Rights Violation Blamed for Long Jail Sentence

By KARL SCHOENBERGER

Mercury News

SHANGHAI, China - The foreigners’ unit at Shanghai’s Qingpu Prison began providing inmates with hot water nearly two years ago, but Jude Shao continues to take cold showers. The Stanford MBA holder wants to remind himself of what he has been through, he says, and channel his energy for the struggle to prove his innocence.

Before his arrival at Qingpu in June of 2000, authorities detained the Chinese-American businessman for 26 months in a holding cell jammed with more than a dozen other criminal suspects. Space was so tight there was often no room to turn over during sleepless nights on the hard floor. Shao claims he was held incommunicado before his summary trial, after which he was convicted of tax evasion and fraud and sentenced to 16 years in prison,

In his first jailhouse interview with a news organization, Shao told the Mercury News last month he realizes his own arrogance was part of the reason why he has spent the past 5 ½ years behind bars. He regretted the contemptuous way he dealt with government tax auditors who examined the books of his Shanghai subsidiary in July 1997 -- a misstep that led to his arrest.

But Shao makes no apologies for his tenacity in taking on China’s criminal justice bureaucracy. Shao is one of more than 50 American citizens serving time in Chinese jails, but his case stands out because of serious violations of his legal rights during his pretrial detention. His story serves as a warning of the legal land mines awaiting small-scale entrepreneurs in China, where enforcement of the law is often arbitrary.

“A lot of Chinese entrepreneurs get into trouble like this if they make a lot of money, but they buy their way out,” Shao said, alluding to China’s systemic corruption. Shao, 41, claims a tax official offered to stop the audit in exchange for a $60,000 “tax audit bond,” which Shao construed as a bribe and refused to pay on principle.

Petition refused

In December, the Shanghai People’s High Court rejected Shao’s second petition for a review of evidence proving he paid the disputed taxes, which were levied on medical equipment his San Francisco-based China Business Ventures imported into China. But the High Court parted from judicial secrecy with a formal letter acknowledging his appeal and confirming that his case was pending before China’s Supreme Court in Beijing.

“That’s the first time I’ve been recognized by the High Court,” Shao said in a rambling telephone conversation that prison officials cut off in mid-sentence after 50 minutes.

In his call from jail, Shao said prison conditions had improved noticeably for him in November after a Chinese Justice Department comment circulated in the Western media suggesting that the High Court would be willing to review new evidence in his case. “All of a sudden the attitude of the prison officials has changed,” Shao said. “They’re allowing me to make phone calls to my family more frequently. It’s as if they . . . feel sympathy with me.”

Qingpu Prison is relatively benign by Chinese standards. Its foreign inmate unit does not fit the dark, foreboding image of the Laogai, China’s equivalent of the Soviet Gulag, where political prisoners and hardened criminals alike are punished with forced labor. According to Garry Ohmert, Shao’s former cellmate, foreign prisoners at Qingpu were regarded as “intellectuals” and were not forced to do manual labor.

Shao, he said, spent much of his time studying Chinese law and reading books. “He used to read voraciously late into each night to keep his mind off the day’s rut,” Ohmert said in a lengthy e-mail interview. Shao turned down prison requests to do translations, but volunteered to fix Qingpu’s computers, Ohmert said, exploiting his background as an electrical engineer in exchange for occasional Internet access.

“Jude’s most admirable quality is his tenaciousness in the face of the almost impossible task of petitioning the PRC government to re-examine his case,” said Ohmert, who spent 11 years in Shanghai jails on a drug possession charge until his release last year, using the initials of the People’s Republic of China. “Every day for two years Jude spent at least four hours researching the laws of China, going over the documents that he so wisely had saved in California.”

Experts on the Chinese legal system are not optimistic about Shao’s prospects for a retrial any time soon. His best bet, they say, is to seek early release from prison on medical grounds—a strategy used by many high-profile political prisoners. Shao appears to be a possible candidate for medical parole, as he has been complaining of severe headaches, back pain and insomnia in weekly visits to the prison hospital.

Stanford attention

Shao’s case garnered widespread attention after his classmates at Stanford’s Graduate School of Business, where the Shanghai-born Shao earned a master’s degree in business administration in 1993, drummed up media coverage of his plight. But it’s not clear whether his case has become enough of a political issue for senior Chinese officials to generate an early release.

