RECOMMENDATION FOR FOREIGN POLICY REFUSAL OF VISA

C O N F I D E N T I A L SECTION 01 OF 03 TAIPEI 000964

SIPDIS

DEPT PLEASE PASS TO CA/VO/L/A FOR BRIAN HUNT
GUANGZHOU FOR M. JACOBSEN/K. LANG
SHENYANG FOR J. FOUSS

E.O. 12958: DECL: 08/05/2019
TAGS: CVIS KFRD KJUS PREL TW CH
SUBJECT: RECOMMENDATION FOR FOREIGN POLICY REFUSAL OF VISA
FOR INDICTED EMBEZZLER CHEN YOU-HAO

REF: A. TAIPEI 0277

B. TAIPEI 0570

C. TAIPEI 0651

D. WWW.NEWSWEEK.COM/ID/74369

Classified By: AIT Acting Director Robert S. Wang,
for Reasons 1.4(B) and (D).


1. (C) Summary. AIT recommends that the visa application for
Chen You-hao (among the ten "Most Wanted" criminal fugitives
in Taiwan) be denied on the basis of foreign policy
considerations. Visa issuance would seriously undermine U.S.
law enforcement cooperation with Taiwan and, further, could
affect our ability to work effectively with Taiwan on a
broader range of issues. End summary.


2. (C) Chen You-hao, and his wife Lin Fu-mei, indicted by
Taiwan courts for offenses ranging from breach of trust to
fraud and embezzlement, have applied for the renewal of
H1B/H4 visas in Guangzhou. Despite the fact that Taiwan
authorities have produced a significant body of credible
evidence to support charges that Chen and his wife may have
been involved in multi-million dollar white collar crimes and
even though his current application may be aimed primarily at
avoiding extradition to Taiwan given a recent cross-Strait
legal assistance agreement, there appear to be no legal
ineligibilities. Thus, AIT recommends that the Department
make a finding of ineligibility on the basis of foreign
policy considerations. Issuing these visas would not only
discount indictments that have been lawfully-executed in
Taiwan courts, but would also create significant friction in
the U.S.-Taiwan relationship by permitting a high-profile
economic fugitive, the subject of a 2007 Newsweek article on
how he gamed the cross-Strait relationship to escape justice,
to continue to conduct business in the United States. Given
that Taiwan's cooperation in complying with U.S. requests for
the return of criminal fugitives in Taiwan has come under
public fire for a perceived lack of equity, issuing visas to
Chen and Lin could exacerbate this perception and create
greater pressure on the Ma administration to demonstrate its
equities on other issues in the U.S.-Taiwan relationship.

Background
--------------


3. (C) Chen You-hao and his wife Lin Fu-mei are named as
principal defendants in at least two indictments (2003 and
2005) for breach of trust and embezzlement. Both have a
history of circumventing safeguards in Taiwan and U.S.
immigration systems, including applying for asylum as PRC
nationals, renewing visas through Mexico, insisting on using
a PRC passport for visa issuance purposes (rather than the
Taiwan passport, which was revoked because of the criminal
indictments),etc. While Chen and Lin maintain their
innocence, they have not returned to Taiwan to defend their
case in court and Taiwan's judicial system does not permit
conviction in absentia.


4. (C) Chen's alleged money laundering and embezzlement
activities can be traced back to 1992, according to the 2003
and 2005 indictments issued by the Taipei District Court
Prosecutor's Office. According to the 2007 Newsweek article
(ref D),Chen began building his first factory in China in
1992 and eventually served as an advisor to Xianglu and
Dragon Group, which received permission in 2004 to produce
PX, a toxic chemical used in plastic and polyester, in
Xiamen. From November 2001 to April 2002, according to the
2005 indictment, Zheng Maoxi (aka Zheng Maozhi, Ray Cheng),
the owner of Natural United Company Ltd, used his U.S.
passport to open a "foreigner" account at the HSBC Taipei
Branch, which was used to launder money embezzled from
Dongding Corporation by Chen You-hao and others. In August
and November 2002, respectively, Chen and Lin departed Taiwan
using their Taiwan passports. The investment funds declared
in Chen's initial I-526 petition in 2003 came as personal
earnings derived from technical consulting services rendered
between April 2003 and April 2006 from Advance Engineering
(B.V.I.). In March 2004, Chen and his family applied for
asylum in San Francisco with valid PRC passports. In April
2004, Advance Engineering signed an umbrella agreement with
Xianglu Petrochemicals (Xiamen) Company and in April 2006,
Pacific Rim Traders LLC, Chen's U.S. company, signed an

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agreement with Dragon Special Resin (Xiamen) Company. In May
2006, the money earned from Advanced Engineering is invested
in Pacific Rim Traders LLC. In addition, local press reported
the Hilton Los Angeles/Universal City, where Ma Ying-jeou
stayed during his June transit through Los Angeles, was owned
by Chen, though information from the Ministry of Foreign
Affairs indicates Chen is not the current owner and had only
previously invested in the property.

