Dark side of China’s organised crime crackdown revealed in private lender case
- Loans to cash-hungry businesses lead to life imprisonment for woman caught up in campaign against ‘black and evil forces’
- As Luo Wenjun awaits appeal decision, her lawyer warns this and similar cases could end the country’s vast private credit market
This is the second in a series by the SCMP looking at how China’s legal system has changed over the decades and some of the challenges it faces today. Here, Jun Mai looks at how lenders vital to the booming private sector have been caught in ever-changing regulatory nets.
The crackdown saw 54,000 people prosecuted since its 2018 launch – close to 12 times the number in the three years before the campaign began – according to the annual report of the Supreme People’s Procuratorate, released this month.
In announcing the results, top prosecutor Zhang Jun urged caution against using criminal proceedings in civil disputes. But Zhang made a point of saying there should be severe punishments for “debt entrapment” – referring primarily to easy loans offered to college students, families with mortgages and other less well off groups, according to official statements.
Before she was rounded up in 2019 as part of the nationwide campaign against “black and evil forces” – official jargon for organised crime – Luo, 55, had hundreds of clients, including local government officials who needed loans for their family-run businesses. This was despite charging interest at higher than the benchmark rate.