Tuesday, November 22, 2005

The Bush Whitehouse: Dumb & Dummer

Mix of Shock and Resignation on G.M... Shop Floors Set to Close

Like many of the G.M. plants that are closing, the assembly plant in Doraville, Ga., dates to an era when G.M. dominated the car market.

Source: NY Times, http://www.nytimes.com/2005/11/22/business/22workers.html?th&emc=th

Published: November 22, 2005

LANSING, Mich., Nov. 21 - When Dan Fairbanks received word from General Motors early Monday morning that his plant had been tagged for closing next year, there were few people in the factory to tell.

About two-thirds of the 300 hourly employees at the Lansing Craft Center, where Mr. Fairbanks is the president of a local chapter of the United Automobile Workers, are temporarily laid off. In fact, they have not worked for most of the year. The Lansing Craft Center is still scheduled to ratchet up production early next month but will close for good sometime next year.

Closing Plants and Losing Employees

What's Next for G.M. and Ford?

Kerkorian's Offer

G.M. Management Shake-Up

G.M. Is Treading Water


News Release (gm.com)

For a G.M. Family, the American Dream Vanishes (November 19, 2005)

Union Vote Accepts Cuts in Benefits at G.M. (November 12, 2005)
S. & P. Cuts Debt Ratings for G.M. and Ford to Junk Status (May 5, 2005)

Jessica McGowan for The New York Times

Tammy Andrews, a line worker in Doraville, Ga., learned on awakening of her plant's closing. "I'm going to cry when I go home tonight," she said.

"There are going to be some casualties, and we are one of them," Mr. Fairbanks said. In many ways, the plant is symbolic of the problems facing General Motors. The automaker slowed production there to a trickle as demand for the vehicle it produces, the $40,000 high-performance Chevrolet SSR pickup truck, failed to keep pace with capacity. Although most employees do not come to work, under their union contract G.M. is still required to pay them.

A cold drizzle fell in a mainly empty parking lot at the center as this city took in the news that G.M. would close all or part of 12 operations in North America. Here in Lansing, where two of those plants are situated, the automaker's cuts will be deep.

Still, G.M. employs thousands of people in the area at four plants and is currently building a new factory, with modern equipment. The plants that will remain open will provide some cushion for workers who do not take buyouts.

On Monday, G.M. workers across the country met the news of the plant closings and the job cuts with a mixture of shock, resignation and frustration at the company's management.

"There's a lot of people who rely on G.M., especially in this town," said Michael McCoy, 52, a production worker at the Lansing Metal Center with 30 years at the company. The metal center, a sprawling industrial complex across the street from the craft center that makes sheet metal parts for various vehicles, is also scheduled to close.

About the time the G.M. corporate headquarters in Detroit informed union officials at the craft center of the closing next year, Mr. McCoy and his co-workers on the morning shift at the metal center were summoned to the shop floor by their union chairman and told the news.

Art Baker, the chairman of the local auto workers union that represents the 950 hourly workers at the metal center, said he learned of G.M.'s decision just 15 minutes before he told employees. "It was not the expectation that General Motors was going to get lean and mean," Mr. Baker said. "It was a real shock."

The union called the job cuts and plant closings "extremely disappointing, unfair and unfortunate." The union's president, Ron Gettelfinger, and its vice president, Richard Shoemaker, said in a statement that for workers, "hope is diminished, the future is unclear and communities are less stable."

In Oklahoma, Georgia and other states where G.M. is closing its only plants, G.M. workers will have fewer options than their counterparts in Lansing for jobs that offer such high pay and generous benefits.

"I was awakened out of my sleep and told the plant was closing," said Tammy Andrews, 35, a line worker at the General Motors assembly plant in Doraville, Ga., just outside Atlanta. "I'm going to cry when I go home tonight."

