793. Chinese Tycoon Gets Life for Bribes and Smuggling

By Andrew Jacobs, The New York Times, May 18, 2012

Lai Changxing’s case indicated what goes on
on the top in China.

Beijing — Lai Changxing, an illiterate peasant-turned-billionaire whose legacy of bribery, smuggling and monumental profligacy came to personify the excesses of the economic reform era, was given a life sentence on Friday for his role in what the government has described as modern China’s biggest corruption scandal, according to the state news media.

At his peak, Mr. Lai drove a bulletproof Mercedes-Benz, distributed wads of cash to the poor and had in his thrall hundreds of officials in Xiamen, the special economic zone in Fujian, the coastal province where he made his fortune. The scandal brought down scores of those officials, led to the unexplained prison deaths of his brother and his accountant and provoked hand-wringing among top Communist Party officials who feared they might be next.

Although the sentence was heavy, it might have been worse: former Prime Minister Zhu Rongji once remarked that Mr. Lai’s crimes were so outrageous that executing him three times would not be enough.

But Mr. Lai, 53, escaped that kind of fate by fleeing to Canada more than a decade ago. The Canadian government decided to deport him only after obtaining guarantees from Beijing that Mr. Lai would not be tortured or sentenced to death. With his appeals exhausted last July, he was returned to China.

In addition to punishing him with life in prison for smuggling goods worth $4.3 billion, the Xiamen Intermediate People’s Court also sentenced him to 15 years for the prodigious bribes that enriched 64 government officials with cars, cash and real estate valued at more than $5 billion.

“The sums involved are unusually large, and the details are extraordinarily serious, meriting the double sentence,” the court said, according to Xinhua, the state-run news agency. The crimes cited by the court took place from 1996 to 1999.

Although it is not clear whether Mr. Lai was allowed to testify in his defense, in the past he has said he was simply playing by the rules of a lawless system that turned on personal connections and greased palms. One of eight siblings born during a famine, Mr. Lai, whose education was disrupted by the 1966-76 Cultural Revolution, said he had had to rely on mettle, cunning and bribery.

“I had to do things step by step by myself,” he once said. “That’s how people came to respect me.”

Mr. Lai thrived during the headlong embrace of market economics in China that followed the death of Mao Zedong in 1976. His first venture, a rudimentary car parts factory, made him rich by the standards of the 1980s. In the years that followed, he moved into more lucrative lines of business: importing televisions, cigarettes and cars without paying duties. At one point, Mr. Lai’s company, Yuanhua Group, was said to be responsible for one-sixth of the nation’s oil imports.

By the mid-1990s, he was hitting his stride. He built a new airport terminal for Xiamen, spent $4 million to buy a soccer team and presided over the groundbreaking of the 88-story Yuanhua International Center. Many of the 2,000 invited guests received envelopes of cash. About 100 government officials drove away with new Mercedes-Benzes, according to later news reports.

His other excesses included the construction of a replica of the Forbidden City outside Xiamen and the Red Mansion, a pleasure palace where Mr. Lai’s guests could indulge in handpicked female employees.

Mr. Lai’s undoing also brought down many of Xiamen’s leading officials, including the deputy mayor, the vice director of public security and a former provincial party secretary. In all, about 300 officials were implicated; 14 were condemned to death, although most of those sentences were commuted to life in prison.

But a few of those on the top of the food chain escaped punishment. Vice President Xi Jinping, expected to be China’s next leader, was deputy governor and then governor of Fujian at the time of Mr. Lai’s reign. In 1999, after the scandal erupted into full view, Mr. Xi was summoned to Beijing to explain how such a gaudy corruption ring had flourished under his watch, according to reports at the time.

After Mr. Lai escaped to Hong Kong on a tourist visa, he made his way to Vancouver, British Columbia, where he and his wife and three children continued to live well, thanks in part to the largess of appreciative friends in China. The 11-year extradition battle that followed strained relations between the two countries, but in the end, a federal court in Ottawa rejected his application for refugee status, calling Mr. Lai a “common criminal.”