Yongnan Kang, former director and shareholder of Auckland-based One Pure International Group Ltd, claims a $1.7 million court judgment issued against him by a Guangzhou court was tainted by the litigant’s bribery and corruption. Conclusive evidence of corruption was needed before a New Zealand court would refuse enforcement.
Mr Kang lives in Auckland. In 2017, One Pure was looking to raise further working capital from investors in China. It exports drinking water to China. The High Court was told a deal was struck with Guangzhou Dongjiang Petroleum, owned by Hong Kong-based Pun Chung Hing. RMB fifteen million was offered, as a loan. Interest was payable at 0.8 per cent per month. Repayment was secured over Mr Kang’s shareholding in One Pure. This loan would be converted to equity if an equity investment was decided after a period of due diligence.
Mr Kang told the New Zealand High Court all was not above board. There was a side agreement; RMB three million was to be diverted in sponsorship of the Canton golf team. Mr Kang said the full RMB fifteen million was never advanced; he received only RMB eight million, of which RMB 2.25 million went to the Canton golf team. No due diligence was carried out by Mr Pun. In China, Dongjiang Petroleum sued in the Guangzhou courts to recover its loan plus interest. Mr Kang was ordered to pay the equivalent of NZD 1.7 million. Finding Mr Kang had no assets in China, Dongjiang applied to have the court judgment enforced by the High Court in New Zealand.
Mr Kang said the $1.7 million court judgment should not be enforced; it was tainted by corruption, he said. Mr Kang alleged the golf team sponsorship was part of a scheme by Mr Pun to curry favour with Mr Xu Deli, former deputy governor of Guangdong province. Mr Xu had an interest in golf. It was alleged Mr Xu’s influence would assist in having Mr Pun’s company obtain a lucrative petrol resellers licence.
Mr Kang said the Guangzhou court was deceived, it was never made aware of the golf club side deal. It would be too dangerous to tell the court, he said. That was tantamount to accusing Mr Xu of bribery as a senior government official.
Whilst corruption in gaining an overseas court judgment is grounds to refuse enforcement in New Zealand, said Associate judge Bell, this requires clear and cogent evidence of corruption. Mr Kang did not provide such evidence, he ruled.
Guangzhou Dongjiang Petroleum Science and Technology Development Co. Ltd. v. Kang – High Court (20.11.20)
20.182