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Lai Changxing: His case has cast a shadow over Canada-China relations for years (Lyle Stafford/Reuters/REUTERS)
Lai Changxing: His case has cast a shadow over Canada-China relations for years (Lyle Stafford/Reuters/REUTERS)

Lai's sentencing marks the end of China's Great Gatsby Add to ...

When a court in Xiamen sentenced Lai Changxing to life in prison for his role running a multibillion-dollar smuggling operation, it ended another chapter – surely among the last – in one of the most colourful capers to emerge from China's wild transformation to capitalism.

In a country where few profess to know the details of the Tiananmen Square massacre, nearly everyone knows Mr. Lai's name. He's the ultimate antihero, the poor kid from Fujian province who came to symbolize the excesses and corruption that have spoiled China's economic rise. Tell someone here that you’re Canadian, and you open yourself to questions about why Canada would shelter a man like Mr. Lai for the dozen years he was in Vancouver fighting extradition before he was finally sent back to China 10 months ago.

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The story of Lai Changxing resonates here because it is interwoven with that of modern China. He made it rich through his own enterprise, only to become mired in the payoffs and profiteering that so many Chinese detest. He was a rogue and a bootlegger, a Chinese Jay Gatsby, who is believed to have rubbed shoulders with some of the rising stars of Communist Party, which many believe helps explain the passion with which Beijing fought to have him extradited and jailed back on Chinese soil. (The party boss in Fujian at the height of Mr. Lai’s influence was Jia Qinglin, now a member of the all-powerful Standing Committee of the Politburo. The provincial governor was Xi Jinping, the man tipped to be China’s next president.)

The official Xinhua newswire reported late Thursday that the 53-year-old Mr. Lai had been convicted on charges of smuggling and bribery. The court found he had overseen a vast operation that illegally moved some $4.4-billion worth of cars, cigarettes, oil and other goods through the southern port city of Xiamen during the late 1990s. Mr. Lai was also found to have paid millions of dollars worth of bribes to a total of 64 officials between 1996 and 1999.

“This was a predicable, even foreordained result,” said Mr. Lai’s Canadian lawyer, David Matas. And it was. While there is now a 10-day period in which Mr. Lai can appeal, the verdict was hardly a surprise given that his guilt had long been stated as fact by state media in China. The only thing that spared him a death sentence appears to have been assurances the Chinese government gave to Canada before a Federal Court judge agreed to finally extradite him last July.

It’s a pact that many ordinary Chinese question; a large share of the population think Mr. Lai deserves to die.



But in Xiamen, “rich like Lai” is still an admiring way to describe someone. Before he was infamous in China and Canada, he was the local boy who made it big despite growing up poor during the Cultural Revolution, the child of a farming family who could only afford to send him to school for one year. “To the people of Fujian, he is a hero,” wrote one Chinese Internet user in response to news of Mr. Lai’s conviction. “He has done more to contribute to Fujian's development than [today’s leaders] you know it.”

Mr. Lai got his first stroke of good luck shortly after he turned 18. Chairman Mao died and his successor, Deng Xiaoping, started China lurching down the path from totalitarian socialism to today’s semi-market economy, a system that is at once heavily regulated and anarchic. Some would get rich first, Mr. Deng famously declared. Mr. Lai liked that idea very much.

He started his first business by convincing four friends to loan him $60 each, enough to buy the equipment needed to forge car parts. Every week, he bicycled the 80-kilometres between his hometown of Jinjiang and the big city of Xiamen, where he sold tire nuts and other bits he’d produced. He eventually earned enough to open a shoe factory. His empire had begun to grow.

It was only when he started importing televisions in 1990 that he started making enough money to get noticed. According to a biography of Mr. Lai by British journalist Oliver August, local officials began harassing his family, at one point beating up his sister in seeming retribution for his refusal to pay bribes. With his businesses forced to the brink of bankruptcy by a vindictive bureaucracy, Mr. Lai started over, deciding this time to play within the system – and bribing everyone who asked.

