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China Executes Man for Ant-Breeding Scheme

Wang Zhendong, the man at the center of the Yilishen investment scam that resulted in mass social unrest, was executed Wednesday. The Associated Press reports:

Wang, chairman of Yingkou Donghua Trading Group Co., had promised returns of up to 60 percent for investors who purchased ant-breeding kits from two companies he ran. Ants are used in some traditional Chinese medicinal remedies, which can fetch a high price. Wang sold the kits, which cost $25, for $1,300, local media reported earlier.

Wang attracted more than 10,000 investors between 2002 and June 2005, when investigators shut down his companies. The closure of his business set off a panic among small-time players who saw their life savings disappear overnight.
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- November 29, 2008 9:31 PM
Al-Jazeera on the Yilishen Ant Farming Scandal

Below is Al Jazeera’s news video about the Yilishen scandal, via Youtube:

Thousands of people across China have been conned out of their life savings in a massive investment scam involving ant farms. A chairman of one company in Liaoning province has been sentenced to death for duping investors out of millions of dollars. Tony Cheng met one hopeful investor in Shenyang who fell victim to the con.

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- February 20, 2008 8:20 PM
Photo: Yilishen ant farmers surround the local Shenyang government building in November, via Global Voices

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- January 12, 2008 9:04 PM
Photo: The headquarters of Yilishen and its CEO

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- January 12, 2008 7:31 PM
Trail of Risky Investments in China - Mark Magnier

The Los Angeles Times takes a closer look at the victims in the Yilishen ant-farming scam:

The story of Yilishen illustrates the get-rich-now mentality here, the constant search for a new angle by those struggling to make a go of it with the communist economy having all but given way to private enterprise, and the frequent collusion of government officials in shady dealings.

Old rules of caution don’t carry much weight in a society that has seen some become absurdly wealthy, seemingly overnight. And government officials often are first in line to fleece the laobaixing, or common folk.

Instead of siding with Yilishen’s victims — mostly poor farmers, construction workers and the unemployed — the government has blocked Internet postings and ordered reporters off the story, ant farmers say. Attorneys in the nation’s capital have been discouraged from representing any of them, according to the website of the Beijing Municipal Lawyers Assn. [Full Text]

See also “Ants and pyramids: China scams abound,” about the phenomenon of scamming in China, from Asia Times.
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- January 12, 2008 10:25 AM
Why the Yilishen Ant Farming Scandal Was the Perfect China Story - William Moss

From Imagethief blog:

Imagethief recently found himself huddled in a wintry hutong courtyard in conversation with two longtime Beijing-based foreign correspondents. During this discussion we came to the conclusion that the recent Yilishen ant-farming scandal is more or less the perfect China story. It brings together at a stroke all of the elements of the modern Chinese story. And surreal story it is.

If you’re not familiar with this incident (and you really should be), you can go read Mark O’Neill’s comprehensive article on Asia Sentinel, or any of several other stories which, collectively, have generated something of a bumper crop in pun headlines.
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- December 26, 2007 6:39 PM
Wang Dan on “Tiger, Ants and Chang’e” - C.A. Yeung

From Under the Jacaranda Tree blog:

Wang Dan, a Chinese dissident and student leader in the 1989 Tiananmen Square Protests, has published an article at the Independent Chinese Pen Centre in which he discusses the political implications of the Tigergate Incident, the Yilishen Scandal and the Chang’e Moon Photograph Saga.

… The following is my translation of Wang Dan’s article:

“Two incidents have captured the attention of netizens in China lately. They are the Fake South Tiger Photograph Incident, and the Yilishen Scandal. The fake photograph is obviously a part of a scam. I do not intend to speculate about the political powers behind the scenes. I only want to point out that the Chinese authorities’ reaction to the Tigergate incident is surprisingly open; to date, the ‘Imperial Guard Against Public Opinion‘ has made no attempt to curb open discussions. It is as if traditional mass media and the Internet in China have suddenly been granted a right to freedom of speech. This opportunity for open discussion is the reason why the Tigergate Incident has had such an impact on Chinese society. As the Tigergate Incident was unfolding, a protest broke out among ant farmers in Shenyang. Tight information control over this scandal serves as a solemn reminder that the CCP has no intention of relinquishing its control over public opinion.” [Full Text]
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- December 18, 2007 4:31 PM
Chairman of Yilishen Arrested on Charges of Instigating Social Unrest – China.org.cn and Wenhui Daily

The Ant Farming Scam story took a dramatic turn with the arrest of Wang Fengyou, Chairman of Yilishen Group, on charges of instigating social unrest, according to China.org.cn and Wenhui Daily. It’s said that Wang paid more than a million yuan to dozens of his employees to organize protests outside government buildings, in order to seek officials’ help to get out of his company’s financial quagmire.

From China.org.cn:

Wang Fengyou, chairman of the Liaoning Yilishen Tianxi Group, was in criminal custody on allegation of instigating social unrest, police said on Tuesday. [Full Text]

Translation from Wenhui Daily:

Wang Fengyou, chairman of the Liaoning Yilishen Tianxi Group, was arrested on charges of instigating social unrest on Dec.7. Wang is suspected of organizing and instigating ant farmers to demonstrate in front of local government departments.

