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Details of Xiamen Smuggling Case Exposed
Details of Xiamen Smuggling Case Exposed
A 10,500-word article written by correspondents of Xinhua and People's Daily discloses details of the biggest smuggling operation uncovered in China since the founding of the people's republic in 1949.
Lai Changxing, 43, head of a smuggling clique in Xiamen, east China's Fujian Province, ran a multibillion-dollar smuggling operation in China between 1996 and the first half of 1999.
It took a team of investigators almost two years to completely smash the clique and for the criminals to be punished by law.
Investigations into the case showed that during the 1996-99 period, Lai and other suspects smuggled more than 4.5 million tons of refined oil, more than 450,000 tons of vegetable oil, more than three million cases of cigarettes, 3,588 automobiles and large amounts of western pharmaceuticals, chemicals, textile raw materials, and electro-mechanical goods, with a total value of 53 billion yuan (6.38 billion U.S. dollars). The evaded tax totaled 30 billion yuan (3.6 billion U.S. dollars).
More than 600 people were involved in the illegal activities. Some 200 suspects who had fled the area were caught and arrested. The local courts have put on trial nearly 300 suspects to date.
Lai, who did not finish primary school, started smuggling in the 1980s. Driven by greed, his criminal activities escalated in the 1990s.
Lai bribed some officials of several foreign trade companies in Xiamen in order to shield his smuggling by using the companies' export-import licenses. For example, Lai's clique "rented" a bonded warehouse and a bonded oil storage from Xiamen Dongfang Development Company with 10 million yuan (1.2 million U.S. dollars) in June 1995, which enabled the clique to smuggle over 180,000 tons of refined oil and 3,588 cars which valued two billion yuan (241 million U.S. dollars) in total, from June, 1996 to January, 1998.
Lai's clique operated through a narrow channel of communication to avoid detection. It was quite difficult for his subordinates to know exactly what was going on as only a few people were included in Lai's inner circle.
Since a national campaign against smuggling was launched in 1998, Lai repeatedly skipped the customs clearance, lied about contents of TEUs, or under-declared import quantities at the customs.
In April 1999, he evaded more than 100 million yuan (12 million U.S. dollars) of tax by declaring to customs that 24,380 cases of cigarettes were wood pulp.
At one point, Lai's band of smugglers were so brash that they did not go through customs procedures at all; instead they turned to the local commodity inspection bureau and harbor superintendency to arrange false checkup and let the smuggled goods enter Xiamen.
During the 1996-99 period, Lai smuggled in this way 3.91 million tons of refined oil worth 10.4 billion yuan (1.25 billion
U.S. dollars), evading two billion yuan (241 million U.S. dollars) of tax. On average, every three days a ship containing over 100, 000 tons of smuggled oil berthed in Xiamen port under Lai's orders.
Dai bribed officials from several key departments, such as the customs and the port office, in order to build a distribution center for what was smuggled into Xiamen. Lai was informed in advance which TEUs would be examined by the customs and then had the targeted TEUs reloaded with goods that accorded with the bill of entry.
Yang Qianxian, former head of Xiamen Customs, was among those who accepted bribes from Lai and then turned a blind eye to his smuggling.
Lai also ordered a group of people to write false value-added tax receipts to sell his smuggled goods to other parts of the country, bringing 357 million yuan (43 million U.S. dollars) of losses to the government.
Lai also controlled the illegal smuggling activities in Xiamen. Any would-be smugglers were forced to pay Lai a certain amount of money to get their goods passed unchecked through customs. In addition, Lai forced those smugglers to share 70 percent of their "profit" from the smuggled goods.
To buy people off, Lai offered either huge sums of money or women, or helped promote those who wanted power.