Many of the plants that will close, like Doraville Assembly and the Lansing Metal Center, are more than 50 years old and date back to an era when G.M. held a commanding share of the American car market. As Asian competitors with lower labor costs and vehicles that many Americans consider more desirable have cut G.M.'s market share down to about a quarter of all American vehicles, the automaker has grappled to regain its competitiveness. Closing under-used plants and trimming its work force is one way it hopes to do that.

For cities like Lansing and Flint, Mich., that have for decades looked to the American auto industry to provide much of their livelihood, G.M.'s downsizing means the end of an era in which generations of families could depend on steady work at a car company and a generous retirement plan after 30 years of service.

"It used to be our kids would come in here and follow us, but that's not the trend anymore," Mr. McCoy said. "I just think it'd be nice if General Motors could get everything together, get it fixed and get going again."

Alvin Jones, 59, a line worker at the metal plant, has 40 years of experience but said he resented the idea of taking a retirement buyout. "Once you take the buyout, what's going to be left for you to do?" he asked. Mr. Jones moved to Lansing from the South in the mid-1960's to take a job with G.M. that he assumed would be his as long as he wanted to work.

Throughout his four decades at G.M., Mr. Jones said he had seen the domestic auto industry at some of its highest and lowest points. As he stood outside the Lansing metal plant on Monday and absorbed the news his plant would be closed, he said, "I've never seen it this bad, and I've been around for a lot of years."

Daniel Crane, 27, who installs glass on minivans at the Doraville plant, criticized G.M. for not making cars that sell well. "Who buys a minivan?" he asked. "G.M.'s not coming out with a product anybody wants."

As news of billion-dollar losses, job cuts and benefit reductions has rolled out of G.M. with alarming regularity this year, some workers said they saw the writing on the wall well before Monday. "Everybody in the G.M. system is trying to speculate on where they stand," said Mr. Fairbanks, the Lansing union president. "A total surprise? No. Not with the way things are going."

Brenda Goodman contributed reporting from Doraville, Ga., for this article.

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Folks, enough is enough... a strong message needs to be sent to the Congress to hold those accountable for this Icon-Economic failure to stand before the American People, under oath, and take a tongue lashing-- and that definitely includes the Whitehouse!... the dysfunctional Whitehouse indeed.

Maybe there is HOPE for Congress in 2006 with a Band of Gypsies that call themselves, "The 30 Somethings". Lord help us, there is only (13) of them thus far...

"Let it Grow, Let it Grow, Let it Blossom-- Let it Grow...", Eric Clapton.

Wednesday, November 16, 2005

Senator Debbie Stabenow of Michigan is Glaring-Down at The Far East

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From the Senate floor on November 15, 2005...

My eyes were Bleeding with JOY!

Finally, the United States Senate is STANDING UP! and saying, "NO MORE!" to the White House and GWB! From Senator Harry Reid pounding on the White House Gates to surrender the TRUTH about the IRAQ fiasco, to Senator Debbie Stabenow pounding on the Senate Floor for Economic Justice & Independence from China & the Far East... Now, we have a WINNING hand to call their BLUFF... ENOUGH IS ENOUGH!

It's only for a few American Icons that are at stake,

Source: Senator Stabenow's Site

Nov. 10, 2005

Contact: Bob Meissner
Phone: 202-224-4822

Stabenow, Senators Urge President to Stand Up for U.S. Manufacturers and Get Tough With China and Japan

In his trip to Japan and China, Bush must join fight to curb illegal trade practices, senators say

WASHINGTON— With the U.S. suffering billions in lost manufacturing sales and thousands of American jobs hanging in the balance, President Bush must take the toughest possible stand with China and Japan on their illegal trade practices when he visits those nations next week, U.S. Senator Debbie Stabenow (D-MI) and 14 other Senate colleagues said today.

Stabenow said the president must demand changes in the economic relationships we share with China and Japan. “President Bush needs to tell the leaders of China and Japan, ‘We no longer accept your illegal trade practices and we demand that you change them.’

