Asked why bonuses were paid when the PrediWave system had not produced any revenue, Ellis theorized that Qu "somehow corrupted and somehow compromised officials of New World" while scheming to create board resolutions and documents because "he knew the day this started" that litigation would come.
But, Ellis added, there was no evidence that Chan profited personally. Ellis described Chan as a "gambler" who "got in over his head," adding, "If you are gambler, you keep doubling your bet because it's the only way out of it." As to a business plan, Ellis said that it was "in many ways a handshake deal."
While a US judge has ordered Chan to give a deposition, his lawyers in Hong Kong say this is "new legal territory" and are not sure whether he will testify.
detained
Ellis said it was only after the deal collapsed that investigators working for the company learned that Qu had not only been detained in Shanghai in 1994 but that there was also an outstanding detention order on file as well as a financial judgment for about US$90,000.
Lin scoffs at the charges but notes that documents that look official can be bought in China. To bolster his case, he points to documents Qu has filed in court from what appears to be a Chinese government agency that states that he has no criminal record. The documents were also submitted to the US government, Lin said, before Qu was granted citizenship last August.
Lin insisted that New World would "look foolish" in the forthcoming trials because the PrediWave system was demonstrated successfully in China. He pointed to a Web site for Fujian Cable TVNet Service Co., which currently advertises the PrediWave system and service.
An operator for Fujian said the PrediWave system was available for about US$9 a month, providing six VOD channels with movies and sports as well as 14 digital channels. The service has been offered since October 2002, the operator said.
But pirated DVDs of first-run movies are readily available in China for a dollar a copy, making a video-on-demand system that would cost several times that a month less attractive.
The chief technical supervisor of the Fujian cable system, Hu Bufa, said the PrediWave system worked well in demonstrations. But, in practice, he said, the quality of the set-top boxes and other equipment was poor. In addition, he said, the failure of the central government to adopt a format that works best with the PrediWave technology limits its commercial viability, although he acknowledged that a thousand boxes are in use.
While Ellis acknowledged that the PrediWave system appeared to work well in trials, he insisted that it was Qu's responsibility to make the system work in the marketplace. As to Lin's fear that his former partner would find a new politically connected partner, Ellis confirmed that New World had an active partnership with the government-owned China Aerospace to provide "interactive satellite services." But Ellis said that deal would not include the PrediWave technology.
Lin defends the US$100 million or more in bonuses and perks for Qu as justified because of Qu's dedication to his work, the sacrifice to his health and family and a desire by New World to retain his services.
Qu was expected to return to the US and testify in a pretrial deposition in San Francisco yesterday..
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