US corporate due diligence firm Mintz Group said on Thursday its Beijing office was raided by authorities and five Chinese staff were detained, stoking worry among foreign companies in China just as its capital hosts an international economic forum.
News of the raid and detentions comes as Sino-US relations have spiraled downwards following months of diplomatic tensions, including over the US military downing in February of a suspected Chinese spy balloon and a planned US transit next week by the president of Taiwan, the self-governed island China claims as its territory.
“We can confirm that Chinese authorities have detained the five staff in Mintz Group’s Beijing office, all of them Chinese nationals, and have closed our operations there,” the company said in an emailed statement to Reuters.
The company said it was ready to work with Chinese authorities to “resolve any misunderstanding that may have led to these events”, and that its top concern was the safety and wellbeing of colleagues in China.
“Mintz Group has not received any official legal notice regarding a case against the company and has requested that the authorities release its employees,” the company said.
A source at the New York-headquartered firm earlier told Reuters on condition of anonymity that the company’s local legal counsel said the raid occurred on the afternoon of March 20, and that the employees were being held incommunicado somewhere outside of Beijing.
The Chinese foreign ministry and the Beijing public security bureau did not immediately respond to requests for comment.
As per Mintz Group’s website, the Beijing office is its only one in mainland China. The website says the company specialises in background checking, fact gathering and internal investigations and has 18 offices around the world and hundreds of employees.
Randal Phillips, a partner at the firm who heads its Asia operations but is based outside of China, is listed on its website as the Central Intelligence Agency’s former chief representative in China.
Phillips worked in Beijing for years after leaving the CIA. There was no indication the incident was related to him.
The news of the raid and detentions comes as Beijing is gearing up to hold the three-day China Development Forum from Saturday, where executives from multinationals and representatives from international organisations will be among the more than 100 overseas delegates present.
One US business community person told Reuters the Mintz Group incident sent a “remarkable signal” that Beijing wants foreign money and technology but that it won’t accept credible US firms conducting due diligence on Chinese partners or the business environment.
“Red alerts should be going off in all boardrooms right now about risks in China,” the source, who did not wish to be identified due to the sensitive nature of the matter, said.
Western due diligence companies have gotten into trouble with Chinese authorities before. British corporate investigator Peter Humphrey and his American wife Yu Yingzeng, who ran risk consultancy ChinaWhys, were detained in 2013 following work they did for British pharmaceuticals giant GSK.