Debt dispute leaves Missouri man in limbo in China
Thursday, June 21, 2012
ST. LOUIS (AP) — A Missouri man involved in a business dispute has been stuck in China for five months after the Chinese government refused to let him leave.
The Chinese government forced Steve Fleischli of Labadie, Mo., to surrender his passport in a dispute over his company's unpaid debt to Chinese firms. Complicating matters is that he has lost his job since going to China on business in January.
Many of the details of the case, including exactly why Fleischli was fired from his job, are unclear. But his story offers insight into the perils of a western businessman doing business in China, especially when commercial disputes are involved.
The State Department declined comment on his case, but its website says there is little it can do to intervene on behalf of Americans in situations like Fleischli's, which can take years to resolve.
"I think he's more frightened about the comment that sometimes these things go on for years, rather than about his personal safety," Fleischli's attorney, Mitch Margo, said.
Fleischli, 37, began his career at Washington, Mo.-based NorthPole Ltd. 11 years ago and rose to CEO. The company is a leading maker of outdoor gear including tents, foldable camping chairs. Warburg Pincus, a global equity firm, is NorthPole's majority owner.
Times got tough for NorthPole in recent years as prices for materials increased and retail orders slowed. The company owed money to suppliers in China. Margo said Fleischli even loaned NorthPole $200,000 of his own money last year. The company declined to discuss details of the loan, but it was an issue in Fleischli's firing.
Fleischli, who has a 3-year-old daughter and wife back home in Missouri, decided to fly to China to address concerns of suppliers in person. He left in January in anticipation of a meeting with suppliers at a factory in Xiamen, China, in March. The meeting was a disaster as angry suppliers rioted. After more than a day, police were able to help Fleischli get out of the factory.
"It was a pretty nerve-wracking experience," Fleischli told the St. Louis Post-Dispatch. He did not respond to interview requests from The Associated Press.
But that was only the beginning of his troubles.
Because of the unpaid debt to Chinese suppliers, and citing Fleischli's status as NorthPole's legal representative in China, a court in Xiamen ordered Fleischli detained, Margo said.
Margo said Fleischli hadn't even realized he was NorthPole's legal representative, a role that makes Fleischli the point of contact for the company.
Warburg Pincus declined to comment on whether Fleischli had been told he was the legal representative, but NorthPole documents reviewed by The Associated Press indicated Fleischli was informed through email in 2008.
"I had no clue," Fleischli told the Post-Dispatch. "I'm an American guy over here in China. I can't read Chinese. I had no idea what a legal rep even was."
Then in May, Warburg Pincus fired Fleischli for "gross misconduct." The company declined to comment further on the firing, but Margo said it meant Fleischli also lost access to the company's lawyers in China.
It's not clear to Margo or Fleischli why the firing didn't absolve Fleischli of his duties as NorthPole's legal representative. Fleischli has sued NorthPole and Warburg Pincus seeking severance and damages and asking to be removed from that role. Margo believes that would help him get out of China.
But Warburg Pincus says it can't remove Fleischli from that role.
"Warburg Pincus has had no involvement with any travel restrictions Mr. Fleischli may have in China. The firm does not control Mr. Fleischli's status as legal representative of NorthPole in China, and does not control any travel restrictions that local authorities in China have placed on him," the company said in a statement.
The State Department's website says that in regard to commercial disputes, the Chinese "may prohibit you from leaving China until the matter is resolved under Chinese law. There are cases of U.S. citizens being prevented from leaving China for months and even years while their civil cases are pending."
The website says the U.S. Embassy and consulates general "have no law enforcement authority in China and cannot recommend a specific course of action, give legal advice, or lobby the Chinese government regarding a private citizen's commercial dispute."