“We can no longer accept Japan’s and China’s currency manipulation, which allows them to artificially lower the price of their exports, and we can no longer accept the theft of our patents and intellectual property rights,” Stabenow said. “I have been fighting in the Senate to strengthen our trade enforcement and protect U.S. jobs, and this is the opportunity for the president to join this fight. Together, we can do better.”

In a letter to Bush today, the senators said that counterfeiting costs the auto industry – Michigan’s prime industry – an estimated $12 billion a year in lost sales. Simply halting the counterfeiting of auto parts would allow manufacturers in the U.S. to add about 200,000 additional workers – which would be equal to cutting Michigan’s unemployment rate by nearly two-thirds, Stabenow said.

By undervaluing its currency, the senators said, China holds down the price of its goods by between and 15 and 40 percent. “Undervaluation of yuan is tantamount to an illegal subsidy for imports from China and a large tax on U.S. exports to China,” Stabenow said.

Stabenow noted a disturbing statistic. According to The Economist magazine, she said, manufacturing jobs in U.S. have dropped below 10 percent for the first time in history. “This nation cannot sustain a middle class without a manufacturing base, but our manufacturers are having a hard time these days,” she said. “These illegal trade practices wipe out American manufacturing jobs.”

“The president must stand up for our manufacturers and insist that China and Japan play by the rules,” Stabenow said. “The president must act now – before our manufacturing sector and our middle class are taken from us.”

Tuesday, November 01, 2005

Dispute Leaves U.S. Executive in Chinese Legal Netherworld

Dispute Leaves U.S. Executive in Chinese Legal Netherworld

Du Bin for The New York Times
Employees heading to work at Sichuan Changhong Electric in Mianyang. The company, once a defense contractor, is publicly traded and majority owned by the city of Mianyang and the province of Sichuan.

Published: November 1, 2005
BEIJING, Oct. 31 - David Ji, a Chinese-American electronics entrepreneur, spent two months in custody enduring all-night interrogation sessions, but his stubbornness and occasional flashes of sarcasm infuriated his Chinese captors.

David Ji, left, shown last year during his stay under guard in a residence in Shanghai that is owned by Sichuan Changhong Electric.

Apex Digital
David Ji, co-founder of Apex Digital, is accused of fraud.

Zhao Yong, a former partner, is chief executive of Changhong, which says Apex owes it $470 million.

So in late December last year, according to a person who compiled a record of the encounter, guards emptied his pockets, removed his shoes and socks, and ripped the buttons off his oxford shirt. He was ushered disheveled and barefoot into the office of Zhao Yong, the chief executive of Sichuan Changhong Electric, Mr. Ji's onetime business partner and, more recently, his warden.

"Your only way out is to do what Changhong tells you to do," Mr. Zhao told him. "If I decide today I want you to die, you will be dead tomorrow."

Mr. Ji soon agreed to cooperate with Changhong. But a year after the Chinese police apprehended him in his hotel room during a business trip, he remains in China as a pawn - Mr. Ji's colleagues say a hostage - in a commercial dispute that pits Changhong, China's largest television manufacturer, against Apex Digital, Mr. Ji's electronics trading company based in Los Angeles.

Changhong, which declined repeated requests for comment over several weeks, claims that Apex owes it $470 million. Apex, which recruited Changhong to supply Wal-Mart, Best Buy and Circuit City with inexpensive television sets and DVD players, says it owes less than $150 million. The sums involved are large, but what is more significant about the case is the way Changhong, a major state-owned company in Sichuan Province, deployed the police, prosecutors and judges in a campaign to collect its debt.

China has attracted hundreds of billions of dollars in foreign investment and has become the world's third largest trading power. But its legal system, even when handling nonpolitical business cases, has progressed far more haltingly and still rarely backs investors or ordinary citizens against the state.

