China’s anti-corruption TV drama In the Name of the People is not only wildly popular (see WIC362) but has also become a watchword across the press and social media to describe all manner of ills within government and society. It was evoked again last week after the latest target for ‘Operation Fox Hunt’ – Beijing’s global pursuit of fugitives – was slapped with a large fine and lifetime stock trading ban.
In the TV drama, a corrupt vice mayor called Ding Yizhen flees to the US but ends up living in a dingy hotel and cleaning toilets for a living after his ill-gotten gains fail to follow him. He decides he has no option but to return to China and confess his guilt.
The Economic Observer uses the same analogy to describe the actions of Feng Xiaoshu, a former senior regulator at the Shenzhen Stock Exchange. Feng fled to the US in 2015 around the same time that former CSRC vice chairman, Yao Gang, was arrested. The newspaper believes the two actions were not unrelated. Yao was once known as “China’s IPO emperor” because of the power he wielded when vetting listing applications and deciding who got to list first. Like the fictional Ding Yizhen, the real-life Feng Xiaoshu returned to China to face trial last year, one of roughly 1,000 fugitives to do so according to People’s Daily (up from 850 in 2015).
Caixin Weekly has unpicked Feng’s web of corruption, which led to him this month being fined the astonishing sum of Rmb499 million ($72 million) for committing illegal trades and other illicit behaviour.
At the heart of Feng’s case was a “venture capital” company called Shenzhen Shifanglian. This was part-owned by Feng’s mother-in-law – as well as the sister-in-law of a colleague and the daughter-in-law of a former senior official at Ping An Securities. This syndicate was the beneficiary of sweetheart deals by companies doled out to them in exchange for a leap up the IPO queue.
One listing hopeful, Jiangsu Yuyue, transferred a 3.89% stake via Feng’s mother-in-law at a discounted price before it was listed in 2008. Its IPO sponsor, unsurprisingly, was Ping An Securities. Meanwhile a second company, Sanchuan Water Meter, was allowed to go public after Feng’s sister-in-law bought a pre-IPO stake at a steep discount.
Sohu Finance concludes such violations “abound” and suggested the fine was not large enough. “It all depends how much illegal income Feng really made,” it says. “But the fine needs to be big, otherwise it’s meaningless.”
April also saw the investigation and subsequent dismissal of China Insurance Regulatory Commission (CIRC) chairman Xiang Junbo and the disappearance of China Banking Regulatory Commission (CBRC) assistant chairman, Yang Jiacai.
The mainland media believe both men are connected to the disappearance of billionaire financier, Xiao Jianhua. As we wrote in WiC354, Xiao was reportedly abducted from the Four Seasons Hotel in Hong Kong back in February and has been held for questioning on the mainland ever since.
The irony of Xiang’s downfall was not lost on the domestic media. The government announcement said Xiang was suspected of “severe disciplinary violations” less than two months after he held a press conference pledging to rid the insurance industry of “financial crocodiles” (i.e. those rigging the market for personal gain).
Yang, meanwhile, held a similar press conference just a few days before disappearing. In it, he detailed plans to crack down on banking irregularities, after 197 people were punished during the first quarter alone. According to Caixin Weekly, Yang is currently “out of contact,” which might be explained by the large sums of money that seem to have materialised in his wife and son’s bank accounts.
The CBRC has since reiterated that financial regulators such as Feng are banned from taking jobs within the financial services industry for three-years after they leave office.
The People’s Daily has also stepped in with a hard-hitting editorial covering corruption within the financial services sector and its regulatory bodies. Reflecting on the publication of an anti-corruption speech by Premier Li Keqiang, it suggests “the best part of the drama is yet to come”.
Meanwhile one of the most popular social media comments about Feng’s massive fine made clear that it didn’t suffice, suggesting he should face the ancient Chinese punishment of having his body “torn asunder by five carts”.
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