April 21 (Bloomberg) -- China’s Supreme Court suspended the death sentence for Wu Ying, a woman whose conviction for defrauding investors of $55.7 million highlighted the country’s shadow-banking system and sparked a debate on the use of capital punishment for nonviolent criminals.
The Supreme Court referred her case yesterday back to the court that imposed the sentence and recommended she get the death penalty “with reprieve” because she confessed her crimes, according to a statement on the high court’s website. That means that she can avoid execution with good behavior.
Wu’s case drew the attention of Premier Wen Jiabao, who said at a March news conference that the country must integrate private lending into the economy and the Supreme Court should handle her situation carefully. The sentence was criticized in discussions online and in state media, with commentators saying that China, which executes more people than the rest of the world combined, shouldn’t impose death sentences for nonviolent crimes.
“This decision shows the government is being sensible,” Zhou Dewen, president of the Small and Medium Sized Enterprise Development Association in the southern city of Wenzhou, said in an interview. “There are hundreds of people like Wu Ying involved in private lending, and if it deserves to be killed for, there will be too many death sentences.”
The Supreme Court decision comes in the aftermath of the country’s biggest political disturbance since the Tiananmen Square protests in 1989, the ouster of Chongqing Communist Party Secretary Bo Xilai. The party is seeking to maintain social order as it investigates Bo and his wife in the death of British citizen Neil Heywood, and prepares for a once-a-decade political transition later this year.
Wu, the former owner of Bense Holding Group, was sentenced to death in 2009 for cheating investors out of 380 million yuan -- $55.7 million at the time -- after having raised more than double that amount to fund her business. The Zhejiang Provincial Higher People’s Court rejected her appeal on Jan. 18.
Wu Ying spent more than 10 million yuan on “clothing, cosmetics, food and drink, and four BMW cars,” the Supreme Court said. “She also spent 3.75 million yuan to buy a Ferrari for herself.”
Wu’s lawyer, Yang Zhaodong, didn’t answer a call to his mobile phone yesterday. He said in an earlier interview that his client had been unfairly singled out and wasn’t guilty of fraud.
Wu’s conviction involved a common, illegal practice in China: raising money from the public with promises to pay back high interest rates. Known as shadow banking, these underground lending and investing networks are estimated to total $1.3 trillion, according to Ren Xianfang, an economist with IHS Global Insight Ltd. in Beijing.
The lower court found that Wu was guilty of “fabricating facts, deliberately hiding the truth and promising high returns as an incentive,” Xinhua reported at the time.
In yesterday’s statement, the high court said the case was being sent back “for retrial,” while also saying that the evidence of fraud was sound, previous verdicts were accurate and “the trial proceeded according to the law.”
The court said the crimes caused “great damage to victims, and at the same time seriously hurt the state’s financial management order.”
Next page: China's executions
China has cut the number of executions it carries out every year from 8,000 in 2006 to 4,000 per year now, according to the San Francisco-based Dui Hua Foundation, a rights group. It still executes more people than every other government in the world put together. The next highest is Iran, with more than 360 in 2011, according to Amnesty International.
“This is an important case, it’s a wedge case,” John Kamm, executive director of Dui Hua, said in an interview before the Supreme Court made its decision. “If you look at how many people have been killed for nonviolent cases, the number is immense.”
The daughter of a farmer in Zhejiang province, south of Shanghai, Wu dropped out of technical school as a teenager to work at her aunt’s beauty salon and later opened two of her own, according to the state-run Global Times newspaper. Nicknamed “Rich Sister” for her success, she branched out into a foot- massage parlor and bought 10 cars which she rented out. An entertainment center and a boutique featuring Korean clothes followed, as did investments in real estate and copper.
If the lower court agrees with the Supreme Court’s recommendation, Wu’s sentence could be commuted to life in prison after two years of good behavior, according to Roseann Rife, a death penalty expert with Amnesty International.
The Supreme Court’s recommendation doesn’t necessarily mean the lower court will agree, even in the face of strong public opinion, she said.
“We have seen cases that have been sent back for retrial that have still resulted in death sentences,” Rife said. “The problem external viewers like ourselves and internal stakeholders in China have is that the Supreme Court review process is still not transparent.”
--Yidi Zhao and Alfred Cang, with assistance from Henry Sanderson in Beijing. Editors: Nicholas Wadhams, Douglas Wong