Li Jizhou, former vice-minister of Public Security, had a daughter in the United States. Lai immediately mailed 500,000 U.S. dollars to Li's daughter and then offered one million yuan (120,
500 U.S. dollars) to Li's wife when he learned that she planned to start a business.
Lai also bought villas in Hong Kong and Xiamen for Yang Qianxian, former vice-mayor of Xiamen Zhao Keming, and other officials who wanted places to keep their mistresses.
In return, those corrupted officials gave the green light to Lai's smuggling. Some even refused to help investigators by burning bills of goods for smuggled items.
Lai also obtained huge loans from local banks through illegal means. The Bank of Communications Xiamen branch alone wrote 25 letters of credit for Lai with a total sum of 38.41 million U.S. dollars, in violation of banking regulations.
Those who have been corrupted by Lai either created conditions for the illegal smuggling or profited from the money-for-power trade. Some even got involved in the smuggling.
A 74-page tip-off letter was sent by some insider in Xiamen to the relevant department of the central government in April 1999. Attached with it were some bills of sale, documents and other evidence of criminal activity.
An investigation panel formed by the Central Commission for Discipline Inspection of the Communist Party of China, the Ministry of Supervision, and the General Administration of Customs, arrived in Xiamen secretly in June 1999.
However, Lai was able to escape to Hong Kong after someone warned him. He kept contact with Yang Qianxian, the former head of Xiamen Customs, and Zhuang Rushun, former vice-head of the provincial public security bureau, while living away from Xiamen.
When he thought it was safe, Lai sneaked back to Xiamen on August 10, 1999. But he fled again after he was told that police were to arrest him.
Early on in the case, investigators had difficulty collecting evidence because Lai destroyed and hid a large batch of documents and other evidence before fleeing.
The investigators made breakthrough during their probe into the oil smuggling. Less than 20 days of hard work revealed that nearly four million tons of refined oil had entered China without declaration at customs from 1996 to 1998.
More than 1,000 investigators from across the country gathered in Xiamen to begin a massive investigation. They received tip-offs in the form of more than 1,200 letters, 700 phone calls, and 160 visits, many of which provided valuable assistance.
A group of smugglers and corrupt officials were investigated, leading to the collapse of Lai's complicated protection network. Lai's crimes have been disclosed one after another.
If piled up, the files used by the investigation department of the customs alone would be as high as a 10-story building.
Lai Shuiqiang, an elder brother of Lai Changxing who headed the cigarette smuggling operation, was arrested in October 1999. He cooperated with investigators by persuading 13 suspects who fled abroad to surrender to the police.
Smuggling activities severely damaged China's normal economic order, deteriorated the investment environment, and harmed the interests of the country and the people.
Statistics show that before the national campaign against smuggling was launched, more than 100 billion yuan (12 billion U.S. dollars) worth of commodities were smuggled into China each year.
The China Petrochemical Corp, or Sinopec, suffered losses of 2. 4 billion yuan (nearly 290 million U.S. dollars) during the January-May period of 1998 due to the Asian financial crisis, and smuggling of refined oil, chemical industry products and chemical fiber.
The national tariff revenue during the first half of 1998 was about 36.4 billion yuan (nearly 4.4 billion U.S. dollars). The figure has increased at an average monthly rate of 37 percent during the second half of the year thanks to the effective measures taken to crack down on smuggling.
The national customs tariff income reached 150 billion yuan (18. 1 billion U.S. dollars) in 1999, 50 percent more than the goal set by the government. The figure rose to 224.1 billion yuan (27 billion U.S. dollars) in 2000, hitting a historical record.
The economy of Xiamen also developed healthily after smuggling and corruption were vanquished. The gross domestic product (GDP) of the city increased 14.8 percent in 1999 over the previous year, while the local financial revenue grew by 16.89 percent. The tariff income of Xiamen customs increased by 138 percent compared with that of 1998.
In 2000, the GDP of Xiamen witnessed another growth of 15.1 percent, local financial revenue, 23.8 percent, and export and import trade volume, 26.1 percent, over those figures of last year.
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