Lai Xiaomin scandal sends a chilling warning to corporate China
The former Huarong Asset Management chairman sentenced to death for fraud and bigamy
Greed, sex and corruption. The Lai Xiaomin scandal has struck at the very heart of China’s Communist Party and gripped a nation.
In a curious case where the facts were stranger than fiction, a Tianjin court convicted the former chairman of Huarong Asset Management of industrial-scale fraud and bigamy.
“[He] was lawless and extremely greedy … the social harm was huge and the crimes were extremely serious. He should be severely punished according to law,” the court said in a statement after handing out a death sentence.
The facts:
- Lai Xiaomin was convicted of receiving or seeking bribes worth 1.78 billion yuan or US$276.7 million from 2008 to 2018.
- He was also convicted of bigamy and colluding with others to embezzle 25.1 million yuan or $3.8 million of public funds.
- Lai was expelled from the ruling Communist Party two years ago.
- More than 200 million yuan or $30.9 million was uncovered in a raid on one of his properties.
- He also had 300 million yuan or $46.4 million in a bank account under his mother’s name.
- While Lai lived what was considered a normal lifestyle, he did have a secret harem of mistresses.
What was said: A documentary aired by state broadcaster CCTV alleged that he stashed away jewelry, cash and other assets in a Beijing apartment known as the “supermarket.” “I didn’t spend a penny of it. I wanted to save money for my children. I dared not spend it as I was haunted with fear,” Lai said in the documentary,” as reported by the CNN network.
Reaction to the news: “The scale of the crime is unprecedented,” Wang Xiumei, a former Supreme People’s Court judge and law professor at Beijing Normal University, said in the state-run Legal Daily.
China Factor comment: Lai was a big fish in a massive pond. Apart from running one of the “big four,” Huarong Asset Management, he had also worked at the People’s Bank of China and the China Banking Regulatory Commission. Still, the decision to impose the death sentence is severe amid President Xi Jinping’s ongoing anti-corruption campaign and “zero tolerance” approach. “Convicted officials should be harshly punished for corruption-related crimes [including] the death penalty, especially for defendants who sit in key positions or work in important industries,” Lin Wei, the vice-president of the University of the Chinese Academy of Social Sciences, said as reported by the state-owned China Daily. Comments like these and the decision by a legal system controlled by the ruling Communist Party will send a shiver down the collective spine of corporate China.