China 2.0

Off-Duty Reporters Are China's Newest Whistleblowers

Recent cases of official malfeasance in China have been exposed not by newspapers but by reporters writing on their personal microblogs.

Watchdogs 2.0
Watchdogs 2.0
Hua Ti

- OpEd -

BEIJING - Several months ago, reporter Luo Changping accused two top government officials of corruption: Liu Tienan, former vice chairman of the National Development and Reform Commission, as well as the head of the State Energy Bureau. Confident that the magazine where he works, Caijing, would lack the courage to name the men, Changping turned to his personal microblog using his real name. Tienan is now under arrest and being investigated.

And recently, Economic Information Daily reporter Wang Wenzhi exposed serious violations perpetrated by several high-ranking executives — including Song Lin, chairman of China Resources, a state-owned enterprise (SOE) listed on the Fortune 500. But like Changping before him, his reporting appeared on his personal microblog account, not in his employer's print product. Again, investigators took notice.

According to Wenzhi, Lin and some of his colleagues were responsible for losing several billion RMB in national assets through dirty dealings during the merger and acquisition of Shanxi Gold and Coking Group. Not only is Lin accused of dereliction of duty, but he also reportedly received a huge amount of money.

China Resources is a central SOE in which Lin has a high-ranking vice ministerial position. Since taking office, China's new leaders have unequivocally broadcast their intention to “crack down on the tigers as well as the flies” — meaning both major and minor offenders — saying they are determined to fight graft. The storm followed the thunder right away. In the last six months alone, 10 officials of similar high rank have fallen from grace. Such efforts demonstrate the Chinese government’s commitment to punish corruption.

Relevant investigative departments will determine whether Wenzhi's reporting about the China Resources managers is accurate. According to the People's Daily, China's Central Discipline Inspection Commission, the Communist Party's anti-graft watchdog, responded very quickly to open a case. China's central anti-corruption mechanism reacted even faster and more aggressively than in the Liu Tienan case. In other words, the government seems to be working with — or at least listening to — the social anti-corruption forces.

And curbing corruption within any institution or society does require enormous collaboration. The government simply can't fight it alone. If it could, reporting mechanisms such as call-in hotlines wouldn't exist. In many countries, a civilian who blows the whistle on corruption can even be given a huge reward.

A country belongs to each of its citizens, and when their “home” is not clean, they have the right and obligation to tidy it. A reporter is first a citizen, so to denounce wrongdoing using his real name is an inalienable right.

Clearly, the recent exposés from these journalists target senior officials and SOE executives. Officials are civil servants whereas SOEs are the people's property. It's the journalists' duty to tell the public loudly if they find any corruption by these people.

In recent years, scandals involving SOEs have continued to surface. For instance, the astronomically priced chandelier incident involving Sinopec, China's major oil and gas company, utterly disgusted the public. Over and over again, similar events have highlighted the serious problem of insider control.

Insider control of SOEs leads to the loss of property rights and exacerbates the unfair allocation of social resources. How to effectively improve SOE managerial structure is a weighty and important topic. So when reporters grasp facts and materials and make public allegations about official corruption, it serves as a very valuable external monitoring force.

Journalists have professional investigating skills as well as advantages in collecting information. It is inherently the media's duty to be the watchdog of public interests and is only right that they speak out against wrongdoing by governmental officials. But the very fact that these exposés by non-anonymous journalists can become such hot news items is an indication that the Chinese press traditionally has not been effective.

What happens if an accusation by a journalist operating on his own proves to be false after a fair and truthful investigation? Can the reporter, as a whistleblower, be charged with defamation?

I am personally convinced that a non-anonymous whistleblower should be forgiven based on the idea that watchdogs of public resources should have immunity. Because only if they are protected can the public's enthusiasm for keeping an eye on those in the position of dominating public resources be maintained. It is fundamentally conducive to safeguarding public interests.

In the case of officials being wrongly accused, they can clean their name easily in today's highly developed social media environment and can avoid a damaged reputation.

On the contrary, if whistleblowers were punished, there would be a dangerous chilling effect. Nobody would dare to speak out about suspected corruption, and this certainly wouldn't be good news for protecting the public interest.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money but the simplest of errors exposed the scam and limited the damage to investors.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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