd., which runs the Port of Hong Kong; PSA Corp. Ltd., which operates the Singapore port; and London-based P&O Ports have teamed up to bid for millions of dollars in contracts to track and test cargo coming into the U.S.
       Congress has already authorized $28 million in emergency funds for additional port security after the events of 9/11. And it is considering another $83 million in annual port security grants to try to get a handle on the enormous flow of containers which reach the U.S. from foreign ports ø at least theoretically an easy terrorist target. Since these three companies are said to manage some 70 percent of the worldÕs port container operations, they would Ñ other considerations notwithstanding Ñ seem ideal candidates to set up such a security system.
       Meanwhile, another Li Ka-shing company, Hutchison and Singapore Technologies, has completed negotiations with creditors to pick up 62 percent of the equity of a reorganized telecommunications company, Global Crossing, in return for between $250 million and $300 million in cash, and about $200 million in notes. Li was a major stockholder in the original Global Crossing which spent $7 billion creating a fiber-optic network to carry voice and data traffic around the world for business customers in 1998. It was one of the most spectacular of the recent corporate bubbles bust-ups. The crippled worldwide network still carries critical data for many American companies, information that often has implications beyond the profit and loss considerations of the business world.
    Li
    . . . With Global Crossing's worldwide fiber optics network carrying voice and data traffic for American corporation to every corner of the world? . . .

       The problem, as some observers in Congress and the intelligence community see it, is that the 74-year-old billionaire is not just a symbol of the rags-to-riches careers of some of the Red capitalists, once Chinese refugees in Hong Kong during the long period it served as BritainÕs crown colony and an isolated Red ChinaÕs window on the world. But Li, a friend of China President Jiang Zemin and other Communist big-wigs, is much too close to the Chinese intelligence apparatus and military machine to be entrusted with what could be an important listening post for strategic and tactical information about the U.S. economy, even elements critical to American military capabilities.
       This is not the first time that Li and his companiesÕ activities have been scrutinized by U.S. officials and the Congress for their potential risk to American defenses. When LiÕs companies bought 25- to 50-year leases on ports at both the Atlantic and Pacific Ocean ends of the Panama Canal, and port facilities in the Bahamas with some typical Latin American skullduggery in 1999, Congressman Dana Rohrbacher [R., CA], told a Congressional Committee: ÒI am concerned about Communist China gaining a substantial economic foothold in our financial and business community and a maritime base in our hemisphere. Panama Canal security has always been very difficult to guarantee. The presence of entities linked to Beijing controlling ports at both ends of the Canal increases this serious security risk. In addition, their control of the ports and cargo stevedoring enhances the two-way flow of sensitive weapons-related technologies that is extremely difficult to monitor.Ó
       The Li commercial network is vast and intricate Ñ not only operating ports globally but other interests in telecommunications, real estate, retail, manufacturing, and energy. Although occasionally hit with spectacular losses, LiÕs holdings have prospered beyond any predictable forecast even a decade ago. Some American financial observers have compared it with Warren BuffetÕs Berkshire Hathaway's in the 1990s, with annual returns above 20 percent, earning Li Forbes magazine's designation as Asia's wealthiest man. Li is the Chairman of Cheung Kong (Holdings) Limited and Hutchison Whampoa Limited with a combined market capitalization of approximately HK$504 billion as of July 31, 2002.
        Judicial Watch, the nonpartisan Washington legal watchdog group, has filed a class action suit on behalf of Global CrossingÕs original stockholders with the bankruptcy court against Li Ka-shing, President Clinton, Democrat Party Chairman Terry McAuliffe, and others charging mismanagement of the telecommunications company. McAuliffe told Jeff Gerth of The New York Times in late 1999 that his initial $100,000 investment in Global Crossing grew to be worth about $18 million, and that he made millions more trading Global CrossingÕs stock and options after it went public in '98.
    Li
    Li is founder of the shipping giant COSCO which has been involved in the shipping of missile and chemical warfare components to such nations as North Korea and Iraq.

       But it is not these commercial undertakings that excite the interest of the spy chasers in Washington. LiÕs financial and commercial dealings often trail off into semi-government and then government operations of the Chinese government. For example, he was one of the founders Ñ along with other Hong Kong interests with rumored drug and Triad gangster connections Ñ who put together the government China International Trust and Investment Corporation [CITIC], which American intelligence has identified as a principal funding arm and technology acquiring source for China's military. The Clinton Administration briefings for friendly American businessmen doing business in China during the period when Washington saw the Beijing regime as a Òstrategic partnerÓ included Li as the only non-official of the Beijing regime. A 1997 Rand Corporation report states, ÒCITIC does enter into business partnerships with and provide logistical assistance to the PeopleÕs Liberation Army...Ó
       Among CITIC board members has been Wang Jun, the chairman of the Poly Technologies Corporation, indicted by U.S. Customs for attempting to ship thousands of weapons into California for use by street gangs. According to The Wall Street Journal, The South China Morning Post and other reports, the PeopleÕs Liberation Army created the Poly Group, with CITIC funding, for international arms trading, especially advanced military systems sales to the Third World. Li is a director the giant communist Chinese shipping firm COSCO, which in addition to commercial transport has been involved in shipping Chinese missile technology and biological warfare components to North Korea, Pakistan, Iraq and Iran.
       Just as the whole process of ÒglobalizationÓ which erupted just as Washington was dismantling the whole panoply of strategic trade restrictions maintained against the Soviet Bloc during the Cold War, the arrival on the world scene of giant entrepreneurial organizations led by Mainland Chinese and in some cases affiliated with Overseas Chinese in Southeast Asia present a new challenge to U.S. strategy. The Bush Administration, dramatized in the recent reevaluation of Chinese military strength and strategy by a hawkish Pentagon report, appears to have put aside the Clinton Administration concept of a Òstrategic partnershipÓ with the Chinese. But the question of how to deal with the commercial activities of Li, and other Chinese entrepreneurs like him, has not been answered.
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