One Billion Customers - James McGregor [52]
3
Eating the Emperor’s
Grain
China’s relationship-driven system is often incompatible with honesty. This peasant tycoon’s journey into the dark heart of China’s endemic corruption shows how it works and outlines your options.
IT WAS A LAST ROLL of the dice, thrown out of desperation but not despair.
His brothers and sisters, in-laws, nieces and nephews, and hundreds of close friends and valued employees were being detained, interrogated, and threatened with long jail terms or death sentences. His wife was in the Vancouver exile home, on antidepressants and feeling hopeless, while their three teenage children watched kung-fu movies or played computer games.
But for the man once known as “the Boss” and “the Detective,” the man who went from ditch digger to celebrated tycoon, from model citizen to most-wanted fugitive, there was always the hope his luck would turn in Canada’s honeymoon capital of Niagara Falls, Ontario.
In an eighty-four-day spree at Casino Niagara, Lai Changxing, unaware he was under surveillance, tried to stretch the last of his money as far as he could. His bets totaled $5.7 million. On his best day, Lai won $237,500. On the worst, he lost $85,400. But he was never one to quit when he was ahead, especially now when he desperately needed to build a pile of cash that might save his own life.
It had been the same in business. Lai always saw too many opportunities. There were too many ways to profit from China’s booming economy, too many ways to exploit the many cracks between China’s mismatched political and economic systems. There were too many officials to befriend and buy their protection and too many people in his impoverished hometown to whom he felt obligations to provide schools, medical facilities, and even monthly sustenance checks.
With his losses totaling $445,735, Lai’s gambling spree ended on November 23, 2000 when the Royal Canadian Mounted Police arrested him outside his hotel on a charge of falsifying information on his application for refugee status. His next gamble would be for his life, fighting extradition to China in the Canadian courts. The premier of China had already declared that Lai should be executed ten times over.
Lai Changxing fell into this terrible predicament because he had jumped aboard the roller coaster of Chinese economic reform at the very beginning and had taken it for the full ride, right into the dark heart of the Chinese political and economic system. Lai built a remarkable web of protective relationships that reached from the misty coves of the southern China coast to the offices and living rooms of China’s secretive military intelligence and national police bosses in Beijing. He was so connected at the top of the Communist Party hierarchy that he could drive his stretch Mercedes right past the guards into the Chinese Kremlin, the leadership compound known as Zhongnanhai, in the old Imperial Palace grounds. His private Red Mansion entertainment palace in Xiamen was renowned for its collection of the most exotic and compliant beauties from throughout China. And now he stood accused of running the biggest smuggling operation in the history of China, slipping some $6.4 billion in oil, cigarettes, and automobiles past Chinese customs and evading $3.6 billion in taxes and tariffs in the process.
Overview
Balzac might have been writing about modern China when he said that behind every great fortune stands a great crime. In the past twenty-five years China’s burgeoning economy, driven by legions of entrepreneurs like Lai Changxing and guided by the Communist Party’s economic reforms, has created tens of thousands of great fortunes. Behind most of them are crimes great and small. Aided and abetted by government and Communist Party officials, people like Lai have pocketed vast amounts of state-owned assets and government money.
So pervasive is the mentality of government corruption in China that it is embodied in an ancient adage, Chi Huang Liang, which means, “eat the emperor’s grain.” In imperial times,