Twisted path for China-to-B.C. cash revealed in real estate deal

The CEO of a Chinese company moved $750,000 from China to Metro Vancouver for a real estate deal with the help of nine strangers who each brought $50,000 into Canada for “tourist purposes,” according to a B.C. Supreme Court judgment.

The judgment sets out the method through which Hong Jie “Anita” Wang, an executive in Shandong, China, transferred money for the purpose of buying a five-acre Port Coquitlam property with a B.C.-based partner.

The B.C. realtor who acted as the buying agent on the 2011 deal, Ravi Panwar, told Postmedia that such land deals — where offshore investors partner with B.C.-based counterparts — are “quite common,” though he didn’t know how often they involve money shipments like those outlined in this case.

Last week’s judgment is in a civil claim filed by Wang in 2016, accusing Yong Li “William” Wang, her B.C.-based partner in the 2011 purchase, of fraud and breach of contract. She sought sole ownership of the property. The defendant denied the allegations, and the matter went to trial in September.

B.C. Supreme Court Justice Laura Gerow, in reasons for judgment last week, did not find either party to be credible, said there should be an accounting between the parties, and each should bear their own legal costs.

The two Wangs are not related, according to court filings, but both come from Shandong. 

Coquitlam businessman William Wang, who has lived in B.C. since 2001, returned to his home province in 2011 as a member of a B.C. trade delegation, according to court filings. While there, he met Anita Wang, head of a large food manufacturing company, and the two agreed to invest together in land in Metro Vancouver.

The judge did not accept Anita Wang’s claim that she entrusted her new business partner absolutely and, that as a “sophisticated” businesswoman, she “paid little if any attention to the documents.”

“The plaintiff’s story that she completely trusted the defendant even though she had just met him because he was from her home village — including testifying ‘that there is a saying in China that when you meet someone from your home village, tears come to your eyes’ — is totally incredible,” Gerow wrote in her judgment. “Particularly when the ‘home village’ has a population of nine million.”

The court heard evidence that after Anita Wang visited B.C. and returned to China in October 2011, she told her new partner “she was having trouble transferring her share of the funds.”

The judgment didn’t state the reason she had “trouble” moving the money, and her lawyers did not reply to emails asking that question.

China’s capital control measures allow citizens to export only US$50,000 a year, which means, as Bloomberg News reported in 2015, “When Chinese nationals move money overseas, they often do it the way drug traffickers or terrorists do: They break down cash into small amounts below what would trigger official scrutiny.”

It’s reasonable, Gerow wrote, to infer that Anita Wang “would have known whether she could transfer money legally from China to Canada for investment purposes, and what steps were necessary to do so,” and that “money being transferred through nine individuals for tourist reasons is not a legal manner to transfer money to be used for investment purposes.”

Wang used a U.K. bank account to bring another $300,000 into Canada, court heard.

Panwar, the realtor, said such domestic-foreign joint partnerships are as common in Metro Vancouver real estate today as they were in 2011 when he was the buying agent for the two Wangs, but he didn’t know how many used Anita Wang’s method of transferring money into Canada.

“Until the court case came out and revealed how she transferred the money, I had no idea how the money got into this country, honestly,” Panwar said Thursday, reached by phone while on holiday in Hawaii.

Panwar said if he handled a similar deal today, he would do more to determine how the foreign investor’s funds came into Canada. Panwar said B.C. realtors now face more stringent requirements for financial due diligence than they did in 2011, both because of changing requirements and additional scrutiny from the public and media. 

That’s a good thing, said Panwar, who is on B.C.’s Property Assessment Review Panel, on a three-year appointment by the provincial government. “We are more aware of the fact that sometimes, the money is not coming through the legal sources, and we want to make sure it’s done properly.”

A 2014 Real Estate Council of B.C. bulletin announced recent changes to Canada’s anti-money-laundering regulations meant “brokerages are now required to perform increased customer due diligence, in order to better evaluate their clients’ risk of money laundering.” 

The two Wangs are still the registered owners of the Port Coquitlam property, which has a 2018 assessed value of $2,087,000, property records show.

With research by librarian Carolyn Soltau

This content was originally published here.

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