Topic: AMHash1: Cost-Effective Mining Contract - page 28. (Read 304259 times)

Wrong, i don't believe him, his strategy is just naive...

To start with:

China just executed real estate developer Zeng Chengjie.

About 4,000 people are executed annually in the country, according to human rights organization Dui Hua. And a number of those executed are white collar criminals.

Click here to jump straight to the white collar criminals >

Those who have been executed or who are sitting on death row include small business owners, political figures, and CEOs of large companies.  They have been handed death sentences after being found guilty of fraud, corruption, or illegal fund raising.

Many protest the death sentence for such crimes because the definition of illegal fund raising, for example, is very close to private lending, a practice that is crucial for small and medium enterprises. And this has become increasingly controversial because of the role local party officials play in cases of illegal fund raising and fraud, according to Tea Leaf Nation.

China's legal system is widely criticized because those with political clout are said to get off with lighter sentences.

What follows are some of the most notorious cases in which white collar criminals were given a death sentence and in some cases, executed. Some were given a two-year reprieve i.e. if they committed no more crimes for two years and were on their best behavior their sentence would be amended to life in prison.

Note: Figures on the death penalty are a state secret. The number of executions have declined since 2007 because of a reform that required death penalties to be reviewed by the Supreme People's Court (SPC). Lucas Kawa contributed to an earlier version of this report.


Zeng Chengjie, executed
Zeng Chengjie, executed
Weibo via Tea Leaf Nation
Crime: Illegal fund raising and fraud

Job title: Real estate developer in Hunan

In 2011, Zeng Chengjie was convicted of illegal fund raising 3.45 billion yuan, and defrauding 57,000 investors. Zeng's daughter said that local Chinese officials withdrew investments last minute causing panic among local investors.

Source: BBC

Luo Yaping, executed
Luo Yaping, executed
CCTV 13 via Shanghaiist
Crime: Corruption

Job title: Official in urban planning and land use department

Luo Yaping called the "Land Ma'am" was accused of embezzling 32.39 million yuan ($5.14 million) of public funds while she was working in Fushin city in the urban planning and land use department.

Luo was executed in November 2011.

Source: Shanghaiist

Chen Meng, death with a two-year reprieve
Chen Meng, death with a two-year reprieve
Wikimedia Commons
Crime: Offering kickbacks to project managers for bribes

Job title: Deputy Head of Songjuang District government

Chen was found guilty of taking bribes worth over 15 million yuan. The Shanghai No. 2 Intermediate People's Court sentenced him to death with a two-year reprieve.

Source: Xinhua via Hands Off Cain

Song Wendai, death sentence
Song Wendai, death sentence
Screenshot via Shenzhen Daily
Crime: Grafting and embezzling public properties and funds

Job title: Former CEO of Qiankun Gold and Silver Refinery Co Ltd

Song Wendai was sentenced to death for illegally obtaining shares of the company and embezzling 87 million yuan ($13.87 million) in public funds and assets including gold and silver.

Source: Shanghai Daily / Shenzhen Daily

Lin Haiyan, death sentence
Lin Haiyan, death sentence
Reuters
Crime: Illegal fund raising and fraud

Job title: Owner of investment company

Lin Haiyan raised 640 million yuan (approx $100 million) from investors, mostly friends, co-workers, and family. But she failed to recover about $70 million. The Wenzhou court found that Lin told investors she was directing dunes into IPOs and bank deposits but was using them to speculate on futures and stocks.

Source: Wall Street Journal

Zhang Yujun and Geng Jinping, executed
Zhang Yujun and Geng Jinping, executed
http://www.youtube.com/watch?v=SUxOSsQHVnQ
Crime: Selling over three million pounds combined in contaminated milk from 2007-2008

Job title: Dairy producers

On January 22, 2009, Chinese courts sentenced these two men to death for sales of tainted milk which killed at least six children and caused ailments for over 300,000. Melamine, an industrial content, was added to the milk to give the illusion of higher protein content. The two businessmen were executed on November 22 of the same year.

Source: The New York Times

Wu Ying, death with a two-year reprieve
Wu Ying, death with a two-year reprieve
NTDTV via YouTube
Crime: Fraud and raising money outside the banking system

Job title: N/A

Wu Ying aka 'Rich Sister' was sentenced to death in December 2009 by the the Jinhua Intermediate People’s Court in Zhejiang for defrauding investors of about $60.2 million.

But netizens rallied in support for Wu saying her punishment was too harsh and that defendants with political connections got away with lenient sentence. The Supreme People's Court (SPC) overturned the death sentence in April this year giving her a two-year reprieve.

Source: The New York Times

Du Yimin, executed
Du Yimin, executed
Courtesy of Rindge Leaphart
Crime: Fraud and illegal fund raising

Job title: Beauty parlor owner

Du Yimin was convicted of illegally raising 700 million yuan ($103 million). She is said to have promised investors high returns but instead used them to buy apartments, cars and other luxury goods for herself.

She was sentenced to death by an intermediate court in March 2008, and was executed in August 2009.

Source: Xinhua

Si Chaxian, executed
Si Chaxian, executed
China Photos/Getty Images
Crime: Fraud and illegal fund raising

Job title: N/A

Si Chaxian was found guilty of raising $24 million from 300 people and promising high returns. Si was executed in August 2009 on the same day as Du Yimin.

The SPC said that both had "seriously damaged the country's financial regulatory order and social stability."

Source: BBC

Wang Caiping, death sentence
Wang Caiping, death sentence
AP Images
Crime: Fraud

Job title: N/A

30-year old Wang Caiping was sentenced to death by a court in Wenzhou in April 2012. Her brother Wang Guanglin who also used the money to speculate was last reported missing.

