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Sunday, Jun 4, 2023

Tycoon Courts U.S. in China Fight

On most days, Tiangang Sun gets moving at 5:30 a.m. After a half-hour of pushups and jogging, a perfunctory porridge breakfast and a scouring of Chinese news sites, he begins making phone calls to business and legal contacts in China. By late morning, with his overseas associates having gone to bed, he starts ringing attorneys in Los Angeles.

Sun spends five to eight hours a day strategizing like this, usually skipping lunch. Yet, other than an occasional trip to a law office, he has limited face-to-face contact with the outside world. Even his morning jog is confined to the backyard, which has been screened by a security firm.

From the anonymity of a San Gabriel Valley home, the former oil tycoon has launched a one-man crusade against one of the world’s largest companies, Chinese energy giant Sinopec Ltd. Sun, who claims to be among China’s irst self-made billionaires, says the state-owned company seized his assets and conspired to imprison him after a business dispute. He has filed for asylum in the United States and has taken Sinopec to federal court in Los Angeles, where he is seeking $5.2 billion.

“There has to be somewhere in the world that I can get justice,” said Sun, speaking through a translator at the downtown L.A. offices of law firm Arent Fox. “I’m not going to stop fighting.”

The case faces issues of the appropriateness of United States courts as a venue for overseas business disputes, experts said. Sinopec, which did not return requests for comment, has claimed in court filings that U.S. law does not apply to the case and that U.S. courts do not have jurisdiction. It has further denied the charges. A judge will hear its motion to dismiss March 3.

Legal experts said it is not uncommon for people to bring cases over foreign assets in U.S. courts, and some have been successful. But in recent years the U.S. Supreme Court has sought to limit the reach of U.S. law. Experts also noted that the size of Sun’s alleged losses, the extremity of his allegations and the challenges posed by his case are rare.

“I was struck by the number of legal hurdles he’ll have to get over,” said David Cinotti, an attorney specializing in international dispute resolution at Venable’s New York office who reviewed the case for the Business Journal. “I haven’t seen a case like that, with a plaintiff applying for asylum.”


Still, Sun, 61, appears to have no shortage of resources at his disposal for the fight. From his new home base in Los Angeles, he has hired a top-flight law firm in Arent Fox, a personal assistant, a security firm and a team of lobbyists. He is driven to meetings by his assistant in a Mercedes-Benz sedan, which he said belongs to relatives he is staying with.

He declined to discuss the source of his funding, nor would he say what amount of his once-considerable assets he still holds.

In person, Sun comes off as surprisingly good-humored and quick to smile, laughing wryly when describing his jailing by Chinese authorities. That easygoing nature contrasts with his reputation for high-stakes gambles that built his fortune.

After working as a chemical analyst and then representative of a Japanese company in the northeastern Chinese province of Liaoning, Sun said he moved to Hong Kong in 1987 and started a host of companies in the hotel, real estate, food and textile industries. In 1996, he founded a Hong Kong energy company that later became GeoMaxima Energy Holdings, which became listed on the Hong Kong stock exchange through a reverse merger in 2001, according to news reports at the time.

GeoMaxima took on several oil and gas projects in China’s burgeoning energy industry and did not shy from riskier ventures. One of Sun’s biggest bets was a joint venture to build a 43-mile pipeline to the Tahe oil field in northwestern Xinjiang province, a project he said his competitors were wary of.

“They thought it was going to be a little one,” he said. “They didn’t want to invest to build the pipeline because they didn’t expect that much profit.”

The oil reserves there proved many times larger than initially thought, and the pipeline became lucrative, causing shares of GeoMaxima to skyrocket. The stock nearly tripled in eight months, giving the company a market capitalization exceeding $500 million by mid-2002.