Difficulty enforcing contracts, rampant violations of copyrights and trademarks and protection of domestic industry champions have heightened trade tensions at a time when China is struggling to convince the outside world that its growing economic might poses no threat. Beijing is under heavy pressure to embrace global legal norms with the same fervor with which it has pursued foreign trade.

Courts and arbitration panels do resolve many business conflicts that arise from China's thriving market-oriented economy, and they can rule professionally and impartially. But when the fate of powerful companies like Changhong, which has 36,000 employees, lies in the balance, the judicial system does not act independently and offers no recourse for outsiders like Mr. Ji.

Ultimately, some legal scholars argue, China's legal system may not improve markedly until central and local government officials relinquish some control and stop putting short-term political goals, like protecting influential companies and suppressing dissent, above the law.

Mr. Ji and his Los Angeles-based partner, Ancle Hsu, are ethnic Chinese who became American citizens. They helped Changhong break into the American market, and its products outsold Sony and Panasonic, heralding China's arrival as an electronics powerhouse.

Relations with Changhong soured, however, over quality control problems and unpaid debts. And when they did, Changhong's first response was not to file a lawsuit, but to dispatch the police.

The police from Mianyang, the city in southwestern Sichuan province where Changhong has its headquarters, apprehended Mr. Ji in Shenzhen, near Hong Kong, on Oct. 23, 2004. He entered a legal netherworld in which Changhong decided where he would be held in custody, when to interrogate him, and how he could help Changhong take over Apex, according to court documents, video recordings, and taped witness accounts compiled by people sympathetic to Mr. Ji. The records, which were also submitted to the State Department, were obtained independently by The New York Times.

Mianyang is a company town. The legal ambiguity partly reflects the tight bond between local corporate and government officials. It also reflects a risk of doing business in China that applies mainly to ethnic Chinese, dozens of whom have faced criminal charges after falling out with government-backed business partners. Overseas Chinese are often treated as subject to local authority regardless of their country of citizenship.

But in this case, Changhong did not act like a rogue. It solicited and received financial and political support from the most senior levels of the central government, according to lawyers involved in the matter.

Changhong's executives said they could not discuss a pending legal matter. But Jack C. Auspitz, a lawyer with Morrison & Foerster in New York who represents Changhong in an ongoing court case against Apex, said the California company repeatedly failed to pay for goods Changhong delivered. He said that he did not have detailed information about Mr. Ji's conditions in Chinese custody, but that he had no reason to believe that he had been coerced.

The Chinese police accused Mr. Ji of fraud for writing bad checks to Changhong and have threatened to prosecute him. He has been released on a form of bail, with heavy restrictions on his freedom, while negotiations with Apex proceed. That has left the impression that his legal fate depends on debt talks between the companies.

"We have been doing business there for many years but could never imagine something like this happening," said Mr. Hsu, Mr. Ji's partner, in a recent interview. "They have turned a commercial dispute into a hostage situation and a human rights issue."

Trial and Error

Changhong and Apex seemed, for a time, a brilliant match.

The American company spotted the potential of the DVD player to replace the VCR in American living rooms if the price came down. Japanese makers dominated sales in the late 1990's, but often charged $400 or more, making it a luxury item. Apex thought that with the right Chinese partner it could change that.

The job fell to Mr. Ji, 53, who is also known by his Chinese name, Ji Longfen. He was born in Jiangsu Province in eastern China and learned English at Fudan University in Shanghai before emigrating to California. There he and Mr. Hsu, a native of Taiwan, sold scrap metal and car radios before testing the DVD market.