She was found guilty of cheating investors of 100.11 million yuan ($16 million). After promising to use the funds to invest in property she used it to trade futures and gold.

Source: Reuters via The Huffington Post

Zheng Xiaoyu, executed
Zheng Xiaoyu, executed
YouTube via ChinaForbiddenNews
Crime: Accepting bribes in exchange for granting approval for hundreds of medicines

Job title: Head of Food and Drug Administration

Chinese authorities claim Zheng received $850,000 in bribes for which he approved 137 drugs, including an antibiotic believed to have killed ten people. He was sentenced to death on May 29, 2007.

Zheng’s deputy, Cao Wenzhuang, received a death sentence for his role in the crime, which was reduced to a two-year reprieve. Zheng was executed on July 10, 2007.

Source: The New York Times
 

Wang Yang, death sentence
Wang Yang, death sentence
(Photo by China Photos/Getty Images)
Crime: Fraudulently raising funds, loan fraud, and escape from detention

Job title: N/A

Wang Yang was sentenced to death by The Xinxiang City Intermediate People’s Court in 2003. He was accused of raising about 253 million yuan ($37 million) by promising high interest rates and then using the funds for his personal expenses.

Source: Amnesty International

Tang Chengqi and Zhang Xiaohua, death with a two-year reprieve
Tang Chengqi and Zhang Xiaohua, death with a two-year reprieve
Xinhua
Crime: Accepting bribes in exchange for government contracts

Job titles: Party Secretary of Nanchang County and Hufang Town, respectively

These two men received over 60 million yuan from real estate developers looking to score government contracts. The Jiangxi Provincial Higher People's Court sentenced each man to death with a two-year reprieve.

Source: Shanghai Daily via Hands Off Cain

Song Chenguang, death with a two-year reprieve
Song Chenguang, death with a two-year reprieve
CNS
Crime: Trading bribes for business favors

Job title: Vice Chairman of the Jiangxi Provincial Committee of the Chinese People's Political Consultative Conference

Song offered favors to 18 companies or individuals in exchange for over 12 million yuan. The Intermediate People’s Court sentenced him to death with a two-year reprieve on April 27, 2012.

Source: Xinhua via Hands Off Cain

Wang Jiping, death with a two-year reprieve
Wang Jiping, death with a two-year reprieve
China Photos/Getty Images
Crime: Accepting bribes for government contracts and embezzlement of funds

Job title: Chief of the Beijing Local Taxation Bureau

The No.1 Intermediate People's Court sentenced Wang Jiping to death with a two-year reprieve. Wang accepted over 4 million yuan in bribes and embezzled another 10 million between 2002 and 2009. 

Source: IANS via Hands Off Cain

Ying Guoquan, death with a two-year reprieve
Ying Guoquan, death with a two-year reprieve
China Daily
Crime: Graft, embezzlement, accepting bribes, and illegal distribution of State assets

Job title: Chairman of the Wenzhou Cailanzi Group

Ying defrauded the government of 12 million yuan, which he gave to senior executives. He was also found guilty in a massive grant case of over 370 million yuan. The Wenzhou Intermediate People's Court sentenced Ying to death with a two-year reprieve on May 22, 2012.

Source: China Daily via Hands Off Cain

Wu Shengyou, death sentence
Wu Shengyou, death sentence
Flickr - Sharon Drummond
Crime: Producing counterfeit currency

Job title: N/A

Wu was the ringleader of a group that produced 195 million counterfeit yuan, of which he had already distributed 128 million. He was sentenced to death on June 14, 2012, and plans to appeal.

Source: Associated Press via Hands Off Cain

Wang Xianmin, death with a two-year reprieve
Wang Xianmin, death with a two-year reprieve
China.org.cn
Crime: Accepting bribes

Job title: Party Leader in Dangchang County

The Higher People's Court of China's Gansu Province upheld Wang’s death sentence with a two-year reprieve. The Intermediate People’s Court of Baiyin originally sentenced him on April 6, 2011 for accepting approximately $2.45 million (US) in bribes while serving as a party leader.

Source: UPI via Hands Off Cain

Zheng Ziansheng, death with a two-year reprieve
Zheng Ziansheng, death with a two-year reprieve
AP Images
Crime: Embezzlement and accepting bribes

Job title: Head of the Mingzhen Management Committee

Zheng was found guilty of embezzling over 100 million yuan intended for relocation compensation and accepting bribes totaling over 20 million yuan in exchange for improperly granting land use rights. He was given a two-year stay of execution and stripped of his assets on July 26, 2012.

Source: Xinhua via Hands Off Cain

Wang Zhendong, executed
Wang Zhendong, executed
Flickr/Marufish
Crime: Fraud

Job title: Owner of business reportedly making wine and medicines from ants

Wang Zhendong found guilty of defrauding investors of $416 million in an ant-breeding scheme was executed in October 2008 in China's Liaoning Province. He had reportedly promised investors returns of 60%. "Ants are used in some traditional Chinese medicinal remedies, which can fetch a high price. Wang sold the kits, which cost $25, for $1,300, the local news media reported earlier," wrote the New York Times.

