Auction of Chinese private enterprise casts suspicion on CCP

Monday, May 23, 2022

The Chinese Communist Party (CCP) auctioned a successful private Chinese enterprise to a brand new company
(Photo: Burst) 

The Chinese Communist Party (CCP) auctioned a successful private Chinese enterprise to a brand new company 

On the afternoon of April 15, without prior notice, a court order gave a verbal notice regarding the continuation of the auction. According to the ruling, Dawu Agriculture and Animal Husbandry Group was auctioned off to a company named Baoding Ruixi Technology Co., with a transaction price of ¥686.1 million. The auction price matched the previous official evaluation price. The Dawu Group’s ¥5.1 billion (~$762 billion) assets are only worth about ¥700 million after appraisal, and Baoding Ruixi Technology Co. acquired Dawu Group at a significantly low price.


Baoding Ruixi Technology Co. was established on April 12, three days before the auction. It then participated in the auction of Dawu Group assets by Gaobeidian Municipal People’s Court and won the bid. Netizens exclaimed that the company was established for the sole purpose of “looting” the assets of Dawu Group. Authorities calculated the ¥700 million registered capital to match the ¥686 million acquisition of Dawu Group.


According to the industrial and commercial information network Tianyancha, the company’s legal counsel Zhao Andong has a registered capital of ¥700 million (the amount that is subscribed and not actually paid), and the company’s business interests include “agriculture, forestry, animal husbandry, and fishery technology marketing services and more.”


According to reports, the hand behind this company is either the government or a “Xinfadi company.” The “Xinfadi company” has reached an agreement with government officials through the back door to take over the Dawu Group and went through the motions in the form of an “auction.” A person familiar with the matter said that the Xinfadi company was the white glove of senior officials in Beijing, and now another “white glove” company was established to “embezzle” the Dawu Group by seemingly legitimate means.


Human rights lawyer Liu Xiaoyuan expressed his suspicions in an online post, “‘the company was only approved for establishment on April 12, participated in the auction and won the bid on April 15, that’s no easy feat.”


“The company was established for the purpose of bidding for the Dawu Group, right?” lawyer Liu continued.


Sun Fushuo, the second son of Sun Dawu, posted on his WeChat Moments at 4 pm on the 15th, confirming the news that the company had been auctioned.


The beginning of Dawu Group’s acquisition involved a land dispute. On June 21 and August 4, 2020, there were two verified conflicts between Dawu Group and the local state-owned farmland. Several employees and managerial personnel of Dawu Group were arrested, which led to Dawu Group protesting publicly. On November 11, Hebei police detained Dawu Group’s founder Sun Dawu, his wife, and his eldest son in the middle of the night. Authorities also arrested nearly twenty executives of the group. The Dawu Group’s assets were seized by officials, and the authorities sent many workgroups to twenty-eight subsidiaries of the group and took away all financial information.


At the end of July 2021, Sun Dawu was sentenced to eighteen years in prison on eight counts of “illegal fundraising” and “picking quarrels and provoking trouble.” Nineteen executives of Dawu Group were sentenced to suspended sentences or sentences ranging from one to twelve years.


The Dawu case was controversial at the time. Sun Dawu’s lawyer believes that Sun Dawu’s behavior complies with mainland laws and is a form of private lending; it does not count as “illegal absorption of public deposits.”


Sun Dawu, 68 years old, is a well-known Chinese entrepreneur who started his business by raising chickens and pigs. He founded Dawu Group in 1985, which encompassed many fields such as planting, breeding, private education, medical care, and elderly care.


In 2003, Sun Dawu was sentenced to three years in prison with a four-year suspension on the charge of “illegally absorbing public deposits.” Liu Xiaobo, a professor at Beijing Normal University who later won the Nobel Peace Prize, commented on the case in 2003:


Agricultural entrepreneurs like Sun Dawu not only despise power and money transactions but also have the courage to speak out. They have both economic resources and organizational skills. They also put forward ideas on getting rid of poverty from the perspective of fighting for farmers’ rights and calling for political reform from the standpoint of constitutional democracy. Their ideas pose a considerable challenge to the current system politically. They are likely to become a new type of “peasant leader,” so the authorities felt the need to use vague laws to rectify this.


Sun Dawu has close contact with celebrities in the Chinese academic and ideological circles. In April 2003, Sun Dawu published an article in memory of Chinese liberal intellectual Li Shenzhi on the website of Dawu Group. Authorities accused him of seriously damaging the image of state organs and fined him. They ordered the group’s website to suspend operations for rectification.


Sun Dawu once praised Xu Zhiyong, a human rights lawyer who defended him in 2003. Police took Xu Zhiyong in February of last year, and courts approved his arrest in June. He and his girlfriend are currently in prison.


When the Chinese authorities arrested human rights lawyers on a large scale in 2015, Sun Dawu spoke up for human rights lawyers and expressed in his writing that the arrest of lawyers brought a terrifying atmosphere to society.


Before the group was auctioned off, the family members of founder Sun Dawu and twenty thousand shareholders publicly protested and questioned the court’s “auction” of Dawu Group. In an open letter to Chinese leader Xi Jinping, Sun Dawu’s second son, Sun Fushuo, asked, “Why is an ordinary criminal case exaggerated and alienated into a highly sensitive political case?”


~Gao Zhensai, Special Correspondent of ChinaAid


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