The Stanford supporters operate a Web site (www.freejudeshao.com) and caught the interest of Jerome Cohen, a New York University law professor and China expert, who is advising Shao’s family. The group also persuaded several members of Congress to write letters to Chinese officials. House Minority Leader Nancy Pelosi and Democratic presidential candidate John Kerry are among those who have written letters in Shao’s support.

Shao’s guilt or innocence should not be the major concern, said Daniel Yu, a legal scholar at NYU who teaches law in Shanghai and has worked with Cohen on the Shao case. “There’s a prevalence of tax evasion in China, even among some foreign companies,” Yu said. “Even so, there’s no excuse for incommunicado detention. We’ve seen this kind of procedure being violated routinely, where the accused are held in secret and they go to trial without having seen a lawyer.”

In June, U.S. Ambassador to China Clark Randt mentioned Shao’s case in a speech while naming a list of Chinese political prisoners of concern to the U.S. government. But Shao is not on the State Department’s “priority list” of Chinese prisoners, according to a reliable source. Inmates on this list are raised in back-channel diplomatic discussions about human rights and democratic reform, putting pressure on the Chinese for clemency.

Shao’s family members in Shanghai, meanwhile, have been doing their best to support him since police and prosecutors cut them off from direct contact with Shao during his detention, trial and sentencing—from April 1998 to June 2000.

New wife divorced him

Shao, who had just been granted U.S. citizenship in 1997, was in contact during that period with U.S. consular officials, but claims he was not allowed to see a lawyer during his relentless pretrial interrogation. To his distraught family, including the young woman he had married shortly before his arrest, Shao vanished for 26 months. His wife soon divorced him.

“Jude is a very honest person, and he was very clever when he was a boy. He had a strong sense of self-confidence, and he became very ambitious,” said Shao’s older sister, Jingli Shao, 48, an eye doctor who coordinates his legal defense campaign. As a teenager, she raised Shao when their parents and two older brothers were banished to the countryside during the chaos of the Cultural Revolution in the early 1970s.

The fraternal bonds run deep, especially after their father died in June 2002 at the age of 72. “If Jude is released I hope he can travel between the U.S. and China,” said Jingli Shao. “He’s a U.S. citizen, but his home and family are in Shanghai.”

Asked about his father in his jailhouse interview, Shao’s voice cracked. “That’s the background that shaped my attitude about many things,” he said.

Shao fought bitterly with prison officials for the privilege to wear plain clothes, not prison garb, when he made a deathbed visit—in irons—shortly before his father died, said cellmate Ohmert.

The father, a businessman, had been convicted as a “counterrevolutionary” by Red Guards for making critical remarks about the government and was sentenced to three years’ hard labor, with his civil rights rescinded for life. On return from exile, he spent a decade fighting in the courts to have his conviction overturned.

“My father had quite a lot of influence on me,” Shao said. “I think I inherited some of his righteousness.”

Cheated by broker

Charles Duan, a Shanghai lawyer who represented Shao in his lower court trial, said Shao was cheated by an unscrupulous import broker who was a co-defendant in the trial and testified against the American to get a reduced sentence. Duan said he lost the case because the court would not compel customs officials to provide records that would prove Shao’s innocence. “We didn’t have enough time to prepare for trial,” Duan said.

“The details of the case are very complicated, but I think the solution will be something simple,” said Shao, moments before the line went dead. “Maybe one day they’ll retry this case.”

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The Mercury News

Wed, Nov. 05, 2003

China says it will accept evidence in man's appeal

By KARL SCHOENBERGER

Mercury News

In a potential breakthrough in the case of a jailed Bay Area businessman, the Chinese government has signaled that Jude Shao can submit new evidence to appeal his 1999 conviction for tax fraud.

Shao, a Stanford MBA who was the subject of a Mercury News report and editorial in July, is serving 16 years in a Shanghai prison. He says he was denied due process during his trial.

His attempts to appeal and submit exculpatory evidence to the Shanghai High Court have been rejected so far. Likewise, Shao's attorneys say his petitions to China's Supreme Court have been ignored, despite the opinion of an independent panel of Chinese legal scholars that the case should be retried.

The Chinese Consulate in San Francisco said that in response to the Mercury News coverage, it had asked China's Justice Department to look into Shao's case, and that the Justice Department found the Shanghai High Court had not received the ``three pieces'' of evidence Shao claims he submitted to the court in 2001 -- records from his San Francisco-based China Business Ventures that he says refute the tax-fraud charges. But the consulate's statement -- quietly released in August -- also says that ``if Shao provides these three pieces of new evidence and also makes an appeal directly to the court, the court will adjudicate in accordance with law.''