Source: The New York Times



Read more: http://www.businessinsider.com/chinese-white-collar-criminals-death-sentence-2013-7?op=1#ixzz3TzQDjywj


And if this not convincing enough read this:


Fraud and white-collar crime:
a Chinese perspective
Richard G. Brody and Robert Luo
Anderson School of Management, University of New Mexico, Albuquerque,
New Mexico, USA
Abstract
Purpose – This paper sets out to discuss white-collar crime and fraud in China and to draw
implications for Western businesses wishing to enter the Chinese market.
Design/methodology/approach – The paper provides examples of recent frauds committed in
China and also provides a brief review of the literature. It traces the development of China’s economy,
describing China’s modern-day economy, and also looks at cultural issues and differences between
Western and Chinese attitudes.
Findings – Western businesses planning to enter the Chinese market need to do their due diligence
before committing resources. What works in Western society may not work in another culture, like
China’s. However, gaining an understanding of the culture and general way of life will go a long way
towards laying the groundwork for success.
Research limitations/implications – Additional focus should be placed on examining how
cultural differences affect judgments and behaviors.
Originality/value – From a practical standpoint, the paper provides insights into possible areas of
disagreement between employees from different cultures that can result from their divergent opinions
about individuals’ responsibility for fraudulent acts.
Keywords Fraud, Corruption, China
Paper type General review
Introduction
One of the most influential criminologists in the twentieth century was sociologist
Edwin Sutherland. In his 1949 monograph, White-Collar Crime, Dr Sutherland defined
white-collar crime “approximately as a crime committed by a person of respectability
and high social status in the course of his occupation” (p. 9). While many of the high
profile white-collar crimes in the USA (e.g. Enron, WorldCom, Adelphia) were
committed by individuals that fit this definition, others were perpetrated by average
citizens (e.g. clerks, petty criminals, bookkeepers). For example, crimes like identity
theft, check fraud and embezzlement are often committed by those trying to make a
living or others trying to climb the social ladder.
The situation in China, while similar in some ways, is different in many others.
Although China has been moving from a state-controlled economic system to a
market-oriented economy since late 1979, the business world in China is not
independent of political and governmental control. The Communist Party and
government still wield a great deal of power in the business world, and it is this power
that often creates an opportunity for party and/or government officials to engage in
behavior that benefits them or their families (Zhang, 2001). Thus, more common forms
of white-collar crime in China involve bribery and corruption.
Zhou and Cong (2001) define occupational fraud as part of white-collar crime that
“refers to an act whereby the individual illegally uses his or her position for personal
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1352-7606.htm
Fraud and
white-collar
crime
317
Cross Cultural Management
Vol. 16 No. 3, 2009
pp. 317-326
q Emerald Group Publishing Limited
1352-7606
DOI 10.1108/13527600910977382benefit” (p. 59). These types of crimes “did not become a national disease until the
economic reform and open door policy were implemented in the early 1980s” (Zhang,
2001, p. 26). As stated by Rojek (2001, p. 101), “Corruption and the acquisition of wealth
are rife at all levels of the Chinese government. It is ironic that China had been the
paragon of a society that was nearly crime-free and highly interdependent, but is
rapidly becoming wracked with materialism and crime”.
Zhang (2001) provides examples of bribery and corruption on both an individual
basis and organizational level. He argues that Chinese officials believe that the chance
of getting caught is quite remote and that this is true because:
. the political culture leaves a great deal of room for the abuse of power;
. even if caught, any penalty or punishment would influence the “face” of the
government and damage official authority; and
. bribery and corruption are seen to be common practice and that punishment of a
corrupt official simply implies that the individual has “bad luck”.
Beyond this, it is thought that there is social privilege attached to having official social
standing. Thus, as the transformation to a market economy has taken place, individual
interests are starting to replace the collectivist tradition that previously existed. Zhang
states (p. 30) that “the interesting phenomenon is that the nation is lifting old social
constraints, the economic transition is producing opportunities, and the motivation
(getting rich) is strongly socialized for committing corruption”.
The development of China’s economy
To fully understand the climate in which white-collar crime takes place, it is necessary
to have a general understanding of China’s history. In 1949, the People’s Republic of
China (PRC) was established by Mao Zedong and the Chinese Communist Party (CCP)
in Beijing. The Communist Party took control at a low point in China’s history; the
country had been plagued by war and social conflict for many years. The economy was
struggling and, as a result, inflation was high. The governing party’s solution was a
version of the Soviet Union’s political and economic order. Throughout the 1950s, the
Chinese government worked diligently to improve the country’s economic and social
status. The CCP, under the direction of Mao, gained popularity when inflation
improved and the economy was restored. Something critical to the current business
makeup of China occurred during this time. The authority of the CCP grew and
expanded into many aspects of Chinese life, including business.
In 1958, Mao announced a new economic plan called the “Great Leap Forward”. The
purpose of the plan was to rapidly raise industrial and agricultural production through
giant communes and “backyard factories”. However, Mao’s plan proved disastrous,
and the economy and people of China were devastated. From the time of the “Great
Leap Forward” to the time of Mao’s death in 1976, the CCP faced frequent opposition
and cries for reform. Mao’s death presented new opportunities for China. The
leadership that followed him made many changes that continue to impact China’s
current place in the global market. In 1978, the government leaders instituted new
economic reform policies, specifically aimed at expanding rural income and incentives,
encouraging widespread experiments in enterprise autonomy, reducing central
planning and attracting foreign investment into the Chinese economy. Although the
late 1980s saw high inflation, the 1990s were a time of great emphasis on success in
