How China's Massive Corruption Crackdown Snares Entrepreneurs Across The Country
LULIANG, China — The meteoric rise of aluminum executive Zhang Zhixiong transformed his rural Chinese hamlet into a lucrative mining community. But his fall from grace was even more dramatic.
In March 2018, he and 10 others were sentenced to harsh prison terms for supposedly forming a criminal organization and illegal mining, among other crimes. Zhang, chairman of Juxin Mining Co., was accused of being a crime boss and received a 25-year prison sentence. He denies the charges.
Chinese state media branded him "an evil leader disguised in red clothes" — a kingpin pretending to be an upright communist citizen — and a high-profile target in a sweeping anti-corruption campaign.
President Xi Jinping launched the campaign in 2018 with the slogan "Saohei chu'e," meaning "sweep away black and eliminate evil." After three years, the initiative concluded last year. China's legislature, which is convening this week, will likely hail the campaign as a smashing success: nearly 40,000 supposed criminal cells and corrupt companies busted, and more than 50,000 Communist Party and government officials punished for abetting them, according to official statistics. Now Beijing is signaling it will continue elements of the campaign.
Successive Chinese leaders have long fought against corruption. And, with the second-biggest economy, China does have its share of it, though the country's ranking improved in the latest Corruption Perceptions Index from watchdog Transparency International.
But in many cases, legal experts say, the latest campaign has served another function: enabling officials across China to lock away entrepreneurs and other citizens whom they perceive to have gained too much wealth or influence independent of the party.
The families of some of those imprisoned — including Zhang's — say the campaign netted mostly innocent people charged with crimes that they either did not commit or were exaggerated to fulfill prosecution quotas and a political mandate.
"This campaign is going after organized obstructions to party rule from alternative power bases," says Jeremy Daum, a legal scholar at Yale University's Paul Tsai China Center who reviewed several cases with NPR. "This campaign is trying to root out the people who aren't faithfully implementing the direction of the party or are obstructing its implementation at the lowest levels."
Zhang Zhixiong's troubles began with a fistfight in his hometown of Gaojiagou village, in northern China's Shanxi province.
The price of bauxite, used to make aluminum, was rising and so were Juxin Mining's fortunes. Prosperous, Zhang became obsessed with improving the village, according to his sister, Zhang Zhaohui.
He set out to widen Gaojiagou's main road, shore up a canal and build new apartment buildings as part of a Communist Party "beautiful countryside" program, according to a 2015 official notice.
Except the canal ran through land on which another entrepreneur, Bai Sisi, hoped to build a cement mixing plant. In August 2014, men allied to the two entrepreneurs — mostly from Gaojiagou village — traded a few blows.
"We went to watch the excitement. Village life is otherwise boring," says Zhang Ruqing, who worked at a nearby gas station at the time. (Many residents of the area have the family name Zhang and are loosely related through generations of marriage, a common occurrence in China's countryside.)
That December, Zhang Zhixiong, his three brothers and a Juxin Mining manager were detained for "provoking troubles" stemming from his fight with Bai — a common criminal charge often used to detain activists, writers and other political irritants.
"Our lawyers, and the courts, all told us they would be out soon," says Zhang Xiaohui, the sister. "None of us realized at the time how big the case would become."
In 2016, China's state news agency revealed Zhang Zhixiong and his associates had been charged with an additional crime of "gang-related activities." Suddenly, Zhang was facing decades behind bars. Even then, lawyers were hopeful they could overturn the charge, according to one person involved with the case. They requested anonymity because lawyers can be disbarred for speaking to reporters about sensitive cases.
Then, in January 2018, China's cabinet-like State Council formally announced the start of the nationwide saohei campaign.
Within days of that announcement, Zhang Zhixiong and 24 of his family members, employees of Juxin Mining, and local officials who had allegedly shielded him were brought to trial and sentenced, after languishing in detention for more than two years. When Zhang's legal team appealed, the court gave them only three days to prepare, and told them ahead of time that his sentence would be upheld, according to a lawyer on the case.
Infuriated, Zhang's legal team handed in an appeals request printed with only one word: "injustice."
Juxin Mining case documents presented by both the prosecution and defense show significant factual discrepancies, according to a review by NPR and experts in Chinese law.
Prosecutors relied on the 2014 fistfight and other altercations that had already been litigated in civil court years ago, and wrapped those cases into saohei criminal charges. That was questionable, says Chi Yin, a comparative law researcher at New York University's U.S.-Asia Law Institute and former judge in China.