In 1994, he founded the Yuanhua Group, the company later alleged to be little more than a front for the smuggling empire he was building. He brought shiploads of contraband into Xiamen from as far away as Cyprus, dodging customs right under the nose (some say with the complicity of) the People’s Liberation Army Navy base in the city. Often, the trick was to declare that containers of cars, cigarettes or alcohol held plainer, and lower-taxed, items such as wood pulp. Other times, the labels on containers that arrived were swapped for those that had already cleared customs. Everyone was paid to look the other way.

Mr. Lai threw money around without hesitation, building the five-star Yunhua International Hotel (now a Sheraton Hotel) in downtown Xiamen, as well as an airport in Jinjiang. He bought a soccer club from away from the rival city of Foshan and moved it to Xiamen, and broke ground on an 88-storey skyscraper that would have been the biggest building in the city. He drove an armoured Mercedes that had belonged to former president Jiang Zemin, and hosted government officials in a seven-storey brothel he called the “Red Mansion.” In Xiamen, they called him The Emperor.

He acted the part. A diminutive man, barely five-feet tall, the hard features in his face he rounded out with success. When entertaining in Xiamen, he made it clear that money was no longer an object for this poor boy from the countryside. He wore designer suits and ordered Hennessy XO cognac, the drink of choice in the late 1990s for China's robber barons.

Mr. Lai’s good fortune started to run out in 1999, when hundreds of anti-corruption investigators from Beijing descended on Xiamen. They had been tipped off by a manager of one of Mr. Lai's companies who, heavily indebted to other Lai associates who had financed his gambling trips to Macau, tried to get out of it by bringing all his creditors down at once.

At first, Mr. Lai thought he could handle the investigators the same way he handled other government officials, but it soon became clear this wasn’t something he could fix by hosting a party in the Red Mansion. He got a warning call that summer from a senior police officer he had cultivated for years. The political winds had changed, he was told, and it was time to leave. Mr. Lai boarded a speedboat the same day and fled down the Chinese coast to Hong Kong (he had obtained a Hong Kong passport several years earlier). Three days later, he and his family were in Canada.

The 12 years he spent living in Vancouver were controversial in Canada, but top-of-the-newscast stuff in China, where propaganda authorities seemed to adore the story’s mix of China chasing a corrupt official while a Western government blocked the effort. As China repeatedly sought Mr. Lai’s extradition, the deputy mayor of Xiamen and its No. 2 police official were charged and convicted with taking bribes from Mr. Lai. Fourteen of his employees got the death sentence – and Premier Zhu Rongji said “if Lai Changxing were executed three times over, it would not be too much” – strengthening the argument by Mr. Lai’s lawyers that he would never get a fair trial in China.



Despite such rhetoric, Chinese government went to remarkable lengths to overcome the Canadian law preventing extradition to a country where a suspect is likely to face execution. At one point, former president Jiang Zemin made a personal intervention with then-prime minister Jean Chértien, vowing China would not seek the death penalty in Mr. Lai's case. (Mr. Lai’s lawyers in Canada highlighted while his brother and his accountant avoided death sentences for their roles in Yunhua, they both died in prison under mysterious circumstances.)

While Mr. Jiang’s guarantee appears to have been honoured, a subsequent promise to allow an “open trial” in practice only meant allowing Canadian diplomats to attend Mr. Lai’s court hearings. No foreign media was present Thursday when the verdict was handed down (the date was kept secret until shortly before the hearing, when police roadblocks were erected around the courthouse in Xiamen), and Mr. Lai’s statement to the court was not shown on Chinese newscasts.

“This is was not a judicial judgment... politics plus diplomacy equals today’s court sentence,” said Zhang Sizhi, one of China’s most prominent lawyers. “The most unpleasant thing about this case is the fact it was not open to the public. A closed trial means there was something that could not be shown.”



Television reports gave only a list of Mr. Lai’s crimes, read out over images of him being physically escorted before the judges by two uniformed police wearing white gloves. Mr. Lai was well attired for his sentencing, wearing a dark suit over a red shirt with a Mandarin collar. But as with Jay Gatsby, when the end came, his powerful friends were long gone.

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