Death penalty for female tycoon provokes public debate

(Ecns.cn)--Wu Ying, once China's sixth-richest woman, lost an appeal against the death sentence at the Zhejiang Higher People's Court earlier this year after being found guilty of fraudulent fundraising, which soon provoked widespread debate over capital punishment for economic crimes, reported Xinhua News Agency on Monday.

Zhang Yanfeng, Wu's defense lawyer, told Xinhua that he and his colleagues were shocked when they heard the second verdict, and that they would make every effort to plea for a lesser sentence while waiting for the review of the Supreme People's Court in Beijing, since all death sentences in China require a final review by the top court before being carried out.

Wu, 31, former owner of the Zhejiang-based Bense Holding Group, was first arrested in March 2007 and charged with "illegal fundraising" of 770 million yuan by promising investors high returns between May 2005 and February 2007.

Of that money, 380 million yuan could not be returned and a large amount of other debt was left unpaid, the Jinhua Intermediate People's Court added.

In December 18, 2009, the charge was changed to "financial fraud," and Wu was sentenced to death.

She later lodged the appeal with the Zhejiang Higher People's Court but was eventually rejected because she had, according to the verdict, "brought huge losses to the nation and people with her serious crimes and should therefore be severely punished."

The court revealed that Wu blindly invested large sums she had raised in real estate and spent nearly 20 million yuan on more than 40 luxury cars, including multiple Ferraris and BMWs.

Nevertheless, those who oppose Wu's death sentence pointed out to the Global Times that "this is merely an economic crime and doesn't involve human life."

Public opinion has adhered mostly to the principle of "a life for a life," and since Wu's case only involved fraud, people have questioned whether capital punishment should be used to deter economic crimes, noted the newspaper.

Yet the China Entrepreneur, a major entrepreneurship networking initiative, has brought attention not only to her alleged crimes but also to the underground financing ecosystem in Zhejiang Province.

Wu's case reflects the dilemma that small and medium enterprises (SMEs) in China currently face, with the narrowing of funding channels and a system still under development, the organization analyzed.

When Wu Ying found no support from official financial institutions, she turned to private lending, a gray area that falls outside the supervision of the authorities.

A farmer's daughter, Wu started out with a single nail salon in 1997 and went on to expand her business interests to entertainment and property investments. As is common for private entrepreneurs in China, she had difficulty obtaining loans from banks and had to raise funds by other means. Unfortunately, as China Entrepreneurs further mentioned, her business had cash flow problems and she failed to pay back a debt to loan sharks in December of 2006.

Teng Biao, a human rights lawyer, pointed out that under the current financial system it is inevitable for the private business sector to commit "illegal fundraising。" In other words, most of the successful private businesses in China have probably committed Wu Ying's "crime。"

"Without support from the banks, private businesses have to borrow money from the market. According to statistics, only 20 percent of short term bank loans go to private businesses. A bank survey shows that more than 90 percent of SMEs said they had failed to obtain loans from banks. More than 62.3 percent of family businesses obtain their capital from the market," Teng was quoted by Global Voices, an international community of bloggers.

The final verdict in her case will directly impact private enterprises and private lending, and become a key precedent, commented China Entrepreneurs.

"What is more important? To make Wu Ying a sacrifice at the altar of control over private lending, or to lift the ban on private lending which is already a common practice? The best result would be for Wu's case to draw the attention of decision makers, and make them more aware of the current underground financing conditions and regulate the market," blogged Tian Wenchang, director of the King & Capital Law Firm and also a confidant of Wu.

Furthermore, the severity of the punishment and heated debates swirling around the blogosphere have also sharpened public outcry over the application of the death penalty, which partially shows China's progress toward humanism, reported the Global Times.

For a long time, due to poverty in China, money and life were closely linked. If an economic crime caused a huge loss, it was only natural that the criminal should be sentenced to death. But such a view greatly differs from judicial views in the modern world. Economic crime should be the first field for China to reduce the application of the death penalty. Given the current mood, legislative and judicial authorities should seize the opportunity to make a breakthrough, suggested the newspaper.

"If Wu must be killed, the runaway bosses in Wenzhou, Zhejiang Province, must be killed too, such as the gamblers who borrowed money from loan sharks and the bosses who showed off their wealth with corporate money. Now we have a group of business losers enjoying the government's bailout, while Wu, who is in a similar condition, has been sentenced to death. This is so unjust," Global Voices translated and quoted blogger Li Ming.

In addition, "Wu was the product of the people's financial environment," pointed out the Wall Street Journal, citing a tweet on the Twitter-like Sina Weibo.

A report on private financing by Zhejiang University found that in Jinhua, where Wu set up the business, cases of illegal pooling of public deposits surged from seven in 2008 to 34 in 2009, and the number of fraudulent fundraising cases jumped from one in 2008 to five in 2009. Meanwhile, a large number of small loan companies were set up as residents tried to avoid undocumented private lending in Jinhua and other cities in Zhejiang.

Imposing the death penalty for fraudulent fundraising could be a sign of determination by authorities to crack down on illicit private lending, which can affect many people and have a huge social impact, Wu Dong, a lawyer and partner of the M&A Law Firm in Shanghai, told China.org.cn.

He said the verdict in Wu's case might serve as a warning to people involved in private lending markets, but the measure might not prove effective in the long run.

"It is better to make clear policies and laws to legalize, regulate and guide private financing, rather than suppressing it, because there is always a need for borrowing and investing outside banks or financial institutions," he added.