US$ 2 Billion Chinese Bankruptcy Scandal
On November 30, the Intermediate People's Court of China, northwest Liaoning Province, accepted the bankruptcy application from the Ant Power (YiliShen) Group — once a major taxpayer in the province, now a US$ 2 billion scandal.
The ruling is another blow to over one million penniless farmers — the company's investors and subcontractors. According to an inside source from the Liaoning police, at least 18 farmers have committed suicide.
Established in 1998, Ant Power claimed to use ants as raw material to manufacture a health supplement product and contracted with farmers to raise ants, promising them that if they paid 10,000 yuan (about US$1,350) upfront, they would get back 13,250 yuan (about US$1,790) in 14 months.
Government Officials Endorsed Investment
Using a successful advertising campaign backed up by continuous support from government officials, who included the former provincial governor Bo Xilai and a popular comedian, attracted over one million farmers. Many of them poured their life's savings into the investment and even borrowed money from relatives because they believed it is safe in a company backed by the government.
Protests after Delayed Payments
On October 10, the company announced a one month delay of payments, and subsequently failed to keep its promise another two times. Starting on November 20, farmers started to gather from all over the province and protested for three days in front of the company's headquarter, the Liaoning Provincial Government, and the U.S. Embassy [to attract attention to the situation] in Shenyang, demanding the return of their money.
A Shenyang farmer told The Epoch Times reporter that during the protest, a middle aged female committed suicide in the main hall of the company's headquarter and died immediately. Her body was carried out by the security personnel under the watchful eyes of over 500 people.
Water Cannons Used in Minus 20 Degrees C
Facing the anxious crowd, the company and the provincial government told them to “go home and wait for one month to get an answer.” On November 22, the authorities mobilized over 20,000 police to disperse the crowd with water canons in temperatures below -20 degree C.
Most of the farmers invested their entire pension, relocation compensation funds, children's education funds, and many also borrowed large sums of money. After they realized the chance of getting their money back was diminishing, and instead of helping them, the authorities used brutal means to force them to accept the reality. Many farmers psychologically collapsed and chose suicide.
A farmer from nearby Tieling City revealed to The Epoch Times that he obtained some inside information from the Liaoning Provincial police department that there were about 18 farmers who committed suicide, but the actual number could be much higher because of tight information controls.
Some farmers also told The Epoch Times they received inside information that after the government finishes the liquidation of Ant Power, the farmers may only get back 10 percent of their original investment.
Over One Million Victims
According to a survey by authorities, more than 1.1 million households are victims of this scandal. Shenyang City police bureau announced on November 23 that Wang Fengyou, Chairman of the Board of Directors of Ant Power Group, was arrested for setting up an illegal financing scheme of over 15 billion yuan (about US$ 2 billion).
The Ant Power Group was founded in 1998, and is an agriculture enterprise primarily involved in raising ants, ant product development, sales, and has registered capital of 10 million yuan (about US$1.3 million), and its legal representative is Wang Fengyou. Later the company became the supporting agriculture enterprise in Liaoning Province and Shenyang District with more than 8,000 employees, 13,000 sales people, and is a major tax contributor in Liaoning.
In November 2004, the United States Food and Drug Administration (FDA) warned consumers not to use Ant Power, and that it contained similar ingredients as the erectile dysfunction drug Viagra. Even as early as 2003, the Japanese Ministry of Health also came out with similar findings. Despite this, China's Commerce Department awarded Ant Power a place on a prestigious list of businesses. At that time, Bo Xilai was the head of China's Commerce Department.
Ant Power Group was also awarded Shenyang City's “Outstanding Charitable Contribution Award”, “Promoting Shenyang Charity Contribution Award”, “Quality in Sincere, Trustworthy Model National Brand”, etc. Wang Fengyou was also awarded “2006 Chinese Private Enterprise and Industry Leader's Award”, “The Entrepreneur Possessing the Most Social Responsibility Award”, and so forth.