- The Washington Times - Friday, September 7, 2001

SHENYANG, China A colorful crowd, two dozen strong, gathers before a closed office block in this northeast China city, the country's fifth largest and the former capital of Manchuria. Bright umbrellas and raincoats glisten in the late summer rain, but the mood is grim.
Each Friday they come in search of the money and dreams of a better future, now sunk without a trace behind the locked doors of the Huaxing Investment Co.
On July 27, nearly a thousand gathered to mark the third anniversary of the collapse of Huaxing's pyramid scheme that swallowed their life savings. Police broke up the demonstration and interrogated its leaders, but despite detentions, threats of imprisonment and a media ban, the Huaxing victims continue to speak out.
They claim high-ranking Communist Party cadres were rewarded for supporting Huaxing and given refunds when it went bankrupt. A three-year investigation into the $157 million scam has yielded little but heartache for most of its 30,000 investors, driving many to hopeless destitution and some to suicide.

One case among many
The story has been repeated in cities across China as little people unschooled in the mysteries of a market economy, but mindful of late paramount leader Deng Xiaoping's maxim "getting rich is glorious" entrusted their life savings to well-connected insiders. Sometimes the money is stolen outright, sometimes it is "invested" in propping up money-losing government enterprises, and often it goes to grease palms and buy protection for the perpetrators.
"My husband might have been saved if I hadn't put our money into Huaxing," said Wang Zeyuan, her tears mingling with the rain. "When he suffered a stroke in 1995, I desperately needed money," recalled Mrs. Wang, 44, laid off by a state-owned plastics factory in 1992.
But their life savings of $12,000, including contributions from her brother and sister, were locked into the Huaxing fund. Mrs. Wang's husband died before she could pay for his medical treatment.
"How could I know Boss Su is a big swindler," she said of Huaxing founder Su Yingqi, a smooth-talking former policeman and ex-convict. "I knew that we laid-off workers have no financial security and little means to make money," she went on.

Investing for security
Putting their money to work seemed a good way to get some security. For almost 15 years, Huaxing China Prospers seemed an excellent bet for people who craved stability in a fast-changing society, yet sought better returns than offered by the state-run banking system.
China's transition to market economics has been painful in centers of the planned economy like heavily industrial Liaoning province, littered with the corpses of state-owned enterprises that once provided jobs and welfare for life.
Investors in more sophisticated markets might have doubted Su Yingqi's promise of interest rates four times as high as the banks were paying, but many Chinese remain naive about the downside of capitalism, and vulnerable to an inadequate regulatory environment and legal system that tilts to economic insiders and high-ranking Communist Party cadres.

Province backed firm
There was little reason for people to doubt Huaxing's government-issued AAA credit rating, or its glossy brochure "Footprints of a Pioneer," distributed at local government offices.
Mr. Su fled to exile in 1998, reportedly through the Siberian border crossing of Heihe, after having smoothed his exit by donating 10 vehicles to the Heihe City police department.
In his company literature, Boss Su often posed in police uniform, or with friends in high places, notably his godmother, Chen Suzhi, a Liaoning vice governor. Contacts tipped him off before he could be arrested, but in the past six months at least 100 senior city officials have fallen into the prosecutor's net.

Ex-mayor is on trial
As the protesters stood in the rain six weeks ago on the anniversary of the Huaxing collapse, swapping information and small comforts, former Shenyang Mayor Mu Suixin was standing trial for corruption in Liaoning province's No. 2 city, Dalian.
The black hair of this one-time high-flier has turned white, state media report with satisfaction, as China finally gets tough on the graft corroding the country's "rust belt." But hopes raised by the arrests were quickly dashed.
"At first, we thought we would have a better chance after Mu was disgraced, since he was in charge of the investigation team into the Huaxing case," said Zhao Zhengbao, a retired engineer.
"And the new city leaders talked about looking back and learning lessons from the past, and increasing democratic supervision. But unfortunately, everything remains the same the same medicine with a different name."

$1 million in bribes
While the ex-mayor could face execution for pocketing bribes totaling almost $1 million, the suffering continues for victims of the corruption that flourished under his rule.
"It was Huaxing that destroyed my husband and our family," said Yuan Meiling, 39, who lost the $12,000 her family had saved from running a grocery store.
"After the collapse, my husband, Li Futian, a laid-off worker, became so depressed that he took up drinking. Now, he's become so ill he has lost the ability to work or talk. In fact, he's like a vegetable. I had to give up work to look after him, and now we live off other people's charity," said Mrs. Yuan.

Local authorities blamed
Victims of the Huaxing swindle are adamant that the authorities should accept responsibility. "It was the government that held the donkey," said retired cadre Zhou Wei, using a slang term for go-between.
"Without government support, the Huaxing investment scheme would never have become that big or lasted that long. The people's government should serve its people, not cheat its people alongside the gangsters."
No one can doubt Mr. Zhou's own determination to serve the people and expose corrupt officials. A lifelong Communist Party member, his second, Lone Ranger-style career began in retirement, when he formed a foot-massage club with other elderly cadres.

Retirees aired scandals
"As we massaged our feet, we talked about politics and the corruption scandals we had heard about," said Mr. Zhou. "Then we decided that talking was not enough. We needed to take action."
Between 1994 and 1999, Mr. Zhou infuriated Shenyang authorities by leading the disadvantaged and dispossessed to City Hall in hundreds of protests and petition campaigns.
City officials stripped him of party membership for his activism, and in May 1999 after Mr. Zhou had reported the Huaxing scandal to Beijing sentenced him to two years in a labor camp for illegally organizing the masses and stirring up trouble.
Friends in the party lobbied for Mr. Zhou's release, but it only came this April two weeks before he finished serving the full sentence.

Citizen's right and duty
"All I did was to report on bad people and bad things, which is a citizen's right and responsibility," said the energetic 70-year-old.
"There was nothing wrong with that. I was put in jail by corrupt officials, and I'll continue to fight them."
For helping to bring down Mu Suixin, Mr. Zhou deserves "a hero's treatment," said a Chinese newspaper reporter who secretly interviewed him inside the labor camp. "He was the first person who dared to point a finger at Mu, thereby attracting the central government's attention."
But the reporter's paper dared not print his article on Mr. Zhou, nor did 50 other publications he contacted. Only in October last year did someone post the story on the Internet, bringing it into the public domain.

'Case not yet closed'
"However, to rehabilitate [Mr. Zhou] would require some officials still in power to admit they were wrong," the reporter said.
Despite her close association with Su Yingqi, Vice Gov. Chen survived the scandal and remains a delegate to the National People's Congress, China's parliament. None of the Huaxing victims expect the investigative team to right their wrongs.
"The case is not yet closed," said a member of the team who identified himself only as Mr. Wang. "We are working as hard as possible to get a good price for the four Huaxing buildings in Shenyang, maybe [$5 million to $6 million,] reduce the losses for the people, and try to catch Su Yingqi" who is rumored to be enjoying a comfortable exile in a Pacific island nation.

The victims gather often
The battle continues. Every Friday morning outside the Huaxing building, and each Monday outside Shenyang's City Hall, from two dozen to 100 victims gather to press their claims.
Casualties continue to mount, including suicides and tragedies like the fatal accident that befell Chen Xianglan, 66, fatally run over by a train when victims of the Huaxing bankruptcy tried to blockade Shenyang station.
"I feel so sad that the only outsider who cares about our case is Uncle Zhou," said a representative from a District People's Congress, who has also been expelled from the party as a troublemaker. "It says a lot about how corrupt our city is."


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