Blowing the Whistle.(People's Liberation Army of China continues to conduct business)

Standing trial in Hong Kong is a disorienting experience for 48-year- old Cheng Sui-wa. He cannot understand English, so he leans forward awkwardly to catch the whispers of his Mandarin interpreter. Both his defense attorney and the public prosecutor are thickset Australian barristers who wear yellowing horsehair wigs. Charged with instigating a more than U.S.$ 14 million fraud using bogus letters of credit, Cheng has argued in an earlier trial that he cannot be held responsible for his actions because he was acting at the behest of his former employer, the People's Liberation Army. And that in itself might be the strangest thing about his case.

Cheng's line of argument won him an acquittal in a lower court in February (the high court is hearing similar but separate charges). But it's rare if not unprecedented to hear the PLA accused in open court.

Since Chinese President Jiang Zemin ordered the military to abandon its myriad business dealings in 1998, the PLA has by and large divested itself of retail businesses. When officers have been suspected of crooked activities, they have often been able to escape before being arrested: executives of 32 PLA-related companies--all of them officers with the rank of major-general or higher--have fled China since 1998.

The few who have actually been brought to trial on the mainland have been disciplined in secret: unbeknown to many, the former head of Army intelligence, Maj. Gen. Ji Shengde, was removed from his post more than a year ago, not because of his involvement in a U.S. campaign-finance scandal (he allegedly donated $300,000 to former U.S. president Bill Clinton's re-election effort) but because he was fingered in a multibillion-dollar smuggling scandal in Xiamen. A secret military tribunal sentenced him to 15 years in prison last year. "No significant military personality has been tried publicly on the mainland for this sort of crime," says Rand Corporation Sinologist James Mulvenon, whose recent book "Soldiers of Fortune" examines the sprawling Chinese military business empire from 1978 to 1998.

Nor have representatives of PRC organizations--military or otherwise-- usually been brought to court for economic crimes in Hong Kong until recently. When the territory's highly regarded Independent Commission Against Corruption (ICAC) plans to detain an employee with a mainland company, officials are first required to notify his or her employers. In the past, suspects have been whisked away before being arrested. "All along, suspected offenders were moved back to the mainland in order to avoid conviction," says James To, chairman of the Security Panel of Hong Kong's Legislative Council. "The ICAC was always furious, but it couldn't do a thing."

Cheng may have been left behind because he didn't seem to be a threat to the PLA. Arrested by ICAC investigators in January of last year along with three other suspects, Cheng originally claimed to be working on his ...