"Like many campaigns in the Chinese Communist Party's history, this [one] is ad hoc in nature and not a systemic legal reform," says Yin, who reviewed the Juxin Mining files and another case with NPR. "It's not a way to administer criminal justice in accordance with the spirit of rule of law."
The illegal mining charge cited conflicting figures, doubling the size of unapproved tunneling. The prosecution also appeared to portray Zhang's village improvements as unlawful personal projects.
"Sweep away the black is a political campaign, so the cases are not decided according to the evidence," says Li Jinxing, a defense attorney who has worked on Zhang Zhixiong's case and two dozen other "sweep away black" cases. "Cases like these are [decided] so they fulfill the campaign's quotas."
In order to bolster the prosecution's case that Zhang ran a criminal syndicate, nearly a dozen low-level Juxin Mining employees were also tried as gang members and sentenced for a variety of charges that legal experts consider thinly supported.
For example, in 2014, many Gaojiagou villagers rallied to help vacate furniture from a soon-to-be demolished restaurant. Three years later, authorities decried the act as "illegal demolition" and arrested only six people — all relatives of Zhang's.
Three of those men would also eventually be sentenced for taking part in the fight between the allies of the mining and cement entrepreneurs. The gas station worker, Zhang Ruqing, served 4 1/2 years in jail but says he merely was a witness to the brawl.
Zhang Shuangshan, a former Juxin Mining security guard, was sentenced to 5 1/2 years in prison for gang activities, "picking quarrels and provoking trouble" — because he and another distant relative of Zhixiong had "severely affected villagers' physical and mental health" by dumping garbage near their houses, according to the court sentencing document. Yet the same villagers signed an affidavit seen by NPR that refuted the account.
While he was detained in December 2014, Zhang Shuangshan says, two police officers repeatedly kicked his torso and head because he refused to confess that Zhang Zhixiong had ordered him and other workers to demolish village houses and rough up opponents. "They did not record anything I told them, only what they wanted to write, and when you did not say what they wanted, they beat you," he says. "Strangely the police never asked about my alleged crimes [dumping garbage]. They only asked about Zhang Zhixiong."
Shanxi's government did not respond to NPR's request for comment.
Zhang Zhixiong was also accused of bribing two low-level village party officials. A key provision of the "sweep away black" campaign is that the guilty curry favors and protection from government officials.
One of the two officials was Zhang Junhai, who had just been named interim party secretary in a nearby village. He was accused of fighting on behalf of Zhang Zhixiong when the brawl broke out over the demolition of the cement plant in August 2014.
"I was not even at the canal when the fight happened; I was at a friend's wedding," says Zhang Junhai, a former soldier and Communist Party member who served 3 1/2 years in prison for allegedly partaking in the fight, and therefore belonging to a gang.
Big stick for regional officials
Modern Chinese history is punctuated by multiple rounds of political purges. The recent "sweep away black" campaign draws inspiration from another anti-graft initiative launched in the early 2000s by now-disgraced politician Bo Xilai.
After his highly publicized campaign against the mafia, Bo, the former party secretary of the powerful Chongqing municipality, was himself sentenced to life in prison in 2013 for a litany of crimes including embezzlement and abuse of power. Political analysts say that paved the way for Xi Jinping to become the head of the Communist Party. But Bo's ideas remain influential.
Under Xi's "sweep away black" campaign, province-level officials acquired wide discretion to prosecute local crimes with state backing.
"That decentralization then creates the conditions for officials to use the campaign as a pretext for arresting individuals who may not have anything to do with thuggery," says Yuen Yuen Ang, a political science professor at the University of Michigan who has written a book about corruption in China.
In Shanghai, for example, those who establish nongovernmental organizations can be prosecuted for conducting gang activities.
In Shaanxi province, authorities arrested an environmental activist, Li Sixia, in 2018 for being an "evil force"; she had repeatedly reported two local quarries for damaging village roads, illegal mining and pollution. Her verdict ultimately was overturned.
The region of Xinjiang, where authorities have detained hundreds of thousands of people belonging to historically Muslim ethnic minorities, decreed that religious or ethnic lectures can be considered organized crime. Tibet considers those who support the Dalai Lama, or liaise with hostile foreign entities, to be engaging in an "underworld" activity. Religious schools and groups across northwestern and central China came under pressure to disband from the anti-corruption campaign, NPR found in 2019.
