Chinese Character

China’s most-wanted man

He once offered Zhu Rongji a $2 billion bribe. Who is Lai Changxing?

China’s most-wanted man

Think of me as Robin Hood: Lai

“If Lai Changxing was executed three times over, it would not be enough,” said former Premier Zhu Rongji in October 2000.

Forget three times over: to Zhu’s likely disappointment, Lai, 53, probably won’t even be executed once.

The smuggling kingpin was returned to China at the weekend after the Canadian government accepted Beijing’s assurances that Lai will not face the death penalty. Instead, China’s most-wanted man now faces life in prison.

Whatever Lai’s fate, his homecoming marks the latest stage in the country’s longest-running and most expensive criminal investigation. Lai has fought deportation back to China for the last 12 years from his Canadian home. Before fleeing across the Pacific, he was accused of masterminding China’s largest smuggling ring, racking up $6.4 billion in revenues from 1996 to 1999 alone, and evading $3.6 billion in customs duties.

Lai’s case is a fraught one, not least because his criminal activity compromised so many around him. Hundreds of local bureaucrats were said to have been on his payroll. The ships carrying his illicit cargo were even said to have been given naval escorts.

In fact, the taint of corruption has spread far beyond Lai’s home province of Fujian. Lai has bragged to reporters that he knows a number of senior officials personally, including some at Politburo level.

The man widely expected to succeed President Hu Jintao next year, Xi Jinping, was also governor of Fujian Province when some of Lai’s freewheeling activities took place. According to reports at the time, after Lai had fled the country Xi was summoned to the capital to explain how such an elaborate scheme had flourished on his watch.

Before fleeing to Canada, Lai was something of a local legend. A self-made man, he presided as chairman of the Yuanhua Group. It sponsored the Xiamen municipal soccer team (Lai even made a few guest appearances in goal) and lured tourists by building a replica of Beijing’s famed Forbidden City north of the city. Just before his fall, Lai also broke ground on what was to be the city’s tallest building, the 88-story Yuanhua International Centre.

His own headquarters, a seven-storey building resplendent in red tiles, was also notorious. Locals called it the Red Chamber (alluding to the popular classic Dream of the Red Chamber). Lai’s office was on the top floor, atop a warren of private banqueting rooms, a 40-seat movie theatre, karaoke lounges, sauna and massage facilities and a dozen guest rooms.

There, he wined and dined key government officials, before secretly videotaping them cavorting with prostitutes, says Sanxia Evening News. Chinese prosecutors claim that Lai then used the videos to manipulate his victims.

Born the seventh of eight children in a peasant family in Shaocuo village, a couple of hours’ drive from Xiamen, Lai was known for his business acumen even as a child. When he was nine, he began buying fruit on the street and then selling it at a premium a few blocks down, his childhood friends recalled. They told China News Service that Lai was “always thinking about money-making ideas”.

After a few years in the well-digging business, Lai pooled $150 with a couple of friends and started an automotive parts factory. He reinvested the profits into a series of new ventures; soon the automotive factory spawned a textile plant, a print shop, an electronics store, an umbrella factory, a shipping enterprise, an investment company, a cigarette plant, a paper-products firm and at least half-a-dozen other enterprises.

“You could start a business in the morning and make money by the evening. Everything was so free and open back then that everyone had lots of businesses. You would be stupid not to,” he said at the time.

In 1994, he founded Yuanhua Group and started using the company as a front for his smuggling operation. With the authorities blackmailed, or paid off, Lai startedsneaking large volumes of oil, rubber, cars, cigarettes and mobile telephones into Fujian province.

But as his empire grew, Lai began to attract the attention of Beijing. His operation started to unravel when, in 1998, then premier Zhu took aim at Lai’s empire. Lai famously offered Zhu $2 billion “to straighten things out” but was rebuffed.

Feeling the pressure, in August 1999 Lai fled with his wife and three children to Vancouver. There he sought protection as a refugee, saying he could face torture or death if he returned to China. As supporting evidence his lawyer argued that Lai’s accountant and his brother had both died of unknown causes during spells in prison. Canadian law prohibits the deportation of foreign nationals to countries where they could face capital punishment.

Asked whether the case against him was valid, Lai told the Toronto Globe and Mail newspaper in 2009 that the allegations were politically-motivated, and that he was being targeted by the government to set a precedent. He also denied the bribery charges, saying he had simply avoided taxes by taking advantage of loopholes in the law.

Back in China, things were not going well for his relatives and business associates. Premier Zhu, who had made anti-corruption a priority, ended up putting more than 300 suspects on trial and sentencing 14 to death, including provincial officials and a former vice minister of public security, says Yangchang Evening News. Lai’s ‘Red Chamber’ was turned into an anti-corruption museum in 2001.

For years Beijing sought Lai’s return, including reportedly personal assurances from Zhu Rongji that the death penalty would not be applied (somewhat of a departure from the “die three times” comment, admittedly).

Then earlier this year, in a move that surprised those involved in the case, Chinese officials agreed to allow Canadian authorities regular access to Lai in detention if he was returned – the first time such a concession had been made.

Early this month, the Canadian federal court then ruled that Lai could be deported because of the “extraordinary assurances” given by the Chinese side.

Chinese media has been triumphant about the fugitive’s return. Similarly so the State Security Ministry, which celebrated that “no matter where a criminal suspect flees, he or she cannot evade legal sanctions in the end.”

The Canadian press has beenmore ambivalent. Some expressed doubt about the Chinese assurances on Lai’s well-being. Others felt that Canada had caved in to Chinese pressure. Foreign Affairs minister John Baird acknowledged that Lai’s extradition had created problems in the Sino-Canadian relationship for over 11 years. But he said that diplomatic pressure did not play a part in the decision to extradite him.

Still, Lai’s reluctant homecoming is likely to see an uptick in relations between the two nations. Ties have warmed over the past two years as Prime Minister Stephen Harper has placed less emphasis on human-rights issues, says the Wall Street Journal.

Then again, not everyone is so delighted to see Lai behind Chinese bars. People in his home village of Shaocuo still regard him as something of a modern-day Robin Hood. Lai rebuilt Shaocuo from the ground up, donating everything from hospitals to a kindergarten. He is said to have given several hundred people monthly “retirement” checks of $85. For many locals, Lai was a big-hearted billionaire who helped out ordinary folk far more than local officialdom.

“We all mourned for days when we heard what happened to Lai Changxing,” a distant relative Lai Ruining told TIME Magazine after hearing of his arrest. “Now, who will take care of our village?”

So will Lai get a fair trial? Wang Xiangwei, writing in the South China Morning Post, says the terms of Lai’s return have put Chinese credibility at stake. And that means that a “fair and public trial” will be conducted.

Keeping track: some major sentencing has been going on in China this week. First off, smuggler Lai Changxing was given a life sentence in jail. This was not a major shock. As we reported in WiC117 he had been extradited from Canada on condition that he would not get the death sentence. More of a surprise was the new sentence handed down to underground lender Wu Ying. As we reported in WiC147, she had been awarded a rare stay of execution by the Supreme Court after huge protests were launched in the media and online about the severity of her death sentence. She was retried in her native Zhejiang this week and given a lighter sentence. The 31 year-old former billionaire was also given a life sentence, but with a two year reprieve from execution. This means that if she does anything in the next two years that constitute bad behaviour she may still face death, but many in China now think this unlikely. (May 25, 2012)

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