A 30-year-old millionaire once labeled one of China's richest women was spared the death penalty, as China's highest court ruled on a case that shone a spotlight on gaps in the nation's justice and financial systems and drew sympathetic comments from Premier Wen Jiabao.
Wu Ying—who turned a single nail salon into a regional conglomerate—was sentenced to death in 2009 after being convicted of swindling 11 investors out of 380 million yuan ($60.3 million).
But China's Supreme People's Court, which must approve all death sentences in China, on Friday said it declined to approve the sentence and referred the case back to the high court in the Chinese province of Zhejiang.
"The Supreme People's Court feels that the amount of funds involved in the case is huge, and a great deal of damage was caused to victims, and at the same time seriously affected the government's financial management," it said in a statement.
But "on an overall assessment of the case, the death sentence may be stayed."
"This is good news. This is what we've been hoping for," said Zhang Yanfeng, Ms. Wu's attorney.
Her death sentence drew an outpouring of protests from China's online community, which questioned its severity for a financial crime. It also drew attention to holes in the Chinese financial system, where smaller businesses often struggle for funding even as giant state-owned enterprises enjoy cheap credit from China's biggest banks.
At a press conference in March, Mr. Wen, the premier, told reporters that the Supreme Court was "taking an extremely cautious attitude toward the Wu Ying case." But he also said her case "reflects how the development of informal finance has still not adapted to the development of our economy and society."
Since then, Mr. Wen has called for breaking what he has called the "monopoly" state-controlled banks hold on lending and taken other steps toward shaking up China's financial system. Chinese officials have authorized a pilot project in Wenzhou, a city in China's Zhejiang province close to Ms. Wu's home of Dongyang, to legalize parts of that city's informal lending system.
Ms. Wu, the daughter of a farmer, got her start as the owner of a single nail salon. She turned it into a conglomerate called Bense Holding Group based in China's eastern Zhejiang province, which prides itself on up-by-the-bootstraps entrepreneurship.
Named in the 2006 Hurun Report—which tracks China's wealthy—as owning 3.6 billion yuan ($571.4 million) in assets, she was ranked the 68th wealthiest person in the country that year.
In addition to her other businesses, Ms. Wu also acted as a sort of bank. According to her lawyers, Ms. Wu received money from investors that she plowed into her own business as well as lent out to others. That made her part of the underground lending system, a general term that encompasses informal lending networks, private investors, loan sharks and others.
The size of the country's underground lending market isn't clear, but economists say it plays a major role in bringing needed funds to small and medium-sized businesses, which account for roughly 80% of China's urban employment. In October, UBS estimated the market could be as much as 4 trillion yuan, or $632 billion, though it said much of it would be focused in the Wenzhou area. By comparison, China's banks issue nearly 8 trillion yuan in new loans annually.
Prosecutors said Ms. Wu collected 770 million yuan ($122.2 million) from her investors with promises of 80% annual interest-rate returns, according to the state-run Xinhua news agency. She wasn't able to return 380 million yuan, prosecutors alleged. Mr. Zhang, Ms. Wu's attorney, contended that she borrowed the money from investor friends and not the general public. Her attorneys have also argued that Ms. Wu plowed the funds into business ventures.
Xinhua published pictures that it said showed some of Ms. Wu's investments, which Dongyang police said comprised more than 100 properties, 41 cars—including Ferraris and BMWs—and more than 100 million yuan worth of jewelry, mostly jade. Mr. Zhang, who said the pictures weren't used as evidence during the trial, said she didn't use investor funds to make personal purchases.
Legal experts independent of the case weighed in after the death sentence was handed down. Zhang Sizhi, a Chinese attorney who was once appointed to defend the disgraced Cultural Revolution-era political leaders known as the Gang of Four, argued that Ms. Wu didn't appear to be planning an escape.
"If there was an intent to cheat, [Wu] would have followed the example of the corrupt, converted the assets and fled—why would there be any assets left to recover?" he wrote in an open letter in February to the Supreme People's Court.
The sentence also came as China's government has sought to temper the judiciary's use of the death penalty. China doesn't disclose capital punishment figures, but San Francisco-based human-rights group Dui Hua Foundation estimates that 4,000 prisoners were executed in the country in 2011.
In 2006, the central government seized oversight of death sentences from provincial courts, restoring it to the Supreme People's Court after a 23-year hiatus, amid what state media suggested was a rash of errors in judicial judgments and excessive use of the capital sentence.
Last year, the country's top legislative body, the National's People's Congress, reduced the number of capital crimes to 55 from 68, with most of the deleted offenses economic and nonviolent crimes.
"Her case has thrown existing reform proposals into relief and it has also put into relief the trend of the public having a greater acceptance of removing nonviolent crimes from capital punishment," said Joshua Rosenzweig, Hong Kong-based senior research manager for the Dui Hua Foundation.
The court's decision drew an enthusiastic response from China's Twitter-like microblogging services, which have become de facto forums for national discussion.
"If it hadn't been for the fact that the Wu Ying case attracted widespread attention, would she have avoided death?" a blogger called Lin Zongwei asked.
"We hope the final outcome is a good one, and that the [final] sentence won't be an indefinite or very long one, as who knows what will happen in prison?" said one microblogger going by the name Wenju007.
Source: Wall Street Journal, April 20, 2012
