Date
19 November 2017
The Guo Meimei saga brought to public attention possible irregularities in the Chinese Red Cross, further smearing the image of the semi-governmental organization. Photo: NetEase
The Guo Meimei saga brought to public attention possible irregularities in the Chinese Red Cross, further smearing the image of the semi-governmental organization. Photo: NetEase

Why Guo Meimei is being nailed to the Red Cross

If you believe all the brickbats thrown at her, you would think Guo Meimei (郭美美) is none other than the devil herself — and she wears not only Prada but owns many other luxury brands as well.

The pretty, 23-year-old lass, who had earlier gained notoriety in China for flaunting her wealth on social media, was arrested by Beijing police for illegal soccer betting earlier this month.

You would say that’s hardly news, but two state-owned mouthpieces, Xinhua News Agency and China Central Television, joined forces to dig up dirt on Guo, and came up with investigative reports and feature stories on her personal history that could make even a bordello keeper blush.

Portraying her as an immoral person leading a debauched life, state media accused her of running a high-class prostitution ring and using her feminine wiles on men to get what she wants.

Guo first rose to national prominence in 2011 when she posted on her Sina Weibo account several pictures showing her expensive playthings, including branded handbags, a luxury villa, a yacht and a Maserati, while identifying herself as the head of the commercial unit of the Red Cross Society of China (RCSC).

Her posts generated a lot of controversy as netizens conjectured the source of her obscene fortune could only be the public donations to the charitable organization. After all, the semi-government body has long been suffering from lack of credibility.

The RCSC vehemently denied that Gui was an employee, and later that year abolished its commercial unit.

But the organization continued to suffer from public mistrust as it has failed to institute reforms that could enhance the transparency of its operations. Meanwhile, Guo continued her high-flying lifestyle.

Against this backdrop, Guo’s recent detention, along with state media’s muckraking on her life, is seen by some observers as an attempt to use her as a scapegoat to whitewash RCSC’s past scandals.

In a recent televised confession, Guo declared: “None of my family and friends, or myself, was a staff of RCSC. I made a huge mistake by seriously damaging its reputation for my vanity.”

The hidden message is: Guo is responsible for all the shenanigans and RCSC itself is her victim.

Yet, it remains unclear why RCSC chose to remain silent on the alleged irregularities in the organization for almost three years and then blame everything on Guo.

Hong Kong Economic Journal columnist Liu Yi has come up with an investigative report on the RCSC that could shed light on the Guo mystery.

According to the report, Guo worked for a Beijing-based firm named Wangding Consulting (王鼎諮詢), which obtained RCSC’s approval for the exclusive right to build 20,000 medical service and health promotion kiosks in 30 provinces and municipalities nationwide. Wangding could sell advertisements at these kiosks to recoup its investment.

The firm later sold 70 percent stake of the 3 billion yuan (US$487 million) project to the Hong Kong-listed investment group Freeman Financial Corp (00279.HK) and the pair began to promote healthcare food and life insurance services at these kiosks. Although the project was carried out in the name of a charity program, it is said that Wangding was assured of a return on investment of more than 100 million yuan every year.

All of RCSC’s provincial and prefectural branches were asked to give their full support to Wangding’s projects.

The deal is a typical example of how RCSC is able to make use of its semi-official status to generate funds. This is completely legal, but due to the lack of transparency in its operation, the public will never have a complete picture of what really goes on in these transactions between RCSC officials and private businesses, of how these “auctions” of charitable programs are conducted.

After acquiring the rights to these non-profit projects, Wangding normally doesn’t put up any investment but sells stakes to a third party, which then provides the funds to implement them. Although it hasn’t invested in these projects, Wangding gets a substantial slice of the profit because it owns the rights obtained from RCSC. In some RCSC documents, the “tender” was usually referred to as its “commercial unit”.

Media reports say that over the past decade Wangding had been the solo “wholesale dealer” for many RCSC projects like the scheme to install automated external defibrillators at major shopping centers across the country as well as setting up smoking areas at railway stations. Wangding subcontracted projects to a number of other firms and RCSC’s exclusive authorization is its unparalleled edge.

One wonders: Who are the RCSC officials who gave the nod to implement programs through private firms like Wangding? That may be hard to answer for now.

The truth is that, unlike the Red Cross in Hong Kong and other countries, RCSC is affiliated with the Chinese Ministry of Civil Affairs and thus it enjoys a semi-governmental status.

Its leadership is composed of senior officials including vice directors of the National Development and Reform Commission and the National Health and Family Planning Commission as well as deputy ministers of finance and civil affairs. In fact, President Xi Jinping is RCSC’s honorary president.

RCSC is the major recipient of donations from outside China, including those from Hong Kong. Last year, such donations dropped 3.3 percent year on year to 81.7 billion yuan, after an 18 percent drop the previous year, according to the China Charity and Donation Information Center. The fall in donations is being blamed on distrust of the system by major foreign donors.

– Contact the writer at [email protected]

CG

Guo’s Sina Weibo account is plastered with photos of her activities as a socialite. Her last update was on July 7, almost a month before her detention. Photo: Sina Weibo


Guo first gained national notoriety when she posted pictures of her high-flying lifestyle on social media. Photo: Sina Weibo


Guo’s Maserati and other expensive assets were grist for the social media’s rumor mill. Photo: Sina Weibo


EJ Insight writer

EJI Weekly Newsletter

Please click here to unsubscribe