Taxing time for smugglers' haven

At about 4.30pm each weekday, a small and usually deserted side street in Shantou's eastern Longhu district is suddenly choked by a fleet of luxury cars.

Inside the assembled Mercedes and Lexuses, carefully coiffured housewives chat idly on their mobile phones and adjust their designer sunglasses as they wait for their children to appear at the gates of Shantou Experimental School, an institution that caters for the sons and daughters of the city's privileged class.

But even from his lowly perch behind the wheel of a battered, mainland-made Charade taxi, Yan Dali is not impressed by all the wealth and imported horsepower on display.

'Look at all these luxury cars. They were smuggled in and bought by people who made their money cheating the system,' said the Anhui native.

Welcome to Shantou, the eastern Guangdong port city and Special Economic Zone that is struggling to shake off a reputation for skulduggery and lawlessness. Long infamous as a haven for smugglers and counterfeiters, for most of the past two years it has been the focus of a central Government investigation into wide-ranging value-added tax (VAT) fraud.

To date, the investigation has resulted in 19 death sentences for convicted VAT cheats and the arrest of the mayors and party secretaries in nearby Chaoyang and Puning. And that is with just a quarter of Shantou's 77 acknowledged VAT cases concluded. Confirmed losses to the central Government total 4.2 billion yuan (HK$3.9 billion).