“Poverty drives diligence, diligence brings wealth, wealth induces disarray, disarray leads to vanity, and vanity results in disaster,’ is an old Chinese saying. It sums up Wang Yi’s story rather fittingly.
Wang – the former vice president of China Development Bank (CDB) – was sentenced to death in April for accepting bribes totalling Rmb11.96 million ($1.75 million) between 1999 and 2008 (the year when he was first detained by the authorities).
Nothing like as much as Madoff in the corruption stakes, of course. But nearly enough for a close-up look at the firing squad. Fortunately for Wang, he got a two-year reprieve, meaning his behaviour in prison will be assessed, after which he will have a chance to appeal for leniency.
But Wang is the most senior Communist party member after former Bank of China chief executive Liu Jinbao to receive the death sentence (which is often commuted to life in prison). His story is also sufficiently well-known for one columnist to term it “the most significant event in China’s capital markets since the collapse of the D’Long conglomerate in 2003,” an event which saw more than 20 financial institutions collapse. The D’Long CEO did rather better than Wang in punishment terms, with an eight year sentence. Perhaps resolve is stiffening among the Chinese judiciary.
But the story of Wang Yi is not just about greed and power. Vanity and arrogance were also factors in his downfall.
Wang was far from your typical banker. Despite being unable to read music, he also composed musical pieces that led to him being heralded as a new-found Mozart. His magnum opus, a symphony called “Ode to China”, was played across the country.
Nor was the case against him merely a financial story. It dominated the gossip sections of papers for months, courtesy of bit parts from two female celebrities, the actress Zhao Wei and CCTV news anchor Liu Fangfei. Both were named as Wang’s accomplices, although both had their names cleared.
Born in 1956, Wang was the eldest son in a modest family of five from Jianchuan, in Yunnan province. His father was of Bai ethnic origin (a minority known for its cormorant fishing) and his mother a Han.
Like his contemporaries, Wang’s early life bore the scars of the Cultural Revolution. As a teenager, he worked in a steelworks and later at a machinery factory. But he dreamed of gaining entrance to Beida (Peking University) and taught himself mathematics, science, English and Chinese. At the age of 22, his unlikely ambitions were realised, and he went to Beijing to begin his studies.
At Beida, Wang rubbed shoulders with the sons and daughters of the Party hierarchy. Among them was Wang Xiaoyin, the daughter of Bo Yibo, a senior Communist party official known as one of the ‘eight immortals’. This paved the way for Wang’s entry to the Central Advisory Commission (the political and consultative unit made up of senior party members), where he served as a personal secretary to the elder Bo. One of the songs played at Bo’s funeral in 2007 was a Wang composition.
Wang worked in the Commission for seven years, where he got to know many government officials. Again this was key to his later rise. “The relationships and network he nurtured then had a big part in helping him gain positions in regulatory circles later,” China Economic Weekly quotes an unnamed securities analyst as saying.
Between 1992 and 1995, Wang served as deputy head in the office that went on to become the China Securities Regulatory Commission (CSRC).
He had limited authority in his role and decided to try his luck as an investor. He went into property in Hainan and formed a stock investment company on the side, while keeping his government job. But his business ventures failed hopelessly and cost him his marriage. A former colleague told China Economic Weekly that the experience taught Wang much about management and the capital markets.
In late 1995, the 39 year-old Wang became the youngest vice chairman of the CSRC. Sticking with his career as an official meant that he now found himself on the receiving end of various perks and favours. He wielded real influence in the industry, including decisions on which companies could raise money through share sales.
“Securities management was still fairly disorganised back then. The officials had access to loads of insider information… with opportunities to make money and to choose partnerships to benefit from,” according to another insider quoted by New Century.
In 1999, Wang was transferred to the CDB to be one of four vice governors. According to New Century, he was disappointed, as he had hoped to become chairman of the CSRC. But there were too many complaints against him, including a fondness for self-promotion. He is remembered at the Guanghua School of Management – part of his alma mater Beida, where he taught part-time – for his extravagant taste for high-end suits and flashy ties, for instance, as well as his claims that no one had a better understanding of securities markets than he did.
This might have been true, if you measure a man’s expertise by his personal influence. Reports suggest that Wei Dong, the head of Yongjin group who committed suicide shortly before Wang’s arrest, was among his closest allies. Wang is said to have given Wei the idea of a “backdoor listing” of Sinolink Securities in 2007. “In addition to dazzling deal-making, Yongjin seemed able to sense upcoming regulatory changes and move ahead of them,” Caijing magazine reported last year.
Wei is one of a long list of businessmen and officials with whom Wang enjoyed close ties. His friendship was often billed out for a fee. Most of the charges against Wang relate to his time at CDB between 1999 and 2008. The bank, which is under the direct jurisdiction of the State Council, is primarily responsible for raising funds for large infrastructure deals, including high-profile projects like the Three Gorges Dam and Shanghai Pudong International Airport.
And, as the Beijing No 1 Intermediate People’s Court charged last month, Wang had CDB funds to disburse too. He helped Li Tao, a Hong Kong businessman, secure a loan for a highway construction project, and received Rmb5.38 million for it. He also took Rmb6.3 million from Zhou Hong (a man he knew from time at the steelworks as a teenager), the chief executive of a steel company in Yunnan, for assistance in loan applications. Another Rmb0.3 million was received for securing a loan for a Henan company.
This was also around the time that actress Zhao and TV anchor Liu are said to have appeared on the scene. Zhao is said to have received appearance fees for attending an opening ceremony at one of the company’s owned by a Wang crony (she denies having anything to do with Wang or his case). It was also alleged that Liu received a Rmb2 million loan from one of Wang’s clients to pay off a mortgage. Liu was a witness at Wang’s trial, but insisted she had returned the money with interest two years ago.
Wang’s involvement in the listing of Pacific Securities has also aroused suspicion. He, his siblings and illegal loan pals Li Tao and Zhou Hong were all shareholders in Pacific. Despite three years of losses, it then acquired a listed company, carried out a ‘share restructuring’ and got the go-ahead from the Shanghai Stock Exchange for a listing itself. All after the alleged arrival of a letter signed by a senior person in the CSRC.
As for his musical accomplishments, Wang apparently got the composing bug in 2002. His magnum opus “Ode to China” would go on to be performed numerous times. It has since been dropped from the China National Symphony Orchestra’s repertoire. Just as well, perhaps: news reports suggest that much of the demand for tickets for “Ode to China” performances came from those hoping to curry favour with its composer. There is a fairly inescapable irony in the symphony’s titling too.
With Wang’s achievements in so many fields, it was perhaps inevitable that his activities would come under greater scrutiny. Whether his own downfall is indicative of a wider trend in cleaning up the capital markets is still to be seen.
At least 41,000 officials were investigated for embezzlement, bribery, dereliction of duty and other work-related crimes last year, according to Prosecutor-General Cao Jianming.
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