Retiring by American standards, Mr. Ji projects a polite deference that plays well in China. He wears his hair in a starchy wave, a style popular among Chinese officials. He toured industrial zones and small township enterprises for partners, a trial-and-error process that produced some embarrassing failures. A worker in one plant altered a chip on an Apex DVD player to make a message appear on the screen if a user loaded an X-rated film: "You dirty old man!"
Changhong, once a big defense contractor and now a publicly traded electronics maker, seemed more professional. The company, though majority owned by the Mianyang city and Sichuan provincial governments, had entrepreneurial drive. Under Ni Rongfen, its chief executive, Changhong became China's top television maker. It had its sights set on the American market.
Mr. Ji and Mr. Ni struck a deal in 2001. In the Chinese style, the agreement consisted of a simple three-page purchase order.

Changhong was not Apex's only vendor, but it rapidly became its largest. Its bulk production brought the retail price of its DVD players at Wal-Mart and Circuit City down to $59. In 2002, Apex became the top brand of DVD player in the United States.

Apex also began selling Changhong-made television sets and got the cost of a 27-inch color model below $100, a record. The company's total sales hit $1 billion in 2002 and nearly $2 billion in 2003.

But the two companies were on a collision course. Changhong received far less from its American sales than it initially recorded on its books. Fast growth covered that deficit for a time, but the Chinese company later claimed that half of what it sold ended up as unpaid debt.

The companies have different explanations of what happened. Apex says Changhong mismanaged its business, basing production on price forecasts that proved overly optimistic. It also did not time its shipments well, saddling Apex with high storage costs, the company says. Worse, the California company claims, Changhong provided low-quality goods, including a ill-fated foray into rear-projection televisions, which left Apex to deal with dissatisfied customers and defective products.

Changhong executives have told the Chinese news media that Apex played tricks with its vendors. It persuaded them to finance their own production and wait months for payment. Payments often lagged behind badly, raising suspicions of fraud.

Two other Chinese electronics makers, the Hongtu High Technology Company and the Tianjin Tiancai Company, say Apex owes them money. A third supplier, the China Minmetals Corporation, recently settled a dispute with Apex in arbitration.

Whatever the root causes of the dispute, Apex and Changhong initially tried to keep things on track, including by taking steps that came back to haunt Mr. Ji.

In early 2003, as debts piled up, Mr. Ni, the Changhong boss, came under pressure to explain the shortfall. He leaned on Mr. Ji, who wrote 37 company checks totaling $85 million. Apex said the checks, which do not bear the markings of having been deposited, were meant as promissory notes. It said it honored them and more by paying Changhong $370 million later in 2003.

Even so, Changhong's debt load worsened and its stock price plunged. Chinese state-run banks stopped advancing loans, Chinese news media reports said. That prompted a boardroom coup against Mr. Ni last summer. He was replaced by Zhao Yong, the deputy mayor of Mianyang.

Shortly after he took office, Mr. Zhao sent a mission to Apex's headquarters to demand payment of $470 million, a figure Apex claimed was three times what it owed. The business relationship froze.

Apex still had a sizable business in China. In October 2004, Mr. Ji visited to oversee progress on a Wal-Mart order for portable DVD players. He ignored warnings of a colleague at Apex, who felt the dispute with Changhong had reached a dangerous impasse, and decided to contact Changhong during the trip. He told his family he would be back in a week.

Mr. Ji phoned Changhong after he arrived and said he would like to meet Mr. Zhao after attending to business in Shenzhen. He hung up thinking that a dinner appointment had been arranged.

"I felt very happy because I thought the problem would finally be resolved by one person," Mr. Ji told a colleague.

Pursuit and Capture

Just after breakfast on Oct. 23, he answered his door at the Grand Skylight Hotel in Shenzhen. Seven men in civilian clothes identified themselves as police officers from Sichuan, 500 miles to the west. They interrogated Mr. Ji for most of the day. He was told he had committed fraud, though the charges were not spelled out and they had no warrant, according to the account compiled by people sympathetic with him.

Late that afternoon, Mr. Ji was taken to a private dining room, where a Changhong executive played host for a banquet, complete with champagne and abalone. The Changhong executive raised his glass to the policemen, congratulating them on their "pursuit and apprehension" of Mr. Ji.