CCM
16,3
318business. During this time, China began working to create a socialist market economy
that attempted to maintain the political system but integrate reform of the economic
system.
Although China has made many changes since Mao passed away in 1976, it is still a
Communist country, which means the government and the CCP are still heavily
involved in many aspects of Chinese life. Pei (2006) reports that for 2003, the state
directly accounted for 38 percent of the country’s GDP and employed 85 million people
(about one third of the urban workforce). He also references a report from the financial
UBS indicating that China’s private sector accounts for no more than 30 percent of the
economy. Pei believes that these numbers do not show the full extent to which the
government is actually involved in Chinese business and that the state is a monopolist
or a dominant player in the most important sectors of the Chinese economy. He states
that only 40 private firms exist among the 1,520 Chinese companies listed on domestic
and foreign exchanges and that 81 percent of the chief executives of state-owned
enterprises are appointed directly by the Communist Party and 56 percent of all senior
corporate executives are appointed by the Communist Party in China. Thus, even
though the 1990s were a time for restructuring the business landscape in China, the
government still maintains a great deal of control and it appears that the control of the
Communist Party in China’s business sector will continue for some time.
The modern day Chinese economy
China’s economy has been a hot topic for many years now. Much of the excitement
surrounding the economy is due to the fact that it is one of the largest economies in the
world and has grown at a rate of over 8 percent for three years in a row (Robertson et al.,
2008). China has a massive manufacturing workforce of over 100 million people and, as
a result, labor is cheap, especially when compared to the average compensation of
production workers in the USA and of many developed countries of the world
(Banister, 2005). The availability of cheap labor excites many businesspeople who
want to take advantage of the situation in China.
In addition, established infrastructures, preferential policies and a gigantic potential
market in terms of land area, population and gross domestic product (GDP), also entice
foreign investment to enter the Chinese market. These factors, along with CCP’s
constant commitment to the open-door economic reform policy, constitute the positive
perception through which foreign companies believe that they can distribute large
quantities of goods while benefiting from significant economies of scale. It is also why
many of the world’s largest companies have determined that China is and will continue
to be a major part of their long-term global plans and strategies.
However, it is easy to get lost in the advantages of doing business in China and
overlook the complications. In his book, Doing Business in China: How to Profit in the
World’s Fastest Growing Market, Plafker (2007) warns that “just like the kick of the
fiery grain liquor offered at any Chinese banquet”, the realities of doing business in
China “can sneak up on you and knock you for a loop, leaving you with nothing but a
nasty headache, a fuzzy collection of bad memories, and some gut-wrenching questions
about where all your money went” (p. 5). As such, it is necessary to understand the
philosophical underpinnings of Chinese society and the differences between China and
its Western counterparts.
Fraud and
white-collar
crime
319Cultural issues
It is quite challenging to directly compare Western and Chinese societies and
philosophies. Yet, in general, the ethical system in China can basically help mirror the
noticeable dissimilarities between these two civilizations. China is not a country that is
devoid of morals. Their beliefs and approaches are different, and that has driven many
Western businesspeople to assume that they are “wrong”. This isn’t necessarily the
case. Although their system of ethics seems to be opposite of the ethics in America,
they in fact do have a set of ethics worth exploring. To understand Chinese ethical
principles, one must have a basic understanding of the ideas behind Confucianism.
Confucianism is a scholarly tradition and lifestyle based on the teachings of
Confucius, a Chinese sage and philosopher who lived during the sixth and fifth
centuries BC. Although his ideals were never organized into a religion, they have been
followed by the Chinese for over two millennia. Despite the mushrooming introduction
of Western management ideas, products, and technologies in today’s China, which is
emerging as one of the most important economies in this globe, the inception of
Western influence has been re-morphed by the deeply rooted socio-cultural context that
is still bounded by the Confucian belief. Given that Confucian thought emphasizes that
man is inner-directed, searching for jen (humanity), there is little need for formal,
external law when Confucianism is followed (Rojek, 2001).
While US and Western societies are built on Plato’s philosophy, which stresses
individualism, equity, and democracy, China, a historically collectivist society, is built
on Confucius’s five Cardinal Relationships, emphasizing hierarchical social order and
authoritarian. This stark cultural contract reveals that Chinese people are socially
oriented and situation-centered and that they more likely tend to follow orders or
doctrine from their leaders. Notwithstanding the riot of Cultural Revolution, the social
and moral structures of Confucianism still have retained and guided Chinese people to
conform to the dominance of the CCP. Notwithstanding the exceptional economic
development, spiritual erosion by Western insights and beliefs, which are considered
exotic and nontraditional, is yet to be tolerated in China.
Even though Chinese society has undergone enormous change over the past three
decades, traditional socio-cultural values have continued to influence the Chinese
people’s societal behavior. The long history of collectivism has continuously shaped
Chinese people in such a way that they tend to prioritize the needs of the group (i.e.
family, work associates, or friends) over the individual. As such, when compared with
Westerners, Chinese members of the group are more concerned about the welfare of the
group than the needs of outsiders. Unlike Western societies, such as the USA, which
value self-expression and trust, Chinese societies value trust inside the family and
deem that self-expression in front of others confronts entrenched behaviors and beliefs
and causes societal tension and conflict.
The ethical ideas taught by Confucius have had a major impact on China’s moral
fabric and these ideas are still seen today in Chinese business. For example,
Confucianism focuses not only on the advancement and wellbeing of the individual,
