Do Some Economic Crimes Require Capital Punishment?
The English version of Chinaview.cn, Xinhua reported on a very interesting story, which raised the question of how to classify economic crimes.
The story is that: "The chairman of a trading company in northeast China has been sentenced to death after he was found guilty of raising 3 billion yuan (380 million U.S. dollars) from gullible investors for a bogus ant-breeding project between 2002 and 2005.
Wang Zhendong, board chairman of Yingkou Donghua Trading (Group) Co., Ltd. in Liaoning Province promised returns of 35 to 60 percent for the fictitious project under the name of Donghua Zoology Culturing Co., Ltd and Donghua Spirit Co., Ltd."
It is unfortunate that the mainstream press version of the story only reports the absurd side, content to focus on the bogus ant-breeding project.
For example, the focus in the Guardian is on why the bogus ant-breeding project is not so ludicrous, "Wang Zhendong tricked people into buying packages of ants for far more than they were worth, with promises that their owners would reap huge profits by using them to make wine, tea and medicines, the local media reported. Mr Wang's claims were not considered outlandish at first. In the southern province of Guangxi, bags of black ants are soaked in alcohol or steeped in tea and sold as natural remedies for such ailments as arthritis."
But this is not the real issue. The more serious and real issue is: when should an economic crime be treated no different than that of violent physical crime? China appears to have thought through the issue since it death penalty, "though usually reserved for violent crimes, it is also applied for nonviolent offenses that involve large sums of money or are deemed to have a pernicious social impact."
The AP story, which can be read at the Boston Globe, does mention in passing that "Fake investments and pyramid investment schemes have become common during China's transition from a planned economy to a free market. Chinese leaders have tried to eradicate the scams, fearing widespread losses could add to already percolating social unrest." But there is nothing more to the AP story about how the Chinese decided to include economic fraud as a capital punishment.
Michael Katz's article, over at the www.street.com, also makes passing reference to our own corporate villains. "If Bernie Ebbers and Jeffrey Skilling think the punishments for their corporate misdeeds were harsh, they should be glad they're not Wang Zhendong."
But, again, there is virtually no discussion about what makes an economic crime worthy of the same type of reprobation that we have for a violent crime.
In this case, was the suicide of an investor a factor?
How was the possibility of social unrest a factor?
Was the size of the fraud, $380 million, a significant factor? If so, does anyone want to verify that there was every that amount stolen?
It is time that we consider seriously the question of when an economic crime is in fact a violent crime, in principle no different than rape or murder.
