Amid Pandemic, Chinese Officials Ordered Medical Supplies From Abroad, Then Sold Them for Profit

September 13, 2020 Updated: September 17, 2020

A Chinese senior official’s grandson says he participated in a scheme to hoard personal protective equipment and other medical supplies from foreign countries on behalf of corrupt officials in China, who then sold the products at a profit to local governments and eventually individuals seeking to cope with the COVID-19 pandemic.

Jiang Pengyong initially agreed to the scheme because he thought he was contributing to the nation’s epidemic response. He said procured the goods through his Shenzhen-based e-commerce company, Shenzhen Jipingyong Tech Co., which has an office in South Korea and where Jiang is based.

Huang Zhongnan, his broker in China, told Jiang that the medical supplies would be donated to frontline healthcare workers or ordinary citizens who needed it to fend against the spread of COVID-19.

But Huang later revealed that the medical supplies were handed off to officials in government and foundations, who sold them for a profit.

After Huang no longer needed to purchase medical supplies from overseas, Jiang received a notice that Chinese government authorities in Suzhou city were suing him for committing contract fraud.

Jiang decided to go public with his story to unveil the corruption in China.

Epoch Times Photo
The masks that Jiang Pengyong bought in South Korea, and the conversation records between Jiang and Huang Zhongnan, a broker for Red Cross China, in February 2020. (Provided to The Epoch Times)

Scheme

In January, as the CCP virus outbreak became severe in China, Huang, a broker for Red Cross China, approached Jiang and asked him to help purchase medical supplies from foreign countries.

Red Cross China, unlike its international counterparts, is directly funded and operated by the Chinese regime. It was previously involved in a local corruption scandal in 2011.

Jiang was aware of Red Cross China’s unsavory reputation. But at Huang’s insistence, he finally agreed.

“The epidemic was very severe … I felt that it was my duty to help my people,” he said. Chinese medical staff in Wuhan, the epicenter of China’s outbreak, was short on PPE during the height of the epidemic.

Meanwhile, the central government was allocating funding to local governments and charities to procure medical supplies, ostensibly to give out to people in need.

According to Jiang, Huang was a broker for the Zhejiang provincial branch of a major charity; branches of Red Cross China; and several local governments in Zhejiang.

Through Huang’s company, Enbo (Hangzhou) Industrial Company, acting as the government vendor, local governments would purchase three million surgical masks from Jiang at the unit price of eight yuan (about $1.16).

The contracts were between Huang’s company and Jiang’s company.

Epoch Times Photo
An official document from the Wujiang district health commission in Suzhou City, issued to allow Jiang’s PPE orders to be shipped, on Feb. 7, 2020. (Provided to The Epoch Times)

Local governments would pretend that they were purchasing the supplies in order to donate to charities.

But in reality, Huang later told Jiang in late January, he would sell the masks to local branches of Red Cross China and other charities at a higher price, at 35 yuan apiece ($5.06).

The profits would be shared between the government officials, Huang, and Jiang.

Jiang provided copies of text messages on popular messaging app WeChat between him or his staff and Huang to arrange the shipments, as well as purchasing orders between Huang’s company and local government entities.

For example, one dated Feb. 1 and issued by the center for disease control and prevention in Jianggan district, Hangzhou city, confirmed the shipment of “overseas purchased medical supplies” between Feb. 1 and 4.

He also provided copies of bank transactions between him and Huang for the supplies.

Jiang thought it was dishonest to cheat the central government funding, but Huang convinced him that the plan was all approved by local governments.

On paper, the transactions seemed legitimate.

A Feb. 7 document from the Wujiang district health commission within Suzhou city stated that: “to prevent and control the novel coronavirus epidemic, the Wujiang Health Commission entrusts the General Manager of Shenzhen Jipingyong Tech Company, Jiang Pengyong, to purchase PPE overseas. These PPE will be shipped to China by cargo air charters.”

The document was issued so that the shipments would be approved at customs and checkpoints along the transportation route.

But Jiang eventually realized there was a deeper scheme.

Epoch Times Photo
Jiang Pengyong visits a tourist site in South Korea in 2020. (Provided to The Epoch Times)

Shady Deals

On Jan. 31, Jiang was scheduled to be at the airport in Seoul and waited to load a shipment of surgical masks to a dedicated aid plane. Huang told Jiang in a series of WeChat messages that these masks were ordered by the Zhejiang provincial branch of a major charity, for distribution in Wuhan city.

But that day, Huang suddenly told Jiang to ship the masks to Hangzhou city (located in Zhejiang) instead as regular shipments, and not charity goods.

This raised Jiang’s suspicions.

On Feb. 1, Huang asked Jiang to ship 3.5 million KF95 facial masks, a South Korean filter standard similar to the U.S. N95 mask rating.

On Feb. 2, when Jiang’s employee was ready to ship masks to China as aid materials, Huang said in a WeChat text to instead ship the PPE to a Chinese private company.

Huang later revealed to Jiang that officials at Red Cross China and other charities were also in on the deal: they would sell different medical supplies to individual users in China at a profit. Jiang procured them at 6.5 yuan apiece ($0.94), but Huang teamed up with officials to sell them to people in China at 139 yuan ($20.10).

The Epoch Times contacted each of the local health commissions Huang dealt with, as well as the Red Cross China branches that Jiang mentioned. They confirmed that Huang was their contact person but would not provide further details about their business dealings with Huang.

Now Jiang is being sued by the police bureau at the Industrial Park district of Suzhou city. His business bank accounts in China have been frozen. He believes it is retaliation from local Red Cross China officials, after he wasn’t able to complete some of the officials’ requests to purchase supplies—which caused them to lose their down payments.

“No matter if you are doing business with them, or doing something against them, you need to pay a heavy price,” he said.