Saturday, March 16, 2013

Why Do Chinese Billionaires Keep Ending Up in Prison? - Rebecca Chao - The Atlantic

Why Do Chinese Billionaires Keep Ending Up in Prison? - Rebecca Chao - The Atlantic

In most places, being ranked by a prominent magazine among the wealthiest people in the country constitutes a great honor. Not in China. Such lists, known as bai fu bang in China and published inForbes and its Chinese equivalent Hurun, are described instead as the sha zhu bang: "kill pigs list."
In the last fifteen years, China has produced greater overall wealth than any other country. The number of its billionaires has gone from a mere 15 to around 250 in just six years, but for a number of these people this vaulted status is short-lived. According to one study, 17 percent of those on the list end up squealing their way to court or end up in jail. If they're lucky, those who are caught are investigated and jailed. Some are even executed.

In a Roy economy the wealthy can be Y at first like a mafia or dictatorship, they can be jailed if the O criminal police are strong and find Oy agents of the Y businessmen to snitch on them.
British businessman Rupert Hoogewerf first introduced the China Rich List in 1999 as part of theHurun Report, a magazine published about wealth and the wealthy in China. Hoogewerf defends his list from accusations that he unwittingly targets China's privileged, arguing that only one percent have run afoul with the law. The latest Hurun Rich List, however, belies this claim: it lists a handful of those have been arrested, charged or jailed.
Many of those who are not in hot water with the law are, however, facing a different quandary: they're getting poorer. Just under half of the 1,000 richest have seen their wealth shrink, with 37 of them enduring losses of over 50 percent. Overall, there were 20 fewer billionaires in 2012 than in the year before.
John Bussey of the Wall Street Journal also noted the curse of the rich list: "Very soon after [China's wealthiest] make the list and get publicity, their share prices begin to decline. The companies themselves are more subject to government cutting off subsidies to them, and the individuals who lead them are more subject to investigation."

This is a rebalancing of the Roy food chain as they attract more O attention.
Take Zhou Zengyi as an example. Once China's 11th richest man, valued by Forbes at $320 million in 2002, he has since been arrested twice and is currently serving a 16-year sentence. Zhou's transgressions even took Chen Liangyu, Shanghai's Communist party secretary, down with him.
What accounts for the sharp rise and fall of China's wealthiest? In a business environment in which personal connections and favors -- referred to as guanxi in Chinese -- predominate, many tycoons have amassed large fortunes without concern of rules and regulations. However, such a fast and loose atmosphere can cut both ways.

Y people being apex predators usually ignore the rules of those under them, they use Oy agents to do the criminal work and T gets the lion's share. This is like y lions taking the carcass off Oy hyenas, the hyenas in effect act as agents for the lions and in return would get some leniency in being on the lion's territory. To break this system the O police use Oy snitches, O is like the center of the food chain where between them and the Oy predators the power of the Y apex predators is reduced.

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