but also on the harmony of the state and society. Western beliefs stress that human
beings have individual rights to seek truth and personal privacy and property, whereas
Chinese beliefs tend to emphasize social harmony and balance and are comparatively
relationship-oriented for virtue. Therefore, a Chinese manager will likely judge what an
employee does based on whether or not his motivations were appropriate and what his
CCM
16,3
320intent was in relation to Confucius’s moral principles. As Hu Jintao, the current Chinese
President, calls for the establishment of social harmony and synchronization, Chinese
people, when compared with Westerners, tend not to alter their external environment
and instead focus on adapting to their current surroundings because they believe that
all things are interdependent and exist for peace.
Confucianism advocates ethical normality, which means that men and women
should practice moral excellence correctly within the confines of an ethical code. In
China, this ethical code is defined in the interpersonal relationship environment
referred to as guanxi (Leung, 2004). Chinese society is built upon the so-called Chinese
term guanxi (interpersonal connections and networks) and Chinese people prefer to
utilize guanxi to seek business possibilities in their social hierarchy. Guanxi, regarded
as the lifeblood of personal relationships and business conduct in Chinese society, may
be one of the most important words a businessperson can learn before entering China.
However, it is difficult, if not impossible, to simply translate guanxi into an English
word.
Burton and Stewart (2008) explain that guanxi is “a complex cultural system of
personal relationships – and moral obligations – which most Chinese see not only as a
natural way of doing business but also as pragmatically necessary” (para. 2). It ranks
relationships higher than other ethical considerations, not excluding things like a
company’s code of conduct and the law. This concept scares many Western
businesspeople because who are used to a different set of ethical standards. Westerners
are taught and trained to rank obeying the law and following a company’s code of
conduct above relationships. Therefore, if ethics in China were compared to driving a
car, Westerners would believe that the Chinese are driving on the “wrong” side of the
road.
Since guanxi stems from the traditional Confucian belief of close bonding with one’s
family and group, a Chinese person’s existence is defined by a bilateral relationship
with another person, and Chinese people operate collectively, having close
relationships with their immediate groups, and those out of this network are
considered as strangers unless they are referred by someone trusted in the group (Lee
and Dawes, 2005). Based on their social networks, Chinese users normally tend to seek
suggestions or opinions from their social groups instead of acting individually and
they prefer to use indirect and implicit communications with others. When learning
about guanxi, many Western businesspeople automatically consider it a form of
corruption and take the position that it will not be tolerated in their company.
Although it is easy to think the solution is to simply forbid Chinese employees from
honoring guanxi, this is not always practical. Western businesses must remember that
guanxi is deeply rooted in Chinese business culture, and business ethics in China are
founded upon it. It is also important to note that guanxi does not give an individual
permission to steal. Moderation must be observed because when moderate amounts are
exceeded, the acts are seen as illegal and unethical; in fact, there are even limits to the
obligations as a result of relationships.
Western companies with operations in China must accept that there will be some
ideals and norms that are uncommon to them that they will be subject to. Burton and
Stewart (2008) believe that while China is “utterly different”, this does not mean that it
is corrupt. The Chinese see Western ethics as strange, just as we see theirs as strange.
They suggest that businesses acknowledge guanxi as part of the culture and that they
Fraud and
white-collar
crime
321set boundaries in which it can be practiced. Although guanxi is deeply rooted in China,
business there is starting to reflect Western and foreign norms. But Western
companies should not expect China to abandon their values. It will take the
participation of both Chinese and Western businesses to understand and control
guanxi.
White-collar crimes in China
With all the advantages of doing business in China, it is important to remember that
there can be many downfalls. China has its own unique business environment, and
understanding the complexities of the social, legal, and political environment is crucial
for any business looking to succeed there. One major concern in China’s business
community is the enormous number of various white-collar crimes. Part of the
white-collar crime problem stems from the government itself, both the corruption of the
Communist Party and actual government officials’ personal involvement in individual
crimes. The government is also responsible for inconsistencies in the level of
punishment for crimes. One indication of the severity of white-collar crime in China is
the increasing amounts of money involved in these crimes.
Before looking at some examples of white-collar crimes committed by individuals in
China, the strategy used to deal with these crimes will be discussed. Control at the first
level (political) takes place in the CCP. The Central Committee of Supervision and
Discipline was created in 1979 and is in charge of investigating and disciplining
officials’ criminal behavior. This committee also determines if an individual is to be
turned over to the criminal justice system for further investigation. If this does occur,
the second level of control (legal) takes over and the government agency in charge is
the Prosecution Department of China, which also has corresponding local departments
and agencies. The third level of control is more recent and basically relates to
administrative measures (e.g. reduce the size of the central government).
While it is not possible to review all of the recent cases of white-collar crime in
China, it will be beneficial to provide a summary of some more recent cases, and the
punishments given to the perpetrators of these economic crimes. Cha (2007) notes that
as China moves from a planned economy to a free-market system, cracking down on
fraud, embezzlement and other financial crimes has become a major priority for the
government. Among the cases taken most seriously are the ones that harmed common
people. Some examples that have been reported in the media:
. Two former employees of China Construction Bank, Zhou Limin and Liu Yibing,
were executed for defrauding bank customers out of approximately $50 million
by offering bogus accounts they said would earn high interest rates (Sawf-News,