Mr. Ji objected, saying he had never been on the run, according to the record of his detention. He was told not to speak for the rest of the meal.

The officers then took him to the airport for a flight to Sichuan. Changhong purchased all eight seats in the first-class section, so the group had the cabin to itself.

In Sichuan, he was handed over to Changhong. The company cordoned off a floor in one of its guesthouses and barred the windows, a makeshift jail. Guards kept watch. A television was left blaring day and night. For four days, Mr. Ji barely slept.

On the fifth day, he was put on the phone with a lawyer named Charlie Wang, known as Wang Xiaolin in Chinese, of Cadwalader, Wickersham & Taft, a white-shoe American law firm that Changhong had retained. Mr. Wang, who was based in Washington, D.C., told Mr. Ji that he had committed fraud and that his only way out was to sign documents that would help Changhong recover missing funds. Exhausted and afraid, Mr. Ji agreed to study the documents, the record of his detention says.

He was then presented with a stack of legal papers the size of a mini-bar. They pledged all of Apex's assets, real property, trademarks and bank accounts as well as Mr. Ji's personal assets to settle the claimed $470 million debt. The documents granted Changhong power of attorney to review Apex's books and remove Mr. Hsu from his position. In effect, he signed away his stake of Apex to Changhong.

Mr. Ji initially balked. A guard then asked, "Do you want this pen, or do you want your hand?" The guard made a motion of chopping off his hand. Mr. Ji took the pen.

'Business as Usual'

Changhong then began an attempt to take over Apex, Apex officials and the record of Mr. Ji's detention say. Mr. Ji was sent to Shanghai by train.

There he stayed in a Changhong-owned residence under guard. But he was instructed to visit Apex offices and act as if he were going about business as usual. He made frequent phone calls back home. As his Changhong guards listened, he repeatedly told Mr. Hsu to execute Changhong's instructions.

The calls did not persuade Mr. Hsu.

"He pretended that nothing was wrong and everything would be worked out," Mr. Hsu recalled. "But we knew he was not himself. Eventually, there was nothing we could say on the phone except, 'Yes David, O.K., yes.' "

Changhong dispatched accountants and investigators to Los Angeles in early December, but Apex refused access, arguing that Changhong lacked legal authority.

It was only then that Changhong took legal action. On Dec. 14, Changhong sued Apex in Los Angeles County Superior Court. The company alleged breach of contract and demanded access to Apex, citing the documents Mr. Ji had signed.

Apex contested the suit. In court documents, it said that Mr. Ji had been abducted and that the documents had been signed under coercion.

Changhong pressed Mr. Ji harder to make Mr. Hsu cooperate. Mr. Ji scoffed, saying he had already "fired" his partner on Changhong's orders so there was little more he could do, according to the record of his detention.

There were constant reminders, however, that his fate hung in the balance. A prosecutor and a judge from Mianyang visited Shanghai to talk with Mr. Ji. They told him that the 37 checks he had written to Changhong in early 2003 constituted a serious crime and that he could get life in prison or even be executed. His only choice was to cooperate with Changhong, the record said.

Changhong submitted the checks as evidence in its American lawsuit. There are no visible markings on the checks to show that they were deposited or sent through the banking system for payment. Apex says that proves Changhong treated the checks as they were intended - as collateral to solve an accounting problem. They became obsolete when Apex made big payments to Changhong in April 2003, the company says.

Mr. Auspitz, Changhong's lawyer in New York, said that despite any other payments Apex may have made in 2003, those checks should have been honored. "There is no question that Apex should have paid and did not," he said.

To counter Apex's argument that Mr. Ji was a hostage, Changhong arranged to have Mr. Ji deposed in Apex's Shanghai offices. Mr. Wang, the Cadwalader lawyer, was present and conducted the videotaped inquiry. Mr. Ji had no lawyer present, and Apex later argued that that raised questions of whether the tape would have any value in an American court.

