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Truth behind tragic secret execution of businessman Zeng ChengjiePressure mounts for the real facts in the case of Zeng Chengjie, accused of fraud and killed by firing squad without his family being notifiedMimi Lau in Shaoyang, Hunan30 July 2013The remains of firecrackers layer Chengjie Happy Road in Yangshiao village, marking the miserable fate of the man who built the street.In rural Hunan, a funeral is more like a twisted carnival in which east meets west. Giant inflatables mark the entrance to the home of Zeng Chengjie, the man dubbed “China’s Bernie Madoff”, and the residence has been turned into a colourful mourning hall. Paper flowers, fancy lanterns and lights hang around huge banners carrying poetic words depicting a paradoxical situation in which “a humble peasant who worked hard all his life” was “unjustly executed”.A rusty brass band plays outdated pop music for arriving guests while Buddhist monks sing scriptures calling for the release of Zeng’s soul from purgatory. In white mourning dress, Zeng’s children each bear a character meaning “injustice” on their caps.“He was always going out of his way to do good and help people, but what is the use of any of that? He had such a tragic ending,” said Yao Mao, Zeng’s 31-year-old son-in-law.The final 46 days of the death row prisoner’s life were disturbing. His hand and leg cuffs were tied with a 40cm chain, as is done to violent inmates or drug abusers. He could not stand up straight or lie in bed properly, even to sleep. The cruel punishment was imposed after Zeng talked back to a guard, says his lawyer Wang Shaoguang, who last saw him on May 28.His torture ended when the 55-year-old western Hunan businessman was killed by firing squad on July 12, without his family being notified. A court in Changsha, Hunan’s provincial capital, claimed his next of kin could not be located, even though his children had petitioned in public for their father’s exoneration since 2009.The children’s mother was sentenced to 5½ years in prison and their sister to seven years after they were implicated for helping Zeng illegally raise 3.4 billion yuan (HK$4.3 billion) and defrauding tens of thousands of investors in Hunan’s western Jishou city.The family argues that Zeng never intended to defraud investors and say his assets more than covered his debts.“My father died [because] of false charges,” says Zeng Xian, his 25-year-old son. “His assets were bigger than his debt. Someone higher up manipulated the case.”“I would much rather be the one who is lying inside the coffin, using my young life to buy him time. I wish to pursue the truth even though one day I will perish away into dust. That way, I can be by his side,” he said.The secret and hasty execution grabbed national headlines and prompted an outcry. Criticism from legal experts, celebrities and citizens is mounting, dominating discussion on the mainland’s favourite social media platforms for nearly a week. While international media compared Zeng to Madoff, the US tycoon whose hedge fund was revealed to be a US$18 billion Ponzi scheme, the case highlighted injustice in the nation’s legal system and flaws in the regulation of private financing.A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organisation running the scheme.Legal experts say Zeng’s case represents a classic dilemma for those seeking financing, where banks’ reluctance to grant loans to non-state enterprises forces entrepreneurs to seek their own funding. Many question whether Zhou Qiang, president of the Supreme Court and a former Hunan party secretary, had a hand in deciding how the sentence was carried out. His court approved the execution last month, as required by law.Many facts in the case have only just begun to surface.
“The public doesn’t know about it. We need to present evidence,” Wang said. “People have been told only one side of the story by the government.”On the second day of Zeng’s three-day funeral, more than 600 people from Jishou who had loaned money to Zeng tried to pay tributes to the businessman, but they were barred from leaving Jishou by security police.At Zeng’s funeral, a banner proclaimed that his death sentence was ridiculous. Photo: Mimi Lau“I was not able to gain a full picture of my dad until after I visited his hometown,” said Zeng Xian of a visit to Jishou. “I have not heard a single bad word about my father.”During the funeral, Professor Feng Xingyuan, a researcher on rural development with the Chinese Academy of Social Sciences and an expert on private financing, rushed from Beijing to study the case. “Zeng Chengjie has died but he should not die in vain. We must try to establish rules from now on to protect private businessmen and their assets,” Feng said. Legal documents showed that the government and judiciary broke the law by convicting him, he said.