The consulate released its statement, in Chinese only, on Aug. 20. One of Shao's Stanford classmates found the document on the Internet while doing research for his group, which is advocating Shao's release, and had it translated into English.

Chinese Consulate information officer Lei Hong confirmed the accuracy of the translation and said it was an oversight that an official English-language version had not been posted on the consulate's Web site.

Shao, imprisoned at Shanghai's Qing Pu Prison, was informed of the consulate's statement, and responded in a message conveyed by his family. He said that ``face-saving rhetoric aside, the statement may contain an unusual message from the Shanghai High Court; that is, that the court wants me to appeal to them again.''

He added, ``I am not sure if it is a wise thing to do now, but this statement is the first official response we have ever gotten out of the Chinese government since the campaign started.''

John Kamm, a San Francisco business consultant who lobbies on behalf of prisoners of conscience in China, said the development comes as Shao and his supporters are shifting their strategy from fighting the Chinese justice system head on to seeking his early release on medical grounds.

In recent months Shao has been suffering ``severe headaches'' that the prison infirmary has been unable to treat, said Chuck Hoover, a Los Angeles businessman who heads the campaign for Shao's release.

``It's important to work both sides of the equation, both the political solution and the legal solution,'' Kamm said. ``They are not mutually exclusive. Jude can conceivably get early release for special circumstances and still try to exonerate himself in the Shanghai courts.''

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Mon. Jul. 21, 2003

Imprisoned Entrepreneur Refuses to Confess,

Demands Shanghai Retrial

By KARL SCHOENBERGER

Mercury News

Jude Shao tells his friends he wished he hadn't been so arrogant that fateful day in July 1997, when tax auditors came to inspect the books at the Shanghai office of his medical equipment trading company.

The Stanford Business School graduate had received an urgent fax that morning setting his date to be sworn in as a U.S. citizen in San Francisco. He was excitedly preparing to fly home in a few days for the ceremony, and brushed off the tax men.

Shao got his American citizenship without a hitch. But he marked his 41st birthday July 11 in Shanghai's Qing Pu Prison, where he's serving a 16-year sentence for tax evasion following a nightmarish journey through the Chinese judicial system.

The violations of due process in Shao's 1998 detention and subsequent trial were so egregious, legal experts say, that his case stands out as a symbol of the corruption and the arbitrary rule of law that are still rampant in China -- even in a seemingly progressive oasis for international business like Shanghai.

Shao's case also suggests that the problem of questionable arrests of overseas Chinese over commercial disputes with local Chinese partners, which gained notoriety in the mid-1990s, remains a potential risk for investors and traders in China.

Shao has denied any wrongdoing and has stubbornly resisted pressure from Chinese authorities to reduce his sentence by confessing. Letters from jail show his regret on one point only: sticking perhaps too rigidly to the principles he learned in his ethics class at Stanford, instead of playing by corrupt local business customs. But Shao tells his friends he's determined to fight for a retrial and clear his name, even if it means postponing his release from prison.

Gathering evidence

Shao has gathered exculpatory evidence that proves he paid disputed taxes and suggests his Chinese business partners cheated and framed him, and has doggedly filed appeals to the Shanghai High Court and the Chinese Supreme Court seeking a retrial to exonerate himself. The effort has been futile so far, but Shao isn't giving up, say his friends, many of whom express bewilderment and frustration over what they see as Shao's self-imposed martyrdom.

``Jude is so Americanized he refused to follow the local corrupt culture in China,'' said Sam Liu, a friend from Shao's years at Jiao Tong University in Shanghai. ``Otherwise he'd be free right now.''

Phone calls to the Chinese Embassy in Washington and the Chinese consulate in San Francisco earlier this month requesting government comment on the Shao case were not returned.

Shao's classmates at Stanford's Graduate School of Business celebrated their 10th anniversary in May with a campus event aimed at raising awareness of his predicament.

John Kamm, a San Francisco business consultant who lobbies for the release of prisoners of conscience in China, told the gathering that some 30 American business people are imprisoned in China, most of them ethnic Chinese like Shao. He warned that business people need to concern themselves with human rights in China because ``the same arbitrary abuses of power used to silence political dissent can be used for other purposes.''

Shao's friends from Stanford started a campaign to lobby for his release and recently launched a Web site (www.freejudeshao.com) where they've posted documents and background information on his case.

