China's most celebrated private entrepreneur, Mou Qizhong, will end his days in a prison cell, a Chinese court decided today.
The Intermediate People's Court in Wuhan sentenced Mr. Mou to life imprisonment, ending a remarkable chapter in China's fitful march toward a market economy.
Mr. Mou, 58, became the very model of the new Chinese capitalist in the early 1990's, after Deng Xiaoping kicked off a fresh wave of high economic growth and easy credit. Mr. Mou delighted the Western and Chinese press with his claims of great wealth and his crazy investment schemes, like a string of private satellites to be launched from neighboring Kazakhstan.
At the peak of the media hype, Mr. Mou insisted that his Land Economic Group was worth as much as $240 million and Forbes magazine listed him as China's fourth wealthiest man. Now it appears more likely that he was China's most indebted man.
Mr. Mou's rise and fall say as much about Western misperceptions of China's development as they do about the deep flaws in China's hybrid socialist-market economy. Mr. Mou was more a symbol of how far an opportunist can get on China's political favoritism and lack of transparency, rather than an example of capitalistic entrepreneurship. And his case starkly illustrates the poor monitoring of China's leaky banking system, which is swamped with bad loans.
The Wuhan court said Mr. Mou defrauded the Bank of China's Wuhan branch by drawing $75 million on a letter of credit that was supposed to pay for computer equipment imported from Australia. Mr. Mou apparently spent the money on satellite investments that generated no revenue. When in 1996 Beijing finally told state banks to call in their loans to Mr. Mou, his debts exceeded his assets by about $40 million.
He rose to prominence in 1989, when he openly supported the government's crackdown on pro-democracy demonstrators in Tiananmen Square. China's leaders rewarded him with public recognition, which allowed him the freedom to operate in what is still a tiny, tightly circumscribed private sector.
Mr. Mou was a charmed man -- for a while. Banks readily loaned him money. He was toasted as China's new breed of capitalist at the World Economic Forum in Davos, Switzerland. He ricocheted from one dubious project to another but by 1995 his political capital was running out.
Zhu Rongji, then China's deputy prime minister, had begun an austerity drive and Mr. Mou's high profile drew scrutiny from more sober eyes. In 1996, when he was unable to repay the bank loans, the government began seizing his assets and confiscated his passport. He was formally arrested in January last year and charged with fraud in November.