Reasons for Chen's Travel to US
--------------


5. (C) During the Chen Shui-bian era, Chen You-hao appeared
to benefit from Beijing largesse with the issuance of a PRC
passport to replace the Taiwan passport cancelled due to his
indictments, according to a December 17, 2007, article in
Newsweek ("Where 'Guanxi' Rules," Newsweek U.S. edition).
The article explains how Chen apparently gamed cross-Strait
relations under Chen Shui-bian to not only avoid standing
trial in Taiwan, but also to continue to grow his businesses
on the mainland. After President Ma Ying-jeou took office in
May 2008, cross-Strait relations greatly improved, resulting
in a new Cross-Strait Joint Crime-Fighting and Mutual Legal
Assistance Agreement (cross-Strait MLAA) signed in Nanjing on
April 26 (ref B). This agreement satisfies the Ma
administration's priority to establish a mechanism for the
return of Taiwan's criminal fugitives from the mainland,
particularly those charged with economic white-collar crimes
like Chen. Chen would be aware of Beijing's friendlier
relations with Taiwan and the new agreement covering the
repatriation of Taiwan's economic criminal fugitives. If
China accedes to Taiwan's requests for repatriation of
certain high-profile fugitives like Chen (and many observers
believe they must in order to demonstrate Beijing's sincerity
in cross-Strait improvements),then Chen's ability to move
freely between the U.S. and China may be compromised. In
fact, Taiwan may seek the extradition of Chen back to Taiwan
to stand trial.

Foreign Policy Implications
--------------


6. (C) President Ma Ying-jeou has identified an extradition
agreement as a top policy priority for the U.S.-Taiwan
relationship. Ma and other Taiwan officials have indicated
their desire to regularize current ad-hoc U.S.-Taiwan law
enforcement cooperation and to secure the return of the over
one hundred thirty criminal fugitives believed to be residing
in the United States (refs A and C). Following the
conclusion of the Cross-Strait MLAA, Taiwan officials expect
to see an even greater rise in the number of fugitives
fleeing to the United States as the mainland begins to
implement the agreement and return Taiwan fugitives back
across the Strait. (Note: The U.S. is already the top
destination for Taiwan fugitives.)


7. (C) But there has been no similar improvement to date in
Taiwan's law enforcement relationship with the U.S. Taiwan
authorities have expressed their frustration over the years
with U.S. inability to secure the return of high-profile
economic fugitives like Chen. This frustration crosses party
lines; Chen has been a top ten wanted fugitive under both DPP
and KMT administrations. It has also become an increasing
irritant in U.S.-Taiwan law enforcement cooperation, leading
to an op-ed by a former Taiwan official criticizing the
perceived inequities in the relationship. (Note: While Taiwan
authorities have returned five criminal fugitives, including
murderers and rapists, over the past twenty months, we have
been unable to return even one of the one hundred
thirty-three fugitives from Taiwan justice believed to be
residing in the U.S.) This heightened public sensitivity
recently led to strong media, public, and legislative
pressure to refuse to return an alleged child molester wanted
in the U.S. While Taiwan authorities were ultimately able to
push back and return the alleged child molester (which
required President Ma's personal intervention),the public
pressure led to delays and has compromised our ability to
request assistance and obtain the return of U.S. fugitives
(refs A and C).


8. (C) The fact that not only is the U.S. government unable
to return Chen, an individual accused of embezzling over one

TAIPEI 00000964 003 OF 003


hundred million U.S. dollars from Taiwan, to Taiwan to stand
trial, but that we are, in fact, about to issue him a visa to
continue to conduct business in the U.S. would severely
undermine public perception of the U.S.-Taiwan relationship
and could impact our ability to obtain Taiwan's cooperation
on a range of issues (such as beef) as the Taiwan public
exerts pressure on the Ma administration to demonstrate a
more equitable relationship.

Recommendation
--------------


9. (C) We understand that the Visa Office, after extensive
consultation with the Department of Justice, has found that
Chen may not be ineligible for a visa under section
212(a)(2)(I) of the Immigration and Nationality Act (related
to money laundering),nor is he ineligible under 212(a)(2)(A)
because he has not returned to stand trial, and therefore,
cannot be convicted. Given that his current visa application
is for a H1B visa, residence abroad requirements under 214(B)
do not apply even though Chen's current visa application is
aimed primarily at avoiding extradition to Taiwan from
mainland China. It is AIT's view that, if Mr. Chen (whom
some have characterized as "Taiwan's Bernie Madoff") is not
ineligible under 212(a)(2)(I),then his visa should be denied
under section 212(a)(3)(C) because to do so would have
"potentially serious adverse consequences for the United
States." Allowing Mr. Chen's entry to and business
activities in the United States would create significant
public pressure on the Ma administration to demonstrate a
more equitable law enforcement relationship with the U.S.,
resulting in the degradation of cooperation on repatriations,
and more widely, undermining public perception of robust
U.S.-Taiwan relations.

Comment
--------------


10. (C) It is important that we actively manage the
U.S.-Taiwan relationship, rather than respond to problems
after they occur. We have no doubt that there will be a very
strong government and public reaction to U.S. issuance of a
visa to Chen at this time. Denying a visa to Chen, formally
indicted and the subject of media attention both locally and
internationally, besides being justifiable, bears little
political cost to us. Refusing to allow Chen and his wife to
continue their business activities in the U.S. would avoid a
public outcry that could reinforce the rising perception that
the United States remains the sole beneficiary of the
U.S.-Taiwan law enforcement relationship.
WANG