“We must get to the bottom of the facts. Ultimately, we wish to push for abolishing the death penalty for all economic crimes.”The events that led to Zeng’s execution began in 2001 when the party secretary of Jishou, Xu Keqin , launched a “breakthrough policy” to stimulate economic development with private finance. The policy helped boost construction, with some 90 per cent of construction financing between 1998 and 2008 coming from private households, according to Wang.Zeng was a prominent and reputable businessman with 57 property developments under his belt when, in 2003 he won the bid for a large government project including a library, gymnasium, stadium, hotel and market. To fund it, Zeng set out to raise over 700 million yuan between 2004 and 2008, with his firm Sanguan offering investors a 20 per cent annual return.Seeking private funding can be illegal on the mainland in circumstances where investors cannot be repaid, for example, when a scheme organiser runs off with the cash. According to Wang, the Sanguan scheme was authorised and the money was solidly invested in legitimate government projects without dubious promotional tactics.The move was not only acknowledged, but also 100 per cent backed by the local government, which even stationed officers in Sanguan’s headquarters to monitor the process. All private financing agreements and contracts were notarised by the authorities, Wang said.In 2008, the private financing boom turned into a credit crisis after local leaders in Jishou were reshuffled. Incoming officials launched a crackdown on private financing and ordered cadres who had invested in the Sanguan scheme to withdraw their money, prompting panic and a run on the scheme.The local government ordered private fundraisers to halt interest payments and concentrate on repaying capital to creditors within three years. That year, 22 entrepreneurs and loan sharks were arrested and their assets confiscated by the Hunan provincial government.“Among the 22, Zeng was the No1 target … even though there were worse cases out there,” Wang said. “It’s because Zeng refused to follow the government policy as he insisted on paying back his creditors with both interest and capital, within one year. This infuriated the local government.”The court accused Zeng of raising 3.4 billion yuan, including interest and bonus payments owed. His assets were estimated to be worth nearly 2.4 billion yuan, but they were sold to Mintain, a company wholly owned by the Hunan Department of Finance, for less then 330 million yuan. They were then sold on, Wang says, to another company, Caixin, owned by the provincial government.“The most ridiculous thing of all is that his assets were sold three months after his arrest, even before his first court hearing. There was no legal paperwork - an outrageous violation of legal procedures and State Council regulations,” Wang said.
“The 3.4 billion yuan was calculated by unfair accounting procedures,” Wang said. “Of the so-called 3.4 billion yuan, Zeng had already repaid over 1.6 billion yuan in capital, 940 million yuan of interest and a further 120 million yuan of bonus money to his creditors and lending agents. In fact, he had only raised 710 million yuan in capital during that four years, but he invested 770 million on government projects by putting in an extra 58 million yuan of his own.”“Zeng’s assets were estimated to be 2.38 billion yuan in 2008 and over 4 billion yuan today. With the outstanding 710 million yuan in capital, his assets were 1.6 billion yuan over his debts. He was fully capable of paying off his debts if the government had not violently interfered.”A Changsha court refused to accept the argument and remained adamant that Zeng had defrauded his investors.“It lacks fundamental logic to give Zeng a death sentence by simply saying he refused to pay back his creditors, which caused private fund contributors the losses,” Wang said.Zeng’s execution has done little for the credibility of Zhou. When Zhou took control of the nation’s highest court in March, many held out hopes that the former Hunan party secretary might push the judiciary towards meaningful reform.“There should be justice. I won’t point fingers but when Zeng’s 2.4 billion yuan of property was confiscated and sold cheaply by the Hunan provincial government in 2009, Zhou Qiang was the governor,” Wang said.“When Zeng’s death sentence was handed down again in his second trial in 2012 by a high court in Hunan, Zhou was the provincial party secretary.“A few months after Zhou had taken his position as Supreme Court top judge, Zeng was executed. These are all facts and you can figure out the rest.”Critics compare Zeng’s case to the more lenient approach for former railways minister Liu Zhijun , given a two-year suspended death sentence for taking 64.6 million yuan in bribes. Such a sentence is usually commuted to life imprisonment.There have also been comparisons drawn with the case of Wu Ying , 31, a self-made billionaire accused of defrauding investors in a 770-million-yuan scheme in Zhejiang province. Wu was first sentenced to death in 2009 by an intermediate court in Zhejiang but she received unprecedented support from people across the nation early last year when the High Court in Zhejiang upheld the death sentence.Zeng Shan, daughter of Zeng Chengjie. Photo: Mimi LauThe uproar prompted former premier Wen Jiabao to step in. Last May, her death sentence was suspended for two years. Her family is still fighting to overturn the death sentence. “I wish I had fought as hard as Wu Ying’s father, to rally more media and public support. But I’m too useless,” said Zeng Shan , 24, Zeng’s youngest daughter.She began a five-day hunger strike in Beijing on Father’s Day last month and organised a lawyers’ conference to discuss her father’s case, but it proved too little, too late.Wu’s father, Wu Yongzheng , says civilians are powerless under the mainland’s legal system.“I believe [Zeng] was innocent. It’s obvious that someone wanted him dead. Their family should have petitioned harder and begun much earlier.”
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