When taping began, Mr. Ji disputed Changhong's version of events, prompting a heated argument between Mr. Ji and Mr. Wang, according to people who saw the confrontation.

The next day, Mr. Ji was taken to meet Mr. Zhao, Changhong's boss. Buttons and belt removed, he had to hold his pants up with his hands. Mr. Zhao warned him that Changhong controlled the courts in Mianyang, that Mr. Ji would be tried there, and that Changhong would decide if he lived or died.

"Apex must give Changhong all the money. This is your only way out," Mr. Ji was told, according to the record of his detention.

A second taped deposition was arranged. Mr. Ji dressed neatly in a suit. He sat slumped in his chair and smiled wanly. Everything Mr. Wang asked him, he muttered agreement. As the camera rolled, he said Changhong had "invited" him to stay at its apartment in Shanghai while he sorted out the dispute about the checks.

"I am trying to run my company," Mr. Ji says on tape. "I am the majority shareholder and want to use my power to manage this situation."

High-Level Intervention

Changhong's lawsuit has remained unresolved in court in Los Angeles. The taped deposition was never formally submitted, though Apex received a copy. Apex then complained that Changhong's lawyer, Mr. Wang, acted improperly by being a party to the detention of Mr. Ji.

Cadwalader subsequently withdrew from the case and Mr. Wang, who was made a partner just a few months earlier, left the firm. A spokesman for Cadwalader declined to comment on the case or on Mr. Wang, citing client confidentiality. Apex's business deteriorated as suppliers and customers learned of its troubles. Its sales this year are off sharply, and it has teetered on the verge of bankruptcy. It now claims it has no money to pay even the portion of the Changhong debt it acknowledges owing.

Internally, however, Changhong may have scored a political touchdown. According to lawyers involved in the case, Changhong submitted a report to Prime Minister Wen Jiabao shortly after it arranged to have Mr. Ji detained. The report claims that a fraud masterminded by Mr. Ji put its business, and its 36,000 workers, in grave peril.

It is unclear if Mr. Wen or other central government officials investigated the matter independently or endorsed Changhong's role in managing Mr. Ji's custody. But the lawyers involved said Changhong had boasted repeatedly about receiving Mr. Wen's support in the form of a three-point written instruction late last fall.

The prime minister praised Changhong's leadership, authorized the company to take legal actions at home and abroad to protect its interests, and ordered state banks to provide emergency financing totaling nearly $1 billion, roughly double the amount Changhong claimed Apex owed it, they said.

The ruling defused the crisis that prompted Changhong to pursue Mr. Ji. But it left the business dispute unresolved. And it left Mr. Ji in legal limbo, facing possible prosecution on the alleged fraud the company described to the leadership.

On May 28, seven months after Mr. Ji was first detained, he was handed over to the Mianyang police for formal arrest on charges of "financial instrument fraud," apparently a reference to the 37 checks he wrote Changhong.

In formal police custody, Mr. Ji's conditions improved, according to the detention record. He has been allowed to visit a hospital to get treatment for hypertension, a kidney problem and a bladder infection. The interrogations ceased. American diplomats have visited him regularly, though they have not spoken publicly about the case.

In June, Apex and Changhong signed a security agreement. Apex acknowledged a $150 million debt. The debt remains unpaid, however. Apex claims it has no money.

In August, the police released Mr. Ji on restricted bail. He is allowed to move around Chengdu, the capital of Sichuan Province, but he is under strict orders not to discuss his case with anyone. The police confiscated his passport and gave him a mobile phone that he must keep with him 24 hours a day. He has not been indicted, but the local authorities frequently remind him that they can prosecute at any time.

"They turned this into a criminal case, and now they don't know how to resolve it," says Mr. Hsu of Apex. "I'm afraid we need government intervention, maybe divine intervention, to help David return home."

Jesus! Does anybody remember when this happened?

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