Tony Biz, one of Shao's Stanford roommates, said he invested $5,000 in Shao's start-up because he was impressed by his energy and his vision to ``bridge the two countries.'' The first year's dividend was a thermal beach towel Shao had made in a Chinese factory for Wal-Mart. Things took off when Shao focused on medical appliances, but disaster struck before investors saw significant returns.

``I don't care about the $5,000 anymore,'' said Biz, a software engineer who designed the Free Jude Shao Web site. ``I just want to get Jude out of prison and hopefully out of China, too.''

A Shanghai native with a modest family background, Jude Jingzu Shao was at the head of the pack of ambitious engineering school graduates who left China in the 1980s seeking their fortunes in the U.S. high technology industry. In 1986 he obtained a student visa to attend Johnson & Wales University in Providence, R.I., then quickly landed a job at Digicom Computers, a now-defunct networking firm in Boston, where he impressed his boss with his technical skills, high energy and dogged determination.

Shao pursued a Master's of Business Administration degree at Stanford, say friends from the Class of 1993, because he wanted to make a lot of money as a trans-Pacific entrepreneur and, at the same time, help in China's development. He found a niche selling used X-ray machines and other U.S. medical devices to provincial Chinese hospitals that could not otherwise afford the equipment. Shao said in a letter from jail he was grossing more than $100,000 in monthly sales when the tax debacle struck in 1997.

What started out as a surprise tax audit of CBV Trading (Shanghai), a subsidiary of Shao's San Francisco-based China Business Ventures, turned into a battle of wills between Shao and a tax auditor named Yu Jiaming. On the second day, Yu offered to dismiss the case in exchange for a $60,000 ``tax audit bond,'' Shao claims, saying he rejected the veiled solicitation of bribery.

Letter from prison

``I was so busy doing things that I didn't really pay attention to the tax auditors when they showed up at the door,'' Shao wrote from prison in April 2002 in a handwritten account of his troubles to Stanford classmate Chuck Hoover. Shao put the auditors in a room with his accountant and left the office for the day, not realizing that the officials might consider such behavior a personal affront.

``I didn't come back and take the auditors to dinner and maybe the clubs. I was very, very rude to the auditors, because any other Chinese company would have treated them like kings. But I never thought I needed to entertain them,'' Shao wrote.

While Shao was in the United States, Shanghai authorities confiscated CBV's ledgers and froze its assets in China. The trading company collapsed after Shao couldn't pay his 15 employees in Shanghai.

Back in San Francisco, Shao had trouble obtaining a Chinese work visa, which he needed as a U.S citizen. He finally returned to Shanghai in April 1998 to try to salvage his ruined business. Acting on a tip, police detained Shao at his hotel and held him incommunicado for more than a year while concerned officials at the U.S. Consulate in Shanghai filed diplomatic protests to gain access to him.

Shao did not meet a defense lawyer until a few days before his two-day summary trial in June 1999, and had no chance to gather evidence in his defense. The following March, Shanghai No. 1 Intermediate Court convicted him of fabricating tax invoices and underreporting his income, and sentenced him to a total of 16 years in prison.

Shao's cause has been taken up by U.S. Ambassador to Beijing Clark Randt, who has cited him among prominent victims of human rights abuse in China in public remarks. New York University law Professor Jerome Cohen, a leading expert on the Chinese legal system, was alarmed enough to volunteer his services as an adviser in the case.

``The more I've been looking into the case, the more disturbed I am, but hopefully the Supreme Court will hear his appeal,'' Cohen said in a phone interview. ``He claims that during the course of his tax audit he was asked to pay a bribe and refused. That's a very serious charge.''

China has a long history of quietly releasing American prisoners and human rights victims as a concession to Washington when it serves its diplomatic interests. But friends lament that Shao's rigid principles hurt his chances of early release.

Glimmer of hope

There was a glimmer of hope recently when Shao's Chinese lawyers hired a panel of six prominent legal scholars and retired judges at People's University in Beijing to review reams of evidence in the case. The panel concluded unanimously that exculpatory evidence, such as documents proving he paid disputed value-added tax on imported medical equipment, is so persuasive that Shao deserves a retrial.

Yet that opinion may have little sway over the hide-bound bureaucrats in Shanghai's judicial system, who risk losing face if Shao's conviction is overturned.

``Jude Shao wants to be vindicated. He has a fierce belief that he's been wronged, and he's willing to do the extra jail time to prove it,'' said Cohen, the NYU law professor. He added that Shanghai has been a been a model for judicial reform in China, but ``this is a case where you have to say Shanghai justice failed.''

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