Punishment Due

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The true story of China’s wealthiest smuggler and his downfall

There is no reason why Lai Changxing should not be the poster boy for 21st century China. He rose from dire poverty in Fujian province and made a fortune through hard work and sheer guts. Too bad the narrative has run its course.

Business in China has a dark side that is very inconvenient for those who only wish to see the fake optimism it fuels. Unfortunately for Lai, he paid dearly for his astronomic success. This is why the controversy surrounding him has garnered a lot of attention but little sensational coverage.

Lai is an anti-hero. He never spoke against the government, much less found a creative outlet for his political angst like Ai Weiwei. Still, his self-imposed exile in Canada was necessitated by a vengeful Beijing. After more than a decade on the run, that vengeance has now been served.

On May 18, the Intermediate People’s Court of Xiamen sentenced Lai to life in prison and slapped an additional 15 years for bribing up to 64 government officials during the 1990s. The worst part is, Lai may still be feeling uneasy over the fact that once in jail, he can be executed for his crimes.

This is what compelled his escape to Canada a dozen years ago after a Beijing-sponsored, anti-corruption crackdown led to death sentences for 14 government officials.

While the state run-media may portray the Lai sentencing as an effective deterrent against corruption, the truth is far more distressing. While meeting students from Vancouver’s Simon Fraser University in 2009, Lai admitted that his business career was primarily focused on loopholes— specifically how to exploit and profit from them.

A few examples of this creative approach to a healthy bottom line is mislabeling cargoes of cigarettes and luxury cars, or venturing into businesses that enjoyed tax exemptions. Lai even went so far as to tell the students that in Xiamen, new businesses get three years off from taxes, so what he did was start new businesses every three years.

Although he never admitted to bribing anyone, it is a foregone conclusion that he did grease the hands of colluding officials regularly, while amassing his alleged billion dollar fortune.

Liquor, Prostitutes
To better understand Lai Changxing, however, requires a biographical examination. Born in 1959 to a dirt-poor family of eight, little is known about his impoverished childhood in the village of Jinjiang. It was not until Deng Xiaoping overturned Maoism in the late 1970s that a new world opened for Lai.

His first venture was selling car parts in Xiamen. When the 1990s rolled in, Lai was rudely introduced to Communist officialdom. He refused to pay them a bribe so they beat up his sister.

It is safe to assume that, after this incident, Lai mastered the subtle art of smooth relations with the local government. His greatest success, however, was to establish a business empire centered in Xiamen, whose status as a Special Economic Zone transformed the once backward port city into a bustling metropolis.

A great part of this change was because of Lai. Other than an airport in his hometown, a football team, and countless highrise apartments in Xiamen were built with Lai’s money.

Commerce was also benefited by Lai’s zeal. His Yuanhua Group trafficked cigarettes, oil, and luxury cars brought to Xiamen’s bustling port thanks to the suspicious absence of rapacious customs agents.

Certain tags were eventually associated with his money train. Countless newspaper reports reveal he drove around in a “bulletproof Mercedes Benz” that used to be owned by Jiang Zemin. A legend grew about Lai using liquor and prostitutes to curry favor with local officials.

The 2007 book Inside the Red Mansion by German journalist Oliver August feeds Lai’s reputation, even mentioning his fondness for Hennessy XO Cognac as proof of his expensive nouveau-riche taste.

The reckoning happened in 1999. A debt-ridden associate ratted out Xiamen’s seedy underworld to Beijing. The resulting anti-corruption backlash compelled Lai’s escape to Hong Kong via speedboat and his subsequent exile to Canada, where he became a resident of Vancouver.

While his two sons studied at Simon Fraser University, Lai’s fate became a diplomatic crisis between China and Canada. The latter stalled his extradition for a dozen years on the grounds that he could be wrongfully executed. It took a personal note from then-President Jiang Zemin to the Canadian Prime Minister to guarantee Lai would not be sentenced to death once in Chinese custody.

Lai’s luck run out in July 2011 when he was deported. More than a year and a publicized show-trial later, his sentence effectively silenced him. But why was his treatment so harsh compared to other tycoons who have wormed their way into Beijing’s good side? It may sound like a nutty conspiracy theory but Lai could be a pawn in a larger gambit.

It turns out that during Lai’s heyday in the late 1990s, incoming Chinese President Xi Jinping was the governor of Fujian province. This leads the curious to ask: What kind of power struggle in Beijing is compelling unseen hands to finally get rid of Lai Changxing?

Lai Changxing may be portrayed as a gangster and white-collar criminal, but given the flexibility of Chinese capitalism, he was probably just playing by a well established rulebook.

The odyssey of Lai, an illiterate whose smuggling operations netted him an estimated US$4 billion, illustrates the plight of all successful Chinese businessmen.

No matter how much money they have, they had better be on the Party’s good side. Perhaps, Lai’s greatest crime is he failed to butter the right side of the mantou.

Print ed: 09/12

 

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