27 October 2016
Once the richest man in China, Mou Qizhong (牟其中), was recently released on parole after serving 16 years in prison for fraud. Photo: Sina
Once the richest man in China, Mou Qizhong (牟其中), was recently released on parole after serving 16 years in prison for fraud. Photo: Sina

Why Chinese tycoons are easy victims of a corrupt system, one of the leading financial news websites in the mainland, ran an investigative report on Chen Guangbiao, once hailed as China’s no.1 philanthropist, on September 20, alleging that he might have been cooking the books and forging financial documents.

The report also said that Chen is closely associated with former director of the general secretariat of the Chinese Communist Party Ling Jihua and former deputy minister of public security Li Dongsheng, both of whom have been put behind bars on graft charges.

The latest accusation against Chen is that he has been arranging free sex service for high-ranking officials in a secret “presidential suite” at his company headquarters in exchange for favors.

Apart from Chen, another former tycoon, Mou Qizhong (牟其中), who has recently been released on parole after serving 16 years in prison for fraud, has also become the focus of media attention in the mainland.

Mou was China’s richest man back in the 80s, pulling off major business deals such as providing the former Soviet Union with leather and canned food in exchange for aircraft, and collaborating with Russia on launching satellites. However, in 2000, Mou was suddenly arrested by the authorities on a charge of financial fraud and sentenced to life in prison.

Also put behind bars for fraud charges was Yang Bin (楊斌), who was once China’s second richest man, according to Forbes’ tycoon list in 2003. Yang’s success story was rather legendary. He went to the Netherlands to study in 1987, and after the June 4, 1989 incident in Beijing, he became a Dutch citizen. A few years later he went back to China as a foreign investor and invested in agricultural projects, tourism and real estate, and soon became a highly successful business tycoon.

Yang was perhaps most remembered for being appointed by the late North Korean leader Kim Jong-il as the governor of Sinuiju, a small town lying on the China-North Korean border which was designated by the North Korean government as its first ever special economic region. However, just roughly one year after Yang assumed office, he was convicted of fraud charges by a Chinese court and sentenced to 18 years in prison.

Chen, Mou and Yang had one thing in common: they were all great salesmen and masters of gimmicks with a remarkably strong power of persuasion.

Apart from their personal qualities, all three of them probably owed their rapid success to their connections with powerful figures in the communist party. Ironically, their connections with these powerful officials had eventually proven their undoing. As their big bosses fell from grace, so did the tycoons.

It is not surprising that Chen, Mou and Yang were all nailed by the authorities on business fraud charges, as it is always the easiest way to convict a business tycoon in the mainland.

Given the corrupt environment, businessmen in China, almost without exception, have to bribe their way through in order to succeed.

As long as you have some powerful friends in the government to protect you, the authorities and party mouthpieces will often turn a blind eye to your dirty little secrets. However, if your mighty friends fall from grace or lose power, it could lead to open season on you. 

To some extent, Chen, Mou and Yang are all tragic figures, as they are victims of a corrupt system under which big businesses and political vested interests are so mutually dependent that it has become a deep-rooted social norm that everybody in the mainland has got used to. In order to succeed, you always have to bribe or befriend powerful officials even if you don’t want to.

This article appeared in the Hong Kong Economic Journal on Oct. 3.

Translation by Alan Lee

[Chinese version 中文版]

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