2006).
. A leading Chinese oil executive, Li Rongxing, was given the death sentence for
embezzling more than $4 million and taking $620,000 in bribes (Cha, 2007).
. The former chief of the State Food and Drug Administration, Zheng Xiaoyu, was
sentenced to death for accepting bribes of nearly $850,000 to approve faulty
medicines that killed at least six patients (Cody, 2007).
. A small business owner, Wang Zhendong, sold overpriced ant farms to the
public as part of a giant scam ($387 million) and was given the death penalty for
his crimes (Reuters, 2007).
CCM
16,3
322Each of the above cases resulted in a death sentence for the perpetrator. The
government defended the use of the death penalty for financial crimes, which have
risen as unscrupulous people attempt to take advantage of the booming economy.
Supreme People’s Court President Xiao Yang told the audience at a death penalty
criminal law conference: “It is necessary to use the death penalty in China to punish
criminals who commit extremely serious crimes in order to safeguard state security,
public interests and smooth operation of economic construction” (Cha, 2007, para. 11).
All fraud cases do not result in a death sentence but it is becoming clear, at least
from these cases, that the government is making an attempt to protect the public’s
interest. Other cases have also meted out harsh penalties for the perpetrators while
stopping short of a death sentence. For example:
. A corrupt banker, Yu Zhendong, was sentenced to 12 years in prison for
embezzlement and money laundering. Yu had fled to the USA after committing
his crimes and returned to China based on the promise that he would not be
executed for his offenses. Yu was the first corrupt Chinese official to be
repatriated since China ratified the United Nations Convention Against
Corruption (Xinhua, 2006).
. One of China’s wealthiest businessmen, Zhang Rongkun, was sentenced to 19
years in prison for his involvement in a social security fund scandal. Zhang
received over $25 million that was embezzled from Shanghai’s social security
fund. He was also convicted of bribing government officials with over $4 million
(China Daily, 2008).
To put things in perspective, Bernie Ebbers (former CEO of WorldCom) and Jeff
Skilling (former CEO of Enron) were given the harshest sentences ever for a
white-collar crime in the USA (25 and 24 years, respectively). These are significant
changes in the US sentencing of white-collar criminals as former perpetrators like
Michael Milken served short sentences (Milken served less than two years) and often
walked out of prison as wealthy individuals (Milken was said to have a fortune of
approximately $500 million when he was released from prison).
The current state of white-collar crime in China
Wu Heping, a spokesman for China’s Public Service Bureau, says economic crimes rose
more than 4 percent last year to more than 84,000 cases. He says that economic crimes
have reached a new peak. In recent years with China’s fast economic development,
economic crimes have been climbing higher every day (Schearf, 2008). It should be
noted, however, that due to the illicit nature of corrupt activities, it is all but impossible
to determine the “true” figures for economic crimes.
This growth in corruption is not breaking news to the people in China. China’s
Prime Minister, Wen Jiabao, may have put it best in February 2006 when he said:
“Bribery has poisoned the ethos of administrative, industrial, and social practices and
has become a plague” (Plafker, 2007, p. 239). Surveys among government officials and
everyday citizens point to corruption as one of their top concerns. From 1999 to 2004,
officials studying at the CCP’s Central Party School have continuously listed
corruption as the most serious or the second most serious social problem.
Transparency International, a Berlin-based non-governmental organization,
releases an annual Corruption Perception Index, which orders the nations of the
Fraud and
white-collar
crime
323world according to the degree of corruption among government officials; China
consistently ranks among the most corrupt nations in the world. From 1996 to 2005,
annual audits performed by China’s National Audit Agency “uncovered 1.29 trillion
yuan ($170 billion) in misappropriated and misspent public funds (illegal practices
include overstating the number of staff, setting up slush funds, misappropriating
special funds, and collecting illegal fees)” (Pei, 2007, para. 5).
In an interview with Tommy Seah, a professor of economics, chartered banker,
certified fraud examiner and expert on fraud in the Chinese economy, a question was
raised dealing with the overall rate of fraud in China relative to the USA. Mr Seah’s
response was: “I believe the rate of fraud in China is greater. You have an oppressed
people who are suddenly given some autonomy over economic decision making. The
burgeoning economy in China means more opportunities to commit fraud” (p. 36). Mr
Seah went on to say that although most businesses in China operate honestly,
dishonest executives can “cook the books” just like their US counterparts.
Conclusion
As China plays a more important role in the development and integration of today’s
global economy, it is engaged in exploring a unique means of combining socialism and
capitalism in order to seek an alternative approach to prosperity. The world, which is
composed of a plethora of different cultures, will be further enriched if the presence of a
rapidly growing Chinese economy continues contributing to the globalized economy
and the Chinese culture can co-exist with other nations whose citizens may have
different philosophical and ethical perceptions and understandings. Simply neglecting
or rejecting the uniqueness or dissimilarities of other cultures with regard to how social
opinions are governed and disseminated is likely to result in erroneous perceptions
and/or misunderstandings. This, in turn, may hinder organizations and/or nations
from effectively and efficiently communicating and cooperating with their foreign
business partners.
Understanding why white-collar crime is so rampant in China can be difficult for
people in Western societies like the USA because the cultures and histories are so
different and often misunderstood. In China, many of these crimes are often regarded
as a socially acceptable way for employees to prepare for retirement or to keep up with
the spending of their peers. This type of logic is so foreign to people who don’t
understand at least some of the culture that drives ethics in China. Thus, it is
inappropriate to simply to translate or impose Western ethical standards on Chinese
individuals; in fact, it is a methodical mistake to do so because China has a different set
of ethical beliefs.
Bhasin (2007) recently pointed out that appropriate adjustments need to be made
before any foreign company enters the Chinese market because of the differences in