To cover up his company’s financial fiasco and shift tension, Wang paid more than one million yuan (about $150,000) to 46 employees of various company branches and about $50,000 to 11 managers to organize and instigate art farmers to petition with local government departments.
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- December 11, 2007 11:03 PM
A Blow to Citizen Bloggers

From Global Voices Online blog:

Below is Zola’s recount of what he’s been through over the past few days and his abrupt conclusion. In a second blog post since his forced return earlier this week he talks of redirecting the space to focus more on blogger education, but also mentions some unfinished business related to his time in Shenyang.

It’s not the specific type of violence he claims he encountered at the hands of police while in custody there, he seems to have brushed that off. Nor is it having been in custody for more than the legally allowed 24 hours or possibly having been turned in by the ant farmer he was trying to help. Zola, reminding readers of his rural socioeconomic background, wants back the USD160 he says security agents confiscated while he was being held; in this message to readers, he threatens to sue to get it back. [Full Text]
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- December 9, 2007 9:23 AM
Yilishen Commits Fraud, Goes Belly Up: Authorities Stick to a High Standard to Cover Up News - China Times

An article in the China Times posits that the health supplement brand Yilishen had “powerful and mysterious political connections,” which contributed to the scandal in which thousands of ant farmers lost all their money. Following large-scale demonstrations by the farmers, news about the incident has been tightly controlled inside China.

From Taiwan’s China Times （中国时报), translated by CDT (With thanks to Japhet Weeks for the translation):

Yilishen commits fraud, goes belly up: Authorities stick to a high standard to cover up news

Using Zhao Benshan, the famous comedy actor, as its spokesperson, Yilishen was well known for a time. But recently a case of fraud has caused the company to go belly up, and tens of thousands of ant farmers, who were hoping to get rich quick but ended up losing everything, have clashed with the police in an effort to get Liaoning’s provincial government to resolve the issue. The fact that the Chinese authorities stuck to a “high standard” in covering up news reports of the incident, as well as the way events progressed, both seem to indicate that there were likely powerful and mysterious political connections at play behind the scenes.
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- December 8, 2007 4:21 PM
“Nailhouse Blogger” Detained & Interrogated, Web Crackdown On “Ant Farmer” Story Continues… - Rebecca MacKinnon

From RConversation:

Zhou Shuguang, aka “Zola,” reports that he is home safe in Changsha after being detained in Shenyang, interrogated, made to write detailed reports on everybody he met and everything since arriving in Shenyang to blog about the Yilishen “ant-farmer” protests, had his ID and money confiscated, punched around the head and neck a little when he objected to being forced to return by air (and pay for his own ticket) rather than travel by train, and then escorted by two state security police on the plane back to Changsha. He has been told not to go far, that they hope he will focus on his vegetable-selling business, and to report to the local police if he needs to go anywhere. [Full Text]
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- December 7, 2007 4:04 AM
Thousands Protest Over Financial Losses From “Ant Farming” Scam

More on the “ant farmers” in Shenyang, who were hundreds of thousands of mostly poor workers and farmers, many of whom lost their life savings in a financial scam. News about the incident and subsequent protests has been strictly censored from online and other media in China. From chinaworker.info on 30 Nov 2007:

Thousands of people in Shenyang, capital of north-eastern China’s Liaoning province, took to the streets over several days last week, surrounding government offices to demand government help in recovering money from a pyramid-style financial scheme to raise ants for the manufacture of an aphrodisiac drug. Reportedly at least 1,000 anti-riot troops and police have been deployed in Shenyang, to quell the protests and shield the headquarters of the provincial government and CCP (China’s supposedly ‘communist’ ruling party). [Full Text]

Here is a video clip from right before the police used force to clean up the gathering space on November 21, 2007. A spokeperson for the provincial government says (translated by CDT):

“…Please look at this issue from the viewpoint of the market economy; be cooperative with the government and corporations to pass this difficult time, instead of putting pressure on the government… Maintain social order, don’t be used by enemies… There is a very small portion of people who are hostile to the government, and others who are in favor of chaos. Therefore, everyone must stay calm and clear-minded. At a moment like this, only listening to the Party and government is reliable. Only by listening to the Party and government, can one reduce their losses. One must cooperative with the government, preventing social instability and unpleasant events.”According to a report from Radio Free Asia, the Liaoning police did announce that more than twenty people are under administrative or criminal detention, charged with “inciting the masses.”

For more on this story, “And Millions fear losing life savings in Chinese ‘aphrodisiac ant farm’” by Kim Hunter Gordon:

It was an offer too good to refuse. A guaranteed 30 per cent annual return - Chinese government approved and promoted by the nation’s best-known comic - on a novel scheme to raise giant ants for use in the production of an aphrodisiac.

Laid-off workers and pensioners in the poor Liaoning province believed what they were told and put their money into the scheme promoted by the Yilishen company.

But with payments frozen for the past two months, China has now ordered a complete media blackout on coverage of a burgeoning scandal, raising suspicions of negligence and corruption at some of the highest levels of government. [Full Text]

Read also: Chinese protest at squashed ant investments by Richard Spencer in Telegraph. Several reports by Chinese journalists on this event (already censored in Chinese cyberspace) are here (in Chinese.)
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- December 6, 2007 11:09 PM