Rising Chinese businessman killed on party official's orders

XIANYANG, China — Zhu Baoqi should have been a shining example of China's economic miracle in the heartland of the ruling Communist Party. As government funds flooded into industry and construction across his home province of Shaanxi, Zhu became a rich man.

Starting in the 1990s, Zhu invested in former state property, trading up from a cement factory to oil fields, and then to a large coal mine. He moved his family out of cramped, bare concrete workers' housing to a three-story villa surrounded by honeysuckle bushes and fruit trees.

He rose with his province's fortunes to become a billionaire in Chinese currency, the sort of man the nation is depending on as it transforms into an industrial juggernaut. From 1990 to 2008, Shaanxi's daily economic output rocketed by 17 times. The clusters of cranes swinging in some sections of the provincial seat of Xi'an, where a major subway system is being built, evoke Dubai.

At the end, though, Zhu's ambitions couldn't keep up with the frenzy, and he ran afoul of party officials feeding at the trough of local projects. A local potentate who'd wanted to invest in Zhu's coal mine sent two men to his home just past midnight on June 15, 2008. One of them pulled out a blade and stabbed the 62-year-old Zhu repeatedly, leaving him for dead.

Late last month, a Shaanxi province court handed down death sentences for one party official and the thugs he hired to kill Zhu. Another official was given four years in prison.

The murder reportedly was part of a backroom deal to seize Zhu's coal mine, a damning example of what goes on behind the scenes of China's financial success.

While the central government likes to project the image of an authoritarian state that's creating a hybrid version of capitalism, many of those in charge of development in the interior behave more like mafia dons than like party cadres.

Zhu's tale, compiled from interviews with local residents, official Chinese press accounts and federal court and prosecutor's publications, makes it plain that even a cunning operator can quickly lose his footing, if not his life, doing business in the country's provinces.

"He earned too much money, which brings great danger," said Zhang Fanxiu, a neighbor of Zhu's for more than a decade. "A lot of things in China have to be done by working together with local officials. There is a lot of risk."

In dark red letters chiseled into rock, a sign inside the state museum says, "Yan'an is the holy land of the Chinese Revolution." Outside, a towering statue of Mao Zedong looks over the town, which sits on the Yellow River, beneath the rolling hills of coal country.

Yan'an is an icon in China's modern history and in Communist Party mythology.

During the 1930s, Communist rebel forces ended their famous Long March near Yan'an. Their retreat from the nationalist army allowed them to regroup and helped propel their revolution and solidify Mao's national political career.

Today, the town is filled with massage parlors, karaoke bars and cheap new hotels, the sort where prostitutes service midlevel bureaucrats and businessmen.

One recent morning, men in their early to mid-40s ambled out of the hotels on Bai Mi Avenue in Yan'an, accompanied by young women in their early 20s wearing high heels and short skirts. They paused across the street from a group of junior government workers doing synchronized calisthenics on the sidewalk, sneering a bit as they walked by.

This is where Zhu Baoqi was hoping for a fair deal, but got a death sentence instead.

In early 2004, Zhu bought the mining and management rights to a formerly state-run coal mine near Zichang, roughly 45 winding miles north of Yan'an. He laid off workers who'd thought they'd had jobs for life, and he planned to invest in upgrading the mine.

"Zhu first told us that he would continue to employ us at the coal mine, and then he told us he didn't want to use us anymore," said Wang Jie, who'd worked at a repair shop there for more than a decade. "Of course we hated him, because he didn't fulfill his promises to us."

Wang and his fellow workers went to Yan'an, the biggest city nearby, to petition the government for jobs or pensions beyond their severance payments. The government in Yan'an didn't want to hear about their troubles and turned them away, Wang said.

Back at the mine, word began to spread that Zhu had gotten himself into a position he couldn't quite afford. Guo Hong'an, who sat on a Communist Party advisory board in Zichang, apparently heard the rumors and smelled an opportunity.

In March of 2008, he approached Zhu, saying he represented an energy company with ties to a large firm. He offered Zhu a loan of 5 million yuan, more than $730,000, with the rights to the mine as collateral.

For reasons that aren't clear, Zhu then essentially doubled down, striking a deal with Guo worth 285 million yuan, or almost $42 million, making him a partner in the mine.

After the arrangement was sealed, Zhu looked deeper into Guo's background and found that not only did his company have no link with the bigger firm, but Guo also lacked the capital to develop the mine, according to state media. Worried that he was being swindled, Zhu demanded that the agreement be revoked.

"He was not cautious about this deal. If he had been cautious he would still be alive right now," said Zhang Jianwu, who lived next to Zhu in the villa community in Xianyang.

Zhang spoke affectionately of Zhu, but said he was always overreaching. Zhu's former neighbors at the workers' housing complex said that when Zhu's family moved out of the drab compound, they left all their furniture and many of their belongings behind. He was in a rush to have a bigger life.

"When I first met Mr. Zhu, he didn't have lots of money. He got into debt buying the house, and sometimes the real estate agent would drop by and ask him when he was going to pay back the money," Zhang said. "Then the oil business started to get better, and after he got this huge amount of compensation from the government (for the oil fields), he used that money to invest in the coal mine."

When Zhu asked to tear up the contract for the coal mine, Guo turned to the deputy secretary of Yan'an's government, who also directed the petitions and appeals office. Ironically, it was the same place that Zhu's miners had pleaded their case. The official, Wang Zhiguo, agreed to mediate an agreement.

Unbeknown to Zhu, Guo had arranged to give Wang a kickback of 2 million yuan, more than $290,000, if Wang found in his favor, according to a publication overseen by a Chinese government agency for prosecution and investigation.

Wang ordered Zhu to return the 5 million yuan loan and another 5 million yuan that Guo also had given him. He didn't stop there: Zhu also would have to give Guo an additional 30.5 million yuan, almost $4.5 million, in compensation. To drive the point home, Guo reportedly sent men to take the coal mine by force.

Zhu was trapped. He began paying the millions of dollars to Guo, but it didn't matter. Guo was out for blood, thinking that if Zhu were gone completely, he could take the mine with even less trouble, according to court testimony reported by state media.

In Yan'an, once the seat of a revolution against a corrupt nationalist regime, that's how business is done these days. A few weeks later, Zhu was dead.

Although Guo and two of his henchmen got the death penalty and Wang got four years in prison, the head of the propaganda department at the court that tried them shrugged off the implications of the case.

"Crimes like murder and robbing and stealing are quite common these days in China. People usually don't pay attention," Li Tiesuo said. "If Zhu wasn't a billionaire, it wouldn't have created this big stir."

The Yan'an government had no comment. A senior propaganda official who refused to give her name came to the gate outside the main government building and denied knowing anything about the arrest of Wang, the city's deputy secretary. "I shouldn't talk about this with you," she told McClatchy.

With that, the official was gone. There was business to do, and nobody wanted to talk about the death of Zhu Baoqi.


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