The rise and fall of China's most wanted man

published 11 July 2007

A founding member of China's new class of oligarchs, Lai Changxing was known as one of the country's richest and most flamboyant tycoons in the 1990s. He was also among its most corrupt, says Oliver August in The Sunday Times. A master smuggler, China's "most wanted" man ran a criminal empire worth $10bn and "took 10,000 officials with him" when he fell. Some were executed; hundreds imprisoned. Lai, 49, fled to Canada, where he has spent the past eight years fighting extradition. Who can blame him? "He should be killed three times over, and even that wouldn't be enough," said the Chinese prime minister in 1999.

Lai had a Capone-like grip on the wealthy port of Xiamen, says the South China Morning Post. He was illiterate and vulgar, yet "succeeded in subverting the government of an entire city". At the height of his career, he was China's main private trader of cigarettes and cars, and imported a sixth of its oil. Lai had everyone in his pocket, from police chiefs to Beijing politicians. "The key was bribery," says August, "and the key to bribery was sex." He built his own brothel, naming it "the Red Mansion" after a Qing dynasty tale about a wealthy family and its courtesans. His prostitutes, Miss Temporaries', had to have a high school diploma unlike him. The seven-storey mansion housed Lai's office, a five-star restaurant, saunas and karaoke rooms. He threw cash around like confetti: showering $100 notes on taxi drivers, bailing out his clients' children, and bribing successful businesswomen to become the mistresses of government ministers. All agreed he was the most genial of hosts, little suspecting he had installed cameras in all the bedrooms for blackmail purposes.

Central to Lai's defence against charges of bribery, tax evasion and smuggling is that he was just an ordinary businessman, operating in an environment over which he had no control. "Ninety-eight out of 100 businessmen did the same things," he says. However, few came quite so far so fast. Born one of eight siblings into a peasant family in the Fujian province, Lai knew about starvation at a young age and received almost no formal education. Soon after the ban on private business was lifted in 1978, he set up a car parts firm, before expanding into umbrellas, textiles and print. Lai quickly saw that profits earned by ordinary manufacturers were nothing compared to those who had connections'. By the mid-1990s, his Yuan Hua group had a finger in almost every pie, says August. He built a movie studio and transported an entire football team from Canton to his home town. Every third tanker that arrived in Xiamen was stuffed with his goods. "He had billions of dollars and didn't know what to do with them."

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Ironically, it was Lai's uncharacteristic refusal to bribe an accomplice in 1999 that sealed his fate. Fearful of his other creditors, to whom he owed gambling debts, the official decided to turn them all in. Within weeks, 600 investigators, led by China's legendary prosecutor Liu Liying and her team of untouchables', had descended on the Red Mansion. "They found detailed lists of hundreds of officials to whom Lai had allegedly paid bribes, along with records of who had slept with whom," says the South China Morning Post. "But the company bank accounts were empty." Acting on a tip-off, Lai had moved the money to Hong Kong, where his wife and children were waiting. He followed them in a speed-boat before flying to Canada.

Should Lai Changxing be sent back to China?

The Chinese spent over a year fruitlessly searching for Lai, who settled in a spacious villa in an upmarket Vancouver suburb and continued to indulge his love of casinos. The Canadian authorities suspected him of money-laundering and placed him under house arrest in 2000. But, having agreed in principle to deport him to China (upon which Lai crashed his forehead into metal bars hoping to injure himself and delay his return), the Canadians have been dragging their feet. A prerequisite of the deal is China's promise not to execute Lai if he's convicted, says The Toronto Star. "Lai and his lawyers are unconvinced", pointing out that his brother and accountant died mysteriously while in prison.

Parts of the Chinese public have come to idolise Lai, viewing him as "a latter-day Robin Hood", says The Sunday Times. But the authorities are desperate to nail him. Lai blazed the trail for an exodus of Chinese financial fugitives to Canada; he is "the kingpin" of some 4,000 fugitives who have fled abroad to escape accusations of bribery and corruption. "His case has become a matter of face for the Chinese government," says the South China Morning Post. "It is the largest corruption scandal under communist rule a showcase to illustrate Beijing's toughened stance against corruption and terrorise others thinking of doing the same." Relations between Beijing and Canada are consequently increasingly sour. Yet Lai is "a changed man" who cuts a somewhat pathetic figure in suburban Vancouver, reports Oliver August. "Have a cigarette," he says. "My company made these, I designed the logo myself. We sold millions. I have only three left now."