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The Black Cat Club in Shenyang has been in darkness since Liu Yong, the most powerful gangster boss in the northeast, was jailed a year ago, but he is far from forgotten.

'He didn't seem such a bad man,' said Lili, who works as a karaoke hostess opposite his club. 'He was nothing like those villains in Hong Kong movies.'

Shenyang, once a drab industrial city, is full of bars and nightclubs despite a crackdown on the biggest gangs operating in the region. The crackdown started a year ago.

Liu remains a feared and sometimes admired figure who the authorities have yet to sentence despite a string of lurid reports about his lifestyle in the mainland press.

Lili recalled him as a slight man of average height, dressing like any other businessman and spending most of his time in hotels. Yet her colleague Mei Mei, who knew him better, said Liu had a violent temper.

'Once I had dinner with him and his wife - we used to play mahjong together a lot - and I noticed the waitresses' hands were trembling with fear as they served him,' she said. 'They said he once pulled out his gun in another city and shot a waitress.'

During the decade in which he emerged as one of Shenyang's richest men, Liu allegedly attacked or murdered more than 40 people and built up a major conglomerate, the Jiayang Group, with interests in every part of the city's economy. The Communist Party never quite stamped out the local gangs in Shenyang after they took over the city, but only in the 1990s did the mob and the party allegedly start to work closely together.

Shenyang's gangsters controlled several rackets - construction, tobacco, gambling, prostitution and the manufacture and export of synthetic drugs - creating a veneer of prosperity as the city's state-owned heavy industry sank deeper and deeper into debt. Half the industrial labour force now relies on state handouts to survive and tens of thousands of women work the city's massage centres, saunas, hotels and nightclubs. The gangsters went on to organise similar ventures around southern China, forming links with triads outside the mainland.

'They organised as an industry with the help of the party leaders,' Mei Mei said.

Professor Jean-Louis Rocca, a French academic who has studied Liaoning province's reforms, said: 'Sex tourism has become very important for the economy. Lots of cadres used to go there for meetings.'

The city's former executive vice-mayor, Ma Xiangdong, now appealing a death sentence, drove a red Ferrari that was reportedly a present from triads in Macau. Ma was finally caught gambling in Macau on his 12th visit by Chinese state security agents who dared not tackle him on his own turf. Several investigators sent by Beijing are said to have disappeared in Shenyang.

Ma and his boss, Mu Suixin, now also in jail, handed out official posts to the gangsters and Liu become a deputy to the local People's Congress.

'People say the police and gangsters are one family here,' said Zhou Wei, a retired cadre who campaigned against official corruption in Shenyang.

Liu Shi, formerly Shenyang's procurator-general, was a close friend of Liu Yong's father and the younger Liu's godfather. He is also under arrest.

So big was the sex industry that in 1997 Mu passed legislation offering work permits to women who registered and paid a 20 per cent tax on their earnings. A month later he was forced to withdraw it in the face of protests by some in the underworld who felt it was cutting into their profits.

As the city government pushed through a massive redevelopment of the city's infrastructure, rival mobsters battled to win construction contracts and earned huge profits by putting up sub-standard buildings using cut-price material and labour. Those who got in the way were attacked. The gangs also seemed heavily involved in trade with the former Soviet Union, smuggling cars into China and exporting drugs and cheap labour.

Rival gangs battled each other on the streets and in restaurants. On one occasion, Liu Yong invited the head of a rival gang, Li Junyan, for dinner, then pulled a gun and shot him in the leg, and started a gun battle between the two gangs.

Liu Yong's brother was a senior police officer and reportedly used his own men to settle feuds between the different gangs, sharing the spoils of the victor.

Liu Yong was arrested a year ago at a border crossing in the Amur region trying to escape to Russia. His identity was discovered through a computer check on his passport. He ran but was caught and then tried to commit suicide with sleeping pills. His wife fled to Canada but later returned to Shenyang.

'She couldn't face being separated from him,' Mei Mei said.

Liu Yong now awaits sentencing along with 45 other gangsters charged with 'membership of an underworld organisation', assault, blackmail, tax evasion and possession of guns.



Jailed gangster a legend in city where crime is king