It’s not often that a sitting US president is sued. The New York Times says one of the more bizarre cases occurred in 1962 when President Kennedy faced civil action for his role in a traffic accident. The plaintiff was Hugh Lee Bailey, a Mississippi state senator, who said the accident meant he could no longer ride a donkey (a particular concern, apparently, because his nickname was ‘the Donkey-Riding Senator’). JFK’s lawyers argued that the President was immune from civil action while in office but a Los Angeles judge ruled that he could be sued like any other citizen. Kennedy settled out of court, paying Bailey $17,500.
Sany Group’s boss Liang Wengen might take heart from the verdict. That’s because he too is suing a US President. Liang launched his suit against Barack Obama – with the support of China’s Ministry of Commerce – after Sany’s investment in a wind farm in Oregon was vetoed on national security concerns. Liang reckons this is a “political stunt” and wants $20 million in damages.
But could the chairman of China’s leading construction equipment firm have his own electoral concerns too? The 56 year-old – who Forbes thought to be China’s richest man in 2011 – is set to become the first private-sector businessman to join the Communist Party’s ruling elite next month. Liang has already climbed far enough up the ranks of the country’s 80 million Party members to become one of the 2,270 representatives to attend the all-important Party Congress in early November. The conclave will select the Communist Party’s powerful Standing Committee (currently consisting of nine men). But as we first reported in WiC123, Liang is being tipped too as a candidate for the Central Committee, of about 370 members. According to Richard McGregor, author of The Party, this group consists largely of ministers, regulatory heads, leaders of provincial and city government and a large bloc from the military. Only the Politburo of 25 members and the Standing Committee itself (see Talking Point) sit higher in the political pantheon.
So could legal action in the United States bolster Liang’s political ambitions? The Hong Kong Economic Journal thinks so, seeing the suit as part of Liang’s otherwise low-key campaign to join the Central Committee.
Sany is no newcomer when it comes to drawing a hard line on national security and economic nationalism. When the US private equity firm Carlyle Group tried to acquire a controlling stake in Xugong Group in 2006, Sany officials led a campaign which saw the deal fizzle out. “The ability to control our strategic industries is equal to our sovereignty,” Xiang Wenbo, another of Sany’s founders, warned at the time. “You can sell everything you want but not your own country.”
Sany describes the current legal action as a commercial matter, and neither an act of economic nationalism or a political stunt.
But in China itself, Tea Leaf Nation reports that the lawsuit has had some unforeseen consequences in endearing some onlookers to the American legal system.
What chance, it asks, of a business being allowed to take Hu Jintao to court on similar grounds?
Yu Shenghai, a prolific financial author with a large following on Sina Weibo was one such admirer. “Friends on the internet have asked; what does it mean when a country is governed by the rule of law?” Yu asked. “Answer: China’s Sany sued US President Obama, [and] the US courts took it. That’s the rule of law!”
Meanwhile, the Financial Times reckons Sany has more pressing problems than a high-profile lawsuit. A study conducted by the newspaper this week suggested that Sany is now waiting for more payments from its customers than any other company in the country. Its accounts receivable were the highest in China, hitting Rmb21 billion ($3.36 billion) in the third quarter.
We last wrote about sales conditions in Sany’s sector in WiC157, reporting concerns about the credit quality of some of the industry’s customers. But Sany doesn’t sound unduly anxious at the latest news. “Due to the impact of the macroeconomic environment, sales repayments have seen some deferrals,” it explained.
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