14 Chinese Receive Death Sentence in Smuggling Case

Chinese courts sentenced 14 people to death Wednesday in a landmark smuggling scandal that has implicated scores of officials and tested Beijing’s resolve to root out endemic corruption.

The trials centered on the southern port city of Xiamen, where entrepreneur Lai Changxing allegedly built a smuggling empire that brought in more than $6 billion worth of cars, oil, electronics, cigarettes and other luxury goods since 1996, according to New China News Agency.

The smuggling by Lai’s Yuanhua Group, the biggest such case in 50 years of Communist rule, cost China billions of dollars in customs taxes, the agency estimated. The actual figures may be much higher.

Tipped off by police, Lai fled the country last year and then directed customs officials to destroy records for about 300 cargo ships that entered Xiamen with smuggled goods, state media have reported. Lai remains at large.

According to the reports, Yuanhua plied customs officials with whatever bribes hit their weak spots: cash, women, housing, travel abroad, even rare books. Yuanhua also reportedly employed relatives of key customs agents and retired customs officials to exert influence within the customs bureaucracy.

In one case reported by Beijing-based Life Week magazine, authorities in Fujian province, where Xiamen is, signed a contract with a state trading firm to import a $60-million mobile phone switching system from Finnish company Nokia. The trading firm subcontracted the job to other companies, which retained Yuanhua. For an 8% cut, Yuanhua reportedly bribed customs officials to allow the equipment to enter China falsely declared as wood pulp and other duty-exempt industrial goods.

The Yuanhua case is apparently the biggest example of the rampant smuggling that has inundated China’s coastal areas over the past decade.

A crackdown in the last two years has led to the arrests of 13 customs chiefs in major cities such as Hangzhou and Shenzhen. Courts have sentenced one customs chief to death and two others to life in prison.

The crackdown has boosted customs revenues, to an estimated $19 billion last year, up $9 billion over 1998, according to official statistics. But Law and News, a magazine under China’s Justice Ministry, cited estimates that China uncovers less than 10% of its smuggling cases, with more than $100 billion in government revenues lost in recent years.

On Wednesday, courts in five cities in Fujian province announced the 14 death penalties after months of investigation.

Those sentenced include Xiamen Vice Mayor Lan Fu; the city’s customs chief, Yang Qianxian; and Fujian Vice Police Chief Zhuang Rushun. Several other bankers and traders were also sentenced to death, but three of the 14 are expected to have their sentences commuted to life in prison.

Xiamen’s Communist Party vice secretary and 11 others were sentenced to life in prison, and 58 others got lesser jail terms.

Other suspects in the case are scheduled to go on trial soon, New China News Agency said. No dates were given.

Still awaiting trial is a former vice minister of public security, Li Jizhou, who was once in charge of border defense and anti-smuggling operations. Li is alleged to have accepted bribes in exchange for providing smugglers with passports and license plates for smuggled cars.