From Red Mansion to a prison cell

PUBLISHED : Saturday, 19 May, 2012, 12:00am
UPDATED : Saturday, 19 May, 2012, 12:00am


Who would have imagined that a semi-literate farmer from rural Fujian who did not even finish primary school would become the head of a smuggling empire that ended the careers of dozens of officials, China's most infamous fugitive and one of its biggest diplomatic nuisances?

Lai Changxing, 53, was jailed for life by a court in his home province yesterday for running a multibillion-dollar smuggling ring. Extradited from Canada last year after 12 years in exile, he was accused of masterminding a US$10 billion network that smuggled an array of goods, ranging from cigarettes to cars and oil, and of bribing government officials and politicians.

Despite the smuggling kingpin's conviction in Xiamen, the port city where his business was headquartered, it remains unproven, despite Lai's repeated claims over the years, that the families of some of the country's most senior leaders were involved in the mainland's biggest corruption scandal of modern times.

Born into a poor family, Lai farmed at home until the age of 18 and afterwards worked briefly as a well digger and an apprentice blacksmith. Smart, sociable and enterprising, however, he was not content to remain a blue-collar worker.

When he was 21, with savings and loans from family members amounting to about 1,500 yuan, he ventured into the car parts business. He proved to be a capable businessman, expanding into textile machinery manufacturing and later opening a garment factory, a print shop and an umbrella factory.

His achievements brought him into contact with powerful Communist Party figures, relationships that helped his businesses grow, and by 1991 he had accumulated tens of millions of yuan. He then acquired a fake identity and moved to Hong Kong, where he made a fortune in the property boom.

That initial success allowed him to set up the Xiamen Yuanhua Group in 1994. He established an electronics factory, a car manufacturing business, tobacco and paper products companies and even a film studio in Xiamen, and a container shipping firm in Shanghai. By the late 1990s it was said his empire was the mainstay of the coastal city's economy.

While much of his profits allegedly came from cars and crude oil, he also imported petrochemicals, electronics, plastics, steel and construction materials, cigarettes, vegetable oil and munitions worth more than 50 billion yuan between 1995 and 1999, evading taxes of nearly 30 billion yuan.

Lai's downfall began when he fell foul of then premier Zhu Rongji , who was shocked at the extent of the graft. More than 300 central and local government officials and businesspeople were later prosecuted for their involvement, including 11 who were put to death in November 2000 and another 73 who were given terms of up to life in jail.

Zhu personally ordered a crackdown on Lai's operations in April 1999 and banned Xiamen officials above the level of department head from leaving the country.

By the time several hundred armed officers surrounded Lai's infamous, multimillion-yuan, six-storey complex in Xiamen known as the Red Mansion, Lai was already on the run, accompanied by his wife and daughter, thanks to his extensive connections with government officials. Fleeing on a speedboat to Hong Kong and using a Hong Kong passport, he made his way to Vancouver.

Stories about Lai using beautiful women, money and gifts of villas and luxury cars to bribe high-ranking officials were extensively reported, along with long lists - which have never been made public - of officials alleged to have accepted bribes of various kinds.

Lai managed to move his company's money to Hong Kong before he escaped but was arrested at a casino in Niagara Falls in November 2000, beginning a protracted battle for asylum.

Lai maintained he would face capital punishment if returned to China, hobbling Beijing's efforts to convince Canada to extradite him .

Zhu was quoted as giving a personal assurance: 'He should be executed three times... Now that we have agreed that he will not be executed, that is the biggest concession we can make.'

Over the years, Lai claimed he had connections with top-level mainland officials whose careers he could ruin if he was ever brought to trial.

Although he did not publish an autobiographical account of the scandal as promised, he nonetheless revealed many astonishing details, tainting officials including Jia Qinglin , No 4 in the party hierarchy and chairman of the Chinese People's Political Consultative Conference, and Jia's wife, Lin Youfang, who was head of the Fujian Foreign Trade Corporation during the 1990s.

Lai also claimed to be an acquaintance of former president Jiang Zemin's top aide, General Jia Tingan .

Both Jia Qinglin, who was party chief and governor of Fujian province from 1985 to 1996 and Jia Tingan appear to have survived the scandal.

But others were not so lucky. One of the most high-ranking officials to fall from grace was Li Jizhou, vice-minister for police from 1995 until his arrest in 1998. He was given a suspended death sentence in 2001.