The saohei campaign has also overlapped with an unusual number of arrests of wealthy businessmen. Last year, China sentenced to life in prison a prominent real estate developer and political critic. Xi reportedly personally ordered the regulatory shake-up against Jack Ma, China's best-known entrepreneur. And a utopian agriculture magnate, Sun Dawu, is in detention and his businesses were put under state management after feuding with a state firm.
"Saohei is a very capacious, very broad category that is also a little bit ambiguous and maybe even strategically ambiguous," says Ryan Mitchell, an assistant law professor at the Chinese University of Hong Kong.
Officials are also encouraging citizens to report each other for potential saohei offenses. By October 2020, a public hotline used to report potential organized crime had received more than 15,000 anonymous tips. Several hundred tips, almost 4%, led to investigations, according to authorities. "Reporting someone only takes three minutes," the Communist Party paper People's Daily advertised.
From loan to lockup
The decentralized model also could give local political factions a way to avenge personal disputes through "sweep away black" prosecutions.
One such case appears to be that of Liu Lijun, a successful real estate magnate in the northern city of Yushu, in Jilin province — so successful that in 2015, Liu decided to lend 28 million yuan ($4.28 million) to the chairman of an agricultural company, Zhang Ping.
Zhang put down a Yushu property as collateral for the loan — but the building, unbeknownst to Liu, was already collateral in 13 separate lawsuits on debts Zhang owed. Liu never got his money back. The building is currently being auctioned on Taobao, an e-commerce site, as part of Zhang's foreclosure proceedings.
In an effort to reclaim his sizable loan, Liu and his family paid an unannounced visit to Zhang's company, Pingan Seed Co., in December 2016 to confront him, and hung signs asking for their money.
Zhang didn't take kindly to the prodding.
"Zhang Ping's people told us that if we kept asking for our money, Zhang had friends in the police force and our entire family would be killed," says a relative of Liu who asked to remain anonymous because they are routinely threatened and surveilled by local law enforcement and face legal consequences for speaking to a foreign reporter. Soon after these threats, Zhang Ping reported Liu to police, alleging he was running a criminal gang and carrying out violent debt collection; Liu was arrested shortly after.
Zhang declined to comment when reached by phone. Jilin's government did not respond to a request for comment.
In October 2020, Liu was sentenced to 25 years in prison, in part for allegedly leading a gang. But he was also convicted of murder. That was a significant twist: Liu had previously testified as a witness in the stabbing he is now accused of committing — one for which another man had confessed to the killing and served 25 years in prison. The murder had occurred in 1993, well beyond China's 20-year statute of limitations.
Liu's family says the charges are fabricated, and that the murder charge is based on tampered evidence and forced confessions.
In phone recordings obtained by NPR, Yushu law enforcement can be heard pressuring the originally convicted killer, An Hongchen, to change his murder confession and blame Liu instead.
"You want me to lie, but how can I lie? You want me to say I saw [Liu Lijun] do it and you ask what my demands are in return [for changing my confession], but how can I have demands when I did not see that happen?" says a frustrated An on the call.
NPR could not independently verify the recordings, but their contents appear to be damning.
The Liu family says the judge ruled that the audio could not be played in court, because An was considered an unreliable witness. Chi Yin, the NYU researcher and former judge, says the audio should have been allowed and An should have taken the stand: "This would have been a perfect moment to explore the question [of An's credibility] through cross examination," Yin says.
Families of those convicted in the anti-corruption drive harbor some hope as some provinces begin to push back against overly harsh sentences or even overturn verdicts meted out during the campaign.
Several law enforcement officials were fired last year in Inner Mongolia, and a prosecutor remains in detention for "violations of discipline," including for allegedly demanding bribes to lessen corruption charges. The defendant, Wang Yongming, is set to have a new trial this year.
However, Wang's relatives say they and their legal team continue to be obstructed from mounting a robust defense. "The prosecution is rushing through their new investigation because they are eager to notch up another victory for their end of year reports," says one family member who asked to remain anonymous as they are under strict police surveillance during preparations for the new trial.
The Communist Party has ousted several top police chiefs and state security officials while placing Shanghai's public security head under investigation. The shake-up heralds a new phase in Xi's anti-corruption crackdown, this time targeting law enforcement and justice organs.
Meanwhile, a proposed law would formalize aspects of the saohei campaign and would give the state extra power to prosecute organized crime.
In December, China's central government gave orders suggesting the crackdown could carry on indefinitely: "Increase society's sense of safety ... and promote the normalization of 'sweep away black.'"
Amy Cheng contributed research from Shanxi province and Beijing.
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