Alarm bells over fallen tycoon's fate

PUBLISHED : Sunday, 05 June, 2011, 12:00am
UPDATED : Sunday, 05 June, 2011, 12:00am


Rumour and speculation still abound concerning the fate of billionaire Wu Ying, sentenced to death in 2009 over a high-profile fraud case.

The fallen tycoon, 30, who illegally took 770 million yuan (HK$923 million) from investors, is waiting to see if she will receive a stay of execution after an appeal in April.

But many businesspeople are asking why she was handed such a severe sentence in the first place.

And some suspect the sentence could have been influenced by powerful government officials who she crossed.

China News Service revealed in a report early last year that more than 20 government cadres were among those who lost millions in a money-lending scheme that promised high returns.

Wu's defence lawyer, Zhang Yanfeng, said he had heard rumours that some investors wanted Wu dead and that they have lobbied to have the death sentence upheld.

Wu Ying's father, Wu Yongzheng, was much more blunt.

'The case has reflected the darkness in the country's legal system, and it could reveal severe corruption among officials,' he said.

The scandal has captivated people since Wu was indicted four years ago for illegally taking money from rich investors in an effort to expand her company, Bense Holding Group, in Zhejiang province.

Wu, once one of the mainland's richest people, had been considered a heroine to entrepreneurs with dreams of building similarly successful enterprises.

Now, many are contemplating what her downfall means for the future of business in Zhejiang.

Private businesspeople in the province question the ruling of the Zhejiang Jinhua Intermediate People's Court in December 2009 that she be executed.

'The practice of underground banking is so rampant in Zhejiang,' said Qian Kang, owner of a private car parts maker.

'Many people in our business circle have been involved in the dealings before, but I don't think they will be punished someday.'

Wu is hopeful she will receive a lighter punishment after pleading guilty to a lesser charge during the appeal hearing in the intermediate court on April 7.

But many are asking whether those who want to see her executed will be able to influence the decision.

According to China Newsweek magazine, a subsidiary of the China News Service, dozens of civil servants and senior government officials each lent Wu millions of yuan, according to documents that the publication obtained from the police and prosecutors.

It has also been speculated that many of those government cadres must have been in on the fund-raising scheme, since they deposited their money through middlemen.

Acting as one such middleman, Lin Weiping, an official with the Yiwu Bureau of Culture, allegedly handed over a combined 470 million yuan to Wu between March 2006 and January 2007, according to the magazine.

Lin reportedly collected deposits from 66 people, including officials such as Lu Ronggui, deputy head of Yiwu city's Environmental Protection Bureau, before handing over the money to Wu.

According to the bureau's website, Lu is still a deputy head of the government agency.

Ying Jun, head of Yiwu People's Court's enforcement bureau, was also among the investors, placing four million yuan into Wu's organisation, China News Service reported.

During her appeal, Wu confessed to illegal fund-raising, but insisted that she did not swindle the investors.

Under Chinese law, those who commit illegal fund-raising without deceiving investors can receive a maximum penalty of only 10 years in prison.

Wu said the money was used merely to support Bense's business operations.

But she promised investors annualised interest rates of at least 50 per cent - nearly 20 times the benchmark rate offered by commercial banks.

Those types of fund-raising practices are illegal in China, but local governments have for years been turning a blind eye to such 'underground banks', which Professor Li Youhuan of the Guangdong Academy of Social Sciences dubbed 'rampant and outrageous in Zhejiang'.

Li is renowned on the mainland for his research into fund flows.

Wu's lawyer, Zhang, noted that the appeals court conducted a thorough look into the business.

He said that investigation 'could prove the money wasn't spent, while no fraud was involved'.

He also went on to criticise the continued use of the death penalty for illegal or fraudulent fund-raising, saying such rulings should be abolished.

'It would be outrageously unfair to Wu if she were to be executed,' he said.

According to the 2006 Hurun Rich List, Wu was the sixth-richest woman in China, with a net worth of 3.8 billion yuan.