China's Biggest Tax Evasion Case Cracked in Guangdong

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Last updated at: (Beijing Time) Thursday, January 23, 2003

China's Biggest Tax Evasion Case Cracked in Guangdong

Shi Zhenghui, president of Hong Kong-listed Global Tech, has been arrested by Guangdong police over a huge tax evasion, and is awaiting trial, media reported Wednesday.

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Shi Zhenghui, president of Hong Kong-listed Global Tech, has been arrested by Guangdong police over a huge tax evasion, and is awaiting trial, media reported Wednesday.

Shi Zhenghui is accused of evading nearly 200 million yuan (US$24 million) in State taxes between 1999 and 2001, some 93 per cent of the total amount he should have paid.

Shi and his colleagues have confessed their crimes and are awaiting public trials in Guangdong Province's biggest case of this kind.

Shi's case first came to light in 1998, when he smuggled 30,000 mobile phones into the country.

Although Shi provided dozens of official import certificates in an attempt to prove he was acting above board, these were later found to be counterfeits.

When Guangdong police started further investigations, they realized this was merely the tip of the iceberg.

Over the next three years they amassed a massive amount of evidence for the tax evasion case.

Police found that, as a sales agent for Samsung mobile phones, Shi's company had tried every possible means to avoid paying sales taxes.

Shi ordered his subordinate companies to counterfeit receipts and financial reports in order to evade a huge amount of taxes. His company counts the sold mobile phones as discarded ones to lower its claimed sales incomes.

Police departments found that Shi had business interests in 18 provinces across the country. More than 100 medium or large-scale enterprises got involved in Shi's delivery chains.

After obtaining firm evidence, Guangdong police detained Shi Zhenghui in November 2001, when he entered the Chinese mainland on a business trip.

The company's secret financial headquarters in Guangzhou were later revealed, and 9 million yuan (US$1.08 million) in cash, seven sedan cars and large amounts of secret financial documents were confiscated.

Sources within the Police Bureau of Guangdong Province contributed the disclosure of Shi's case to a long-lasting anti-tax-evasion campaign in the province.

The bureau uncovered nearly 300 tax-evasion cases in 2002, winning back 300 million yuan (US$36 million) for the State.

The hardline acts adopted in the province against tax evasion have resulted in a fall in such cases by between 30 and 40 per cent, the sources said.

The battle against tax evasion across the country has also been a major priority in recent years.

Sources with the State Administration of Taxation of China said detected tax-evasion in past five years surpassed 200 billion yuan (US$24 billion).

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