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Josephine Ma

Found guilty of illegal deposit taking, rural reformer Sun Dawu has benefited from officials' political concerns

The dramatic release of tycoon Sun Dawu last week brought an end to a unique chapter of the mainland's legal history.

The farmer, People's Liberation Army veteran and former bank clerk was found guilty by Xushui People's Court of raising 13.08 million yuan (HK$12.28 million) from 611 local depositors between January 2000 and May this year without approval from the People's Bank of China.

Under mainland law, only approved financial institutions can run deposit-taking businesses. Sun was fined 100,000 yuan and his company 300,000 yuan.

But the 49-year-old chairman of the Dawu Group in Xushui, Hebei province, was not sentenced to the sort of lengthy prison term usually given to entrepreneurs who fall foul of the authorities.  He was given a three-year sentence, suspended for four years, and set free shortly after the trial.

The arrest of Sun - an outspoken entrepreneur who has been critical of mainland rural policy - received unprecedented attention, with academics, lawyers, reporters and even local farmers rallying on his behalf.

One of Sun's associates said the entrepreneur was well aware of the risks involved in offering bank services to his employees and their acquaintances. But others believe he took the course because state banks refused to finance the development of his agricultural business empire, which encompasses pig and chicken farms, animal feed and fertiliser factories, vineyards, a guesthouse and a secondary school. Even before his arrest, Sun had become a celebrity in business and academic circles. He was one of China's top private businessmen and was recognised as an outspoken advocate of farmers' rights and rural reform.

Despite a media blackout imposed by the government for two months after Sun's arrest, word of his case spread and aroused the interest of prominent scholars such as Mao Yushi, who openly backed the tycoon.

Critics said the financial regulations which Sun violated were out of date and did not meet the needs of private enterprise.

Public pressure appears to have succeeded.  Prosecutors reduced the amount of illegal funds Sun was alleged to have raised from 159 million yuan in the first indictment issued on September 10 to 14 million yuan in the second indictment issued on September 30.

Before the trial opened  last week, Sun's associates were optimistic he would be given a lenient sentence because the government had decided to leave politics out of the case. Both President Hu Jintao and Vice-Premier Hui Liangyu are said to have ordered local officials to handle the case with care.

Sun's defence lawyers and relatives said his sentence was acceptable under the circumstances.

Sun has a long history of  disputes with government officials, and the trial could have been used to punish him for being outspoken on other issues.

In 1997, Sun fought an order by the local authorities to pay 1.38 million yuan in taxes on the grounds that the tax was illegal. He also clashed with local authorities after being accused of converting leased farmland into industrial use without official permission.

According to mainland journalists and academics,  Sun had a 'notorious' reputation among local officials because he  refused to pay bribes. He also advocated political reform and publicly  opposed many government policies,  and even questioned the legitimacy of the Communist Party.

He posted his views and articles by liberals on his company's website. But on May 31, the Dawu Group website was shut down by local authorities for posting three articles which 'seriously damaged the reputation of government departments'.

Sun also declared his ambition to build his business empire  into a Confucian utopia  where everyone enjoys equal rights.

The tycoon, who spent 11 years working in a local bank, also set up an alumni association for veterans from his army unit.

Sun visited universities in Beijing, including the prestigious Peking University, to talk on informal panels.

He won praise as an advocate of rural reform, with some liberal scholars even describing him as a modern-day Robin Hood.

In the end, Sun  paid a high price, even if he avoided a prison term. He was ordered to return  depositors' money and his business suffered heavy losses as buyers cancelled orders when he was detained. Mainland media reports say Sun will have a difficult time keeping his company running.

He may have also lost his platform. Sources say one of the conditions of Sun's release is that he maintain a low-profile and refrains from speaking out on controversial issues.



Public pressure helps tycoon to avoid prison term