Sun benefited from being part of an early wave of energy moguls and his big bets, but momentum quickly reversed. Sinopec, the largest company in China by revenue, bought out GeoMaxima’s partner in the Tahe pipeline and allegedly forced him out, refusing to pay oil transportation fees and building a second pipeline, in alleged violation of GeoMaxima’s 20-year exclusivity clause. By the end of 2002, his company’s shares had lost 90 percent of their peak value.

Sun sued Sinopec in Hong Kong and Beijing courts in 2004 and 2005, respectively, for breach of contract, according to his lawsuit and news reports at the time. Sinopec countersued, claiming that Sun had bribed the former chairman of his original joint-venture partner to obtain the exclusivity clause. Sun claims that Sinopec then conspired with Chinese authorities to imprison him and seize his assets. In August 2005, he was detained and flown to a detention center in the Jilin province in northeast China.

Sun was imprisoned there for five years, cut off from his wife and children. At one point, he claims he endured a 30-hour nonstop interrogation session, not provided food or water nor allowed to use the bathroom.

Sun said he faced two trials on charges of bribery and embezzlement during those years; each time, the indictments were withdrawn. After being released in 2010, he said he spent another two years under house arrest.

Sun also lost assets while he was in prison. He said his personal property, real estate and stakes in companies including GeoMaxima were auctioned off or transferred to other entities by Chinese authorities.

That was made easier due to the structure of his companies: He had set up more than a dozen offshore companies in the British Virgin Islands, Bermuda and Cayman Islands in order to take advantage of laxer regulation and tax savings. GeoMaxima, for example, became publicly traded after a reverse merger between a British Virgin Islands company and a listed Hong Kong company. The lax regulation might have proved to be part of his undoing: Sun now says it allowed employees to later change the company’s ownership while he was imprisoned.

Sun claimed he amassed a net worth of at least $5 billion, a difficult assertion to substantiate. Records indicate his holdings in GeoMaxima exceeded $300 million in 2002, and holdings in another public company, Canada’s Maxy Oil, peaked at around $20 million in 1998. He stated in legal filings that his share of XinJiang XingMei Oil Pipeline Co. Ltd., the private joint venture that once had exclusive rights to the Tahe oil field, was worth $5 billion. That number could be speculative: Profits from that pipeline reportedly peaked only in the tens of millions of dollars before Sinopec built the second one.

Move and legal fight

Sun moved to Los Angeles in 2012, taking up with relatives in the San Gabriel Valley and filing for asylum. His attorneys would not discuss the status of his asylum request. A Citizenship and Immigration Services spokeswoman declined to confirm a request as a matter of policy.

Sometimes he leaves town for up to a month, during which his attorneys are kept in the dark about his whereabouts. He claims he still receives threats and harassment, which his lawyers have argued make this a legal issue in the United States.

Sun’s legal fight presents a long road. If a judge agrees with Sinopec and throws out the case, he’s vowed to appeal. Even if the case gets past challenges related to jurisdiction and application of U.S. law, obtaining documents or depositions from a foreign state-owned entity would be difficult. If a judgment were to be obtained, it would be all but unenforceable in China, experts said, though damages could possibly be sought from Sinopec’s U.S. subsidiary in New York.

In addition to legal redress, Sun’s lawsuit has served other functions. He said it has stopped the auctioning by a Chinese court of his natural gas pipeline company Xin Ji Mei, which defaulted on a loan in his absence.

It has also helped publicize his case.

“We may fail, but our purpose is to have people pay attention,” he said.

Public filings show he has spent $270,000 on lobbying by Holland & Knight. The lobbyists are registered as working with several Republican lawmakers and congressional committees, among other entities. His attorneys said he is interested in speaking to politicians and human rights organizations.

Ever the businessman, Sun is also looking into new ventures in the United States. He confirmed that he has been in talks about them but declined to give much detail. He appears, however, to be following previous tendencies, saying that he favors industries with less competition and that more saturated areas, like tech, might not be for him.

“Some industries are more of a blank field and this is possibly where I’m looking,” he said. “I’m figuring out opportunities to see where we can start.”

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