culture, language, religion, and jurisdiction, etc. It is also apparent that the
white-collar-crime-related sentences handed down are completely different. Wang
Zhendong and others were sentenced to die for their crimes. In the USA, it is
unimaginable that someone would receive the death penalty for committing a
white-collar crime. Despite the threat of being sentenced to death, crimes continue.
Professor Tommy Seah (p. 36) suggests that “Although the penalty for white-collar
crime is more severe in China than America, the Chinese see fraud as an opportunity to
break out of the chain of poverty. Lots of Chinese people have now traveled
CCM
16,3
324internationally; they see the good life capitalism brings, and may are impatient to get
rich quickly. Some see no shame in committing fraud because they believe they are just
getting back what was theirs in the first place”.
In an effort to examine white-collar crime in a rapidly growing economy like China,
and make comparisons to Western societies from the perspective of philosophical and
ethical dissimilarities, this article has implications for both practice and research. From
a practical standpoint, it provides insights into possible areas of disagreement between
employees from different cultures than can result from their divergent opinions about
individuals’ responsibility for fraudulent acts. With respect to research implications,
additional focus should be placed on examining how cultural differences affect
judgments and behaviors.
One thing is abundantly clear: Western businesses planning to enter the Chinese
market need to do their due diligence before committing resources. What works in
Western society may not work in another culture, like China’s. However, gaining an
understanding of the culture and general way of life will go a long way towards laying
the groundwork for success.
References
Banister, J. (2005), “Manufacturing earnings and compensation in China”, Monthly Labor Review,
Vol. 128.
Bhasin, B.B. (2007), “Succeeding in China: cultural adjustments for Indian businesses”, Cross
Cultural Management: An International Journal, Vol. 14, pp. 43-53.
Burton, F. and Stewart, S. (2008), “China: guanxi and corporate security”, Vol. 26, available at:
www.stratfor.com/weekly/china_guanxi_and_corporate_security (accessed April 26,
2008).
Cha, A.E. (2007), “Ant fraud yields death sentence”, The Washington Post, March 20.
China Daily (2008), “Key figure in fund scandal gets 19 yrs”, available at: www.chinadaily.com.
cn/china/2008-04/08/content_6597483.htm (accessed April 11, 2008).
Cody, E. (2007), “Ex-head of China FDA sentenced to death; ruling comes after alarm over tainted
exports”, The Washington Post, May 30.
Lee, D.Y. and Dawes, P.L. (2005), “Guanxi, trust, and long-term orientation in Chinese business
markets”, Journal of International Marketing, Vol. 13, pp. 28-56.
Leung, T. (2004), “A Chinese-United States joint venture business ethics model and its
implications for multi-national firms”, International Journal of Management, Vol. 21,
pp. 58-66.
Pei, M. (2006), “The dark side of China’s rise”, available at: www.carnegieendowment.org/
publications/index.cfm?fa ¼ view&id ¼ 18110&prog ¼ zch (accessed April 15, 2008).
Pei, M. (2007), “Corruption threatens China’s future”, Carnegie Endowment for International
Peace: Policy Brief, Vol. 55.
Plafker, T. (2007), Doing Business in China: How to Profit in the World’s Fastest Growing Market,
Warner Business Books, New York, NY.
Reuters (2007), “Chinese man gets death for ant-breeding scam”, available at: www.reuters.com/
article/email/idUSPEK10228420070215 (accessed June 14, 2008).
Robertson, C., Olson, B., Gilley, K. and Bao, Y. (2008), “A cross-cultural analysis of ethical
orientations and willingness to sacrifice ethical standards: China versus Peru”, Journal of
Business Ethics, Vol. 81, pp. 413-25.
Fraud and
white-collar
crime
325Rojek, D. (2001), “Chinese social control: from shaming and reintegration to getting rich is
glorious”, in Jianhong Liu, L.Z. and Messner, S.F. (Eds), Crime and Social Control in a
Changing China, Greenwood Press, Westport, CT.
Sawf-News (2006), “China executes two former bank employees for fraud”, available at: http://
news.sawf.org/Business/30225.aspx (accessed April 18, 2008).
Schearf, D. (2008), “Serious crime down, economic crime rises in China”, available at: www.
voanews.com/english/archive/2008-01/2008-01-30-voa13.cfm (accessed May 18, 2008).
Xinhua (2006), “Corrupt banker sentenced to 12 years in prison in Guangdong”, available at:
http://english.peopledaily.com.cn/200604/01/eng20060401_255227.html (accessed May 11,
2008).
Zhang, L. (2001), “White-collar crime: bribery and corruption in China”, in Jianhong Liu, L.Z. and
Messner, S.F. (Eds), Crime and Social Control in a Changing China, Greenwood Press,
Westport, CT.
Zhou, L. and Cong, M. (2001), “Criminology in China: perspectives and development”, in Jianhong
Liu, J.Z. and Messner, S.F. (Eds), Crime and Social Control in a Changing China,
Greenwood Press, Westport, CT.
About the authors
Richard G. Brody is the Rutledge Professor of Accounting in the Anderson School of
Management at the University of New Mexico. He earned his PhD in Accounting from Arizona
State University. He is a Certified Public Accountant, a Certified Fraud Examiner and a Forensic
Certified Public Accountant. He is an Associate Director for UNM’s Center for Information
Assurance Research and Education and serves on the Board of Advisors for Fraud Magazine, the
monthly publication of the Association of Certified Fraud Examiners (ACFE). His research
addresses issues related to forensic accounting, auditing and corporate governance. Recent
research has focused on issues such as corporate fraud, identity theft, mandatory auditor
rotation, the outsourcing of income tax returns to India and the impact of corporate governance
structure on auditor judgment. Richard G. Brody is the corresponding author and can be
contacted at: [email protected]
Robert Luo is an Assistant Professor of Management Information Systems and Information
Assurance in the Anderson School of Management at the University of New Mexico. He is
Associate Director for UNM’s Center for Information Assurance Research and Education. He
earned his PhD in Information Systems from Mississippi State University. His teaching and
research interests include information assurance, e-commerce/m-commerce, and cross-cultural
management. His research has been published in journals including Journal of the Association
for Information Systems, European Journal of Information Systems, Communications of the
ACM, Information Management & Computer Security, Journal of Information Privacy and
Security and International Journal of Information Security & Privacy.
CCM
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326
To purchase reprints of this article please e-mail: [email protected]
Or visit our web site for further details: www.emeraldinsight.com/reprints

