In a recent development, Chinese authorities have imposed an exit ban on a senior executive at the American risk advisory firm Kroll. Michael Chan, a managing director based in Hong Kong specializing in corporate restructuring, is currently assisting in an investigation dating back several years. It’s important to note that neither Chan nor Kroll is the focus of this investigation.
Chan had traveled to mainland China in July and subsequently informed his employer that he cannot leave. As a Hong Kong passport holder, he retains the ability to move freely within mainland China and continues working.
China’s Ministry of Public Security and the National Immigration Administration have yet to respond to inquiries, a situation exacerbated by the ongoing national holiday.
Kroll is among several foreign firms offering corporate investigation and advisory services to clients in China. These firms have faced increased scrutiny this year, raising concerns about the challenges foreign companies encounter when doing business in China.
In a separate incident in March, authorities raided the Beijing offices of Mintz Group, detaining its entire staff on the mainland. Consulting firm Bain & Co.’s Shanghai office was also subject to a surprise visit by authorities, while Capvision, a consulting firm founded in China with foreign clients, faced a law enforcement probe resulting in raids across multiple Chinese cities.
Exit bans, commonly employed by Chinese authorities, impact individuals under investigation or assisting with government probes, regardless of their nationality. Typically, those affected are unaware of their exit bans until they attempt to leave mainland China.
These exit bans, which have grown more prevalent, have garnered criticism from Western officials and human-rights groups. They are often seen as a means to facilitate criminal investigations, intimidate dissidents, or exert leverage in disputes involving foreign companies and governments. Some exit bans have extended for months or even years.
Notably, these tactics have contributed to the U.S. State Department’s advisory urging reconsideration of travel to China due to what they view as arbitrary law enforcement. However, China rejects such characterizations as politically biased.
Michael Chan, with extensive experience in insolvency and restructuring cases, has previously worked for Borrelli Walsh, a firm specializing in restructurings and insolvencies, with involvement in multiple deals in China. Kroll acquired Borrelli Walsh in late 2020.
Kroll maintains offices in five Chinese cities, including Beijing, Shanghai, and Hong Kong, providing corporate finance advice, restructuring services, and risk management. Corporate investigations for clients are also part of their portfolio.
The raid on Mintz Group’s Beijing office preceded an exit ban on one of its employees, a Singapore national who was blocked from leaving China in mid-January. The individual was not given a reason for the restriction, nor was she arrested or accused of any wrongdoing. She was eventually able to leave China with assistance from Singapore’s Foreign Ministry.
Chinese authorities later imposed approximately $1.5 million in financial penalties on Mintz Group’s Beijing branch for allegedly conducting unapproved statistical work.