Charity vs. Money Laundering: 70 Million Yuan Missing
A well-known Chinese whistle blower has revealed that the
charity Smile Angel Foundation (SAF) is missing about
70 million yuan ($11.46 million) of donations.
The Beijing-based SAF was founded by Chinese singer
Faye Wong and her former husband Li Yapeng.
The foundation was allegedly involved in money laundering
with participating hospitals.
Analysts say many charity foundations in China
have become money laundering tools for corrupt officials.
The amount of funds misappropriated by a private foundation
such as SAF is tiny compared to the money laundered in the
name of state funded foundations such as the Red Cross,
the Social Security Fund, or the Poverty Alleviation Fund.
The Smile Angel Foundation is a charity
founded by singer Faye Wong and actor Li Yapeng
to pay for operations for Chinese children born with clefts,
and it is affiliated with the Red Cross Society of China.
Netizen Zhou Xiaoyun broke the news online with his real
name, saying the cost of each operation is 5,000 yuan ($800).
More than 8,500 patients have received treatment
from the foundation in the past six years since its founding.
However, data published by the foundation shows that each
operation costs as much as 99,000 yuan ($16,000) on average.
Zhou Xiaoyun says the audit report for the SAF shows that
its total expenditures over six years is 140 million yuan.
A difference of more than 70 million yuan ($11.5 million)
remains after the deduction of actual cost.
Subtracting the cost of 22 million in ads and administration,
there is still a difference of 50 million yuan.
Participating hospitals have also claim a 20 percent discount
to patients funded by the SAF.
Therefore, there is still an actual difference of 70 million yuan.
Gong Shengli, financial analyst: “Private funds, relief funds,
or aids are prone to this type of misappropriation when the
management lacks general principles.
Compared to the state funded foundations, such as the pension
misappropriation of 700 million yuan ($116 million)
by Chen Liangyu, those private funds are relatively minor."
The whistleblower reported the participating hospitals are
mainly private owned and specialized in breast augmentation
rather than the facial surgery.
Some of them are also suspected of fraud, fined by the health
department, and four of them even later closed down.
After the Beijing Smile Angel Children’s Hospital founded by
the SAF opened in 2011, it offered operations costing as high
as 15,000 yuan, and is suspected of money laundering .
However, co-founder Li Yapeng disputed the report
via his microblog.
Gong Shengli: “The dirty money needs a way out.
To get it into the monetary system they pass it through SAF’s,
bank accounts in the name of offering so-called support to
the foundation, and for the rest to get out through this channel
is quite normal and becomes legitimate."
Gong Shengli says the corrupt officials are fairly uneasy
with the misappropriated money.
They employ every means to hide the dirty money, such as
gas tanks, toilets, fish stomachs, chimneys, and septic tanks.
Three years ago, an Internet post revealed an exhibition
showing the “achievements of the hit the gangsters campaign”
by the Chongqing Municipal Public Security Bureau.
A pile of as much as 20 million yuan ($3.3 million) in
dirty money which had been hidden in the mud under a pond.
Numerous money launderings in the name of
charity foundations have been exposed in recent years.
Five years ago, more than 100 well-known artists such as
Fang Lijun raised 84.7 million yuan ($14 million) for relief
aid to Wenchuan Earthquake victims through China Red Cross.
After the earthquake in Ya’an City, Sichuan, Fang Lijun asked
China Red Cross again the whereabouts of the charity money,
China Red Cross finally admitted the funds were misappropriated.
Guo Meimmei, who claimed to be the general manager of Red
Cross Commerce, had boasted online about her 5 billion yuan
($826 million) of savings, luxurious purses and cars.
This led to public speculation on her sources of wealth.
Gong Shengli: “A big problem exists in China’s education,
especially in morality.
Since 1964, what the Chinese have lacked most
is a conscience.
Lacking moral conscience,
they dare to do anything as long as money is involved."
Guo Meimei’s online post has discredited China Red Cross.
When China Red Cross was calling for donations online
in April last year after the Ya’an earthquake, tens of thousands
of people responded to the call by telling it to “get lost.”
The misappropriation of the charity money has people to
believe donating to China Red Cross is tantamount to a crime.
Consequently, fewer and fewer people are willing to do any
charity work in China.
Interview & Edit/LiuHui Post-Production/ZhongYuan