Cases
Real Estate Investigation Report
(confidential information has been changed to protect privacy)
Background information collated:
Source 1: Beijing real estate agent with 4 years experience
The source said that ABC Real Estate's main properties are AAA Building , BBB Building , and CCC Building . AAA, BBB and CCC Buildings are all properties next to each other and in the same area. Combined, it is an area of retail and residential properties.
The source also said that ABC Real Estate has a reputation for developing properties that are innovative in design. For example, the architecture relating to its various properties tends to be modern. Furthermore, the company uses new technology such as highly energy efficient heating and cooling systems that set it apart from its competitors. Because of its strong quality, the properties are also more expensive than the average Beijing apartment.
The source continued that all of the subjects have a reasonable reputation as they have a solid vision and seem to have found a niche in terms of developing properties that are innovative in design. The company is well-managed and has potential.
The source is not aware of any of the subjects being in any major negative or dubious episodes.
Source 2: Official from the Beijing Municipal Land and Resources Administration
The source said that because John Lee previously worked for the National Security Department – a Department which is of great importance and crucial to China – Lee was exposed to and heavily trusted by senior government officials. Thus, John Lee was able to initially develop his government network while working at the National Security Department.
The source further explained that John Lee was given capital to begin his real estate business in the mid 1990s from senior government officials whom he developed positive relationships with during his time at the National Security Department. That is, the senior officials did not give John Lee money from their own pocket but through their influence and some accounting irregularities or oversight, funds were originally from the state.
The source continued that John Lee has strong relationships with both senior national level government officials and local Beijing government officials – especially those from the Beijing Public Security Bureau (PSB). John Lee's main function is to develop government contacts and to use them to his advantage.
In this manner, Lee is able to win deals, receive better loan rates (for example, higher amounts and lower interest rates), or be informed of upcoming business developments or government policies before his competitors.
On the more negative side, John Lee is also friends with senior members of Beijing 's organized crime society. Thus, John Lee is heavily protected by his contacts in both the government and in Beijing 's underworld. The source said that Joe Lee is John Lee's step brother. Although the source is not absolutely certain, he believes Joe Lee may also have a similar background and worked in China 's National Security Department.
The source said that in order to develop and maintain their positive relationships with senior government officials, John and Joe Lee have given kickbacks and personal favors. However, the source also said that the giving of kickbacks to develop government contacts is relatively commonplace in China and not out of the ordinary. Because of the culture of kickbacks, it is almost expected that both individuals need to give kickbacks in order to be relatively successful in the real estate industry.
The source said that John and Joe Lee do not have good reputations because they are “bullies” in the sense that they use their government contacts and influence to gain preferential treatment and unfair competitive advantages. Thus, without the government support, they may not be very capable.
Source 3: Beijing Real Estate Investment Analyst with a Chinese investment bank with 6 years experience
The source reconfirms that Joe Lee is very trusted by John Lee. The source said that both have contacts with senior local Beijing government officials and they are able to leverage their contacts to develop their business.
The source said that besides its AAA Building , BBB Building , and CCC Building., ABC Real Estate is not heavily focused on developing other properties. Thus, ABC Real Estate it not yet particularly well-known in Beijing .