Rice trader invents a US bank, claims to buy it and is exposed by the media.
BEIJING: In a China awash with fake iPhones, pirated DVDs and knockoff Louis Vuitton bags, rice trader Lin Chunping took fakery to a whole new level: He invented a US bank and claimed he bought it.
The little-known businessman shot to fame in January when state media reported that he had taken over Delaware-based Atlantic Bank. The unprecedented acquisition brought him praise: His hometown gave him a prestigious political appointment and state media called his business experience “legendary.”
The only thing that may have been legendary is Lin’s audacity. Not only did he not buy Atlantic Bank in Delaware for $60 million as he claimed, but there is no Atlantic Bank in that state.
Chinese reporters could not locate an Atlantic Bank or a bank registration by Lin in Delaware. He’s under arrest for an unrelated fraud and has been forced to give up his municipal-level appointment to the Chinese People’s Political Consultative Conference, the government’s top advisory body.
Lin, who was arrested in early June, could not be reached for comment. But the 41-year-old’s short, spectacular rise and fall shows how fakery has evolved in China, morphing from the manufacture of copycat goods to entire institutions and careers.
Last year, officials found five fake Apple stores in the southwestern city of Kunming. The stores were modeled after the US company’s iconic stores right down to the winding staircase and the staff in blue T-shirts.
In early June, local press in eastern Shandong province exposed a fake university. Students who did not score high enough on the national college entrance exam to make it into university received sham admission letters to the Shandong Institute of Light Industry, a real school. The students paid nearly 30,000 yuan ($4,800) over the course of four years to attend classes at the institute.
Weeks before graduation, the students learned they would not get diplomas because they were not officially enrolled at the school but in a private training program that rents space from the institute, according to the report in the state-run Jinan Times.
The program organizer had disappeared, the newspaper reported.
Among students, getting ahead by padding resumes or other subterfuge is common.
Zinch China, the Chinese arm of US-based educational networking site Zinch.com, estimates that 90% of recommendation letters to US schools are fake, that 70% of the essays are written by someone else and that half the transcripts are fabricated.
Zinch drew the numbers from interviews with Chinese students, parents and agents.
Experts point to many reasons for the widespread of lack of scruples, from the need to be hyper-competitive to succeed in an over-populated society to an ancient sage who countenanced lying to achieve a higher purpose.
He Huaihong, a Peking University philosophy professor who teaches ethics, takes aim at China’s politics, specifically the disconnect between an avowedly communist leadership and the capitalist economy it oversees.
“Jargon left from a century of political revolution is so disconnected with reality that the society is filled with meaningless, empty talk,” said He.
Lin told Chinese reporters that it took him two years to negotiate the purchase of the US bank, and that the bank had declared bankruptcy in 2008 because of the financial crisis. To add more flair to the story, Lin told reporters that the bank had been running for 85 years and was run by Jews, who are stereotypically seen by many Chinese as having superior business skills.
Lin’s story was particularly captivating because overseas acquisitions are a point of pride in China, showcasing its rising economic power. Lin’s supposed purchase of an American bank signalled both Chinese triumph and US decline.
His claims also cheered his hometown, the eastern city of Wenzhou, which was reeling from a government-imposed credit crunch that had ruined some highly leveraged entrepreneurs, some of whom fled the city and their debts. A few committed suicide.
“People were shocked that an obscure businessman bought a foreign bank and it was a US bank nonetheless. He wasn’t even a banker to begin with,” said Zhu Xiaochuan, a researcher on China’s financial law at CEIBS Lujiazui Institute of International Finance in Shanghai. “The news must be credible because it was in mainstream media. The public were amazed how wealthy Wenzhou businessmen were.”
A profile on the website of the ruling Communist Party’s newspaper People’s Daily depicts Lin as sharp and hardworking, selling buttons as a teenager, then purchasing a copper and gold mine in Ghana and investing in the rice business in China. The profile is still available online.
Lin said he renamed the bank USA New HSBC Federation Consortium Inc. and that the institution had already attracted $40 million in deposits with the prospect of turning an annual profit of $5 million to $6 million. The new name had an air of respectability, borrowing from the London-based global banking giant HSBC Holdings, whose brand is well-known in China.
The story attracted so much attention that Chinese journalists familiar with US banking regulations checked into the legitimacy of Lin’s claims. They found no Atlantic Bank in Delaware and that Lin’s New HSBC was not licensed to offer banking services in Delaware.
When his nonexistent bank was exposed in March, Lin told reporters he made “exaggerations” to raise his social status and to win future opportunities in banking.
Lin is not known to have made any money off his bank claims, but after they were shown to be false he apparently became a target in a police campaign to crack down on economic crimes.
A statement on the Wenzhou police bureau’s website said he is suspected of having falsified invoices worth of hundreds of millions of yuan (tens of millions of dollars) through several of his companies in a tax-evading scheme.