Death penalty - really? Well even if a Chinese court regarded AM as a 'real' company, do you really think it is very likely that they sentenced friedcat or rockxie to such a harsh penalty?

LOL where do you find these images LOL

I didn't claim anything.

You know nothing about China! It's all rumors or 30-year-old news!

I had hopep that China had changed their policy about death penalties for less offensive crimes.
But it doesn't seem so.
I think no one would like anyone to die because of their loss.

Wait what? Death penalty for a scam? Really? I think I'd rather take the loss.

Gratz with your new trolling account

I would appreciate if you can share the draft, which country are you living in?

So from the translated communication between FC and Rock Xie we know that for first and most important AsicMiner is a majority owner of the AMHash brand which commissioned sales are given to Rock.
Secondly we can after checking the wallet addresses where to alleged AM hardware has been mining to where in use after FC's disappearing and btc have been sent from them. That contradicts the statement that FC was sole person with the private key to AMHash wallets.

Another important statement is that Rock Miner employee's have been subcontracted and paid by AsicMiner which only deepens their involvement in the project and shifts the most of responsibility of the project to them.  

If we talk numbers (this is a rough guestimation) 5000 TH/s worth each 1.25 BTC gives 6250 BTC, where from 10% was Rock sales commission (bare in mind that rock did not pay employees salaries so all of that is a pure profit) this gives 625 BTC.

There is another 3% commission paid to have lock - unknown volume so no estimations here.

Disregarding the mint there are still money to be recovered from Rock Miner (their commissions) and even more from AM. Just wondering if at this stage AM is still planing on further operations in ASIC industry - it might be a new entity, new chip but the same ppl. In order to do this they would have to move the funds from Am entity to the new one. There is no problem with this unless there are open claims from existing customers. Conclusion is if we (peeps who invested in AMHash) want to recover anything we have to trigger legal action ASAP.

Addressing the voices of ppl saying "who are you going to take to the court? An asic guy from china?" there is a simple answer: We will address our claims to board of Asic Miner company which is Bitquan and the board of Rockminer company. They are NOT anons and their personalities are well known.

Whole the process of moving funds from bitquan to the new entity is illegal in China and it is a crime which is penalized with death sentence, it can be changed to the life sentence if goodwill after the event of damage was in place. It gives a lot of space for a mutual agreement between the vendors and victims.

Bitquan legal details registration number 1952938, original company name: 比特泉科技有限公司 the money can be extracted after auditing this:

#1(E)FNC1 - Incorporation Form (Company Limited by Shares)
Doc. Ref. No.: 23000882636
Submission/Filing Date:15-AUG-2013
#2(E)Memorandum & Articles of Association
Doc. Ref. No.: 23000882638
Submission/Filing Date:15-AUG-2013
#3Certificate of Incorporation
Doc. Ref. No.: 40007134465
Submission/Filing Date:15-AUG-2013

as far as I am concerned #1(E)FNC1 consitutes the AM shares offered in public sales in the form of havelock shares.

Guys, we don't need to pay high cost lawyers etc. It is pretty obvious that we were scammed, so we have the right to call our countries embassies in China for help. I for myself am preparing a folder with all personal Details of Rock Xie, Friedcat, Asicminer etc. I will send this to my countries Embassy. Everyone of us should do the same, cause then the Chinese government will act to hinder a international diplomatic crisis.

I will share the draft of the folder for you as well, so we all can send the same layout.

You can think of me whatever you want, but Ive been around for longer than most and this isnt exactly the first publicly traded  bitcoin company Ive seen implode, and its not the first where a bunch of shady C-less nonames pretend to organize or coordinate action but mostly just want to make themselves feel important and often want to collect bitcoin. l3sny is to AM as Goat was to Pirate. Anyone remember that?

Ill also give you the bad news, that this has pretty much never worked. Even fully doxed scammers that undoubtedly committed financial crimes, where lawyers got hired and police reportings filed, Alberto Armandi comes to mind, still roam free. The only cases where at least something happened, is when government stepped in.

But if you want to do something, then you need to get in touch with AM board members. Thats your most realistic chance of finding someone who is well positioned to lead an inquiry and possibly coordinate legal or other action,  and who doesnt fail on all the C's I mentioned (credibility, clout, clue, coin. Common sense and Chinese language wouldnt hurt either). Board members interests should also be aligned with the other shareholders, they own too many shares that Id believe them being bought off. Doesnt hurt to keep that possibility in mind though.

First time I hear about it. What was his nickname.

Anybody here anything on Ben who flew to China to speak to David at Asicminers?
Is Ben on this forum?

We need to know who's interested.

+1

You're not the only one who has problems with the funding but we accept all who are supporting our action. Perhaps you could contribute by spreading the word here and via social media? We need ideas, I do not have all the answers and solutions.
I don ot think public list is practicable at this stage. I would prefer contact on PM and once we are confident we may approach someone with our queries we will do so.

I'm not sure how many people is in my situation but,
I've lost all my saving with this incident and it's going to effect my everyday life.

So I won't be able to support you guys financially upfront.
I can only promise to pay my share of costs, if we can recover our money.

Lets just make a list of people and their contacts which are interested.
Lets see if there's a will in people for this struggle.

Guys I am happy to enter any constructive, professional discussion on how to do it in a way that would be acceptable to all Amhash customers willing to take action within this initiative. We have more information than we can disclose here. The problem now is to gather enough people and funding to do this.
I do not know at this stage who could represent us nor how much it would cost as I believe both issues  would have to be discussed within a group and perhaps make some kind of decision thorough voting. We can select a suitable practice and I would suggest using a qualified EU based solicitor who is Chinese to assist us with the choice and be our point of contact. I am sure the whole process can be transparent for the participants so that I am absolutely free from any suspicions of any nefarious activity.