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There may be one politically palatable solution: Because Lai came to Canada on a Hong Kong passport, he may be sent there instead of China. Hong Kong has a readmission agreement with Canada and no death penalty. Although Hong Kong has been a special administrative region of China since 1997, it has never extradited a fugitive to the mainland because of differences in the judicial systems.

Sending Lai to Hong Kong could save face for Canada, but it may not save his neck. The Chinese government claims that Lai’s Hong Kong passport could be nullified because it was obtained with the help of bribed officials. Hong Kong officials would have to decide whether to invalidate the document and would certainly come under extreme pressure from Beijing to do so. In the meantime, Canada mulls its next step.

“The government has been talking quietly with Beijing, negotiating this,” said Boulton, the lawyer. “But in Beijing, they have already held the trial and decided what his sentence will be.”

Canada’s Haven: For Notorious Fugitives, Too?
By JAMES BROOKE
Published: December 29, 2000
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OTTAWA— From a Vancouver detention cell, Lai Changxing, the man charged with masterminding the largest corruption scandal in modern Chinese history, presents Canada with a devilish dilemma.

Deport him to China for trial on economic charges, an almost certain guarantee that he would be executed? Or grant China’s most-wanted man asylum and unwillingly tell the world that Canada is a sunny place for shady people, a haven for international suspects facing excessive punishment at home?

”Canada is clearly not a safe haven for criminals,” Murray Wilkinson, a Canadian immigration enforcement officer, said recently at a political refugee hearing in Vancouver. Referring to Mr. Lai and his wife, Tsang Mingna, who is also under detention, he charged that they were ”trying to hide behind the refugee system of Canada.”

The case has implications for the United States. An American interagency report released this month by the White House said Canada had become a North American port of entry and haven for Asian gang leaders, who could ”conduct criminal activities that impact our country.”

Traditionally, Canada, a liberal country without a death penalty, has resisted deporting asylum applicants who are likely to be tortured or executed after returning home.

But Mr. Lai, 42, who quietly appears at detention hearings dressed in green prison garb, is no ordinary asylum applicant. And China is no ordinary petitioner. Two months from now, Canada, which wants to diversify trade and reduce dependence on the United States, is to send to China a 10-day trade mission of 300 business executives, led by Prime Minister Jean Chretien.

Mr. Lai, according to court documents sent from China, was the kingpin of an enterprise that smuggled $6.4 billion worth of goods into China, evading $3.6 billion in duties.

Operating out of the southeastern Chinese port city of Xiamen, Mr. Lai, Chinese prosecutors say, smuggled shiploads of oil, rubber, cars, cigarettes and cellular telephones and other electronic equipment. Navy boats escorted the ships into harbor as part of a vast ring of corruption that Mr. Lai oiled with millions of dollars of bribes and a guest house known as the Small Red Mansion. There, he wined and dined key officials and secretly videotaped them cavorting with ”hostesses.”

The son of peasants who has only a sixth-grade education, Mr. Lai built a commercial trading empire in southern China and in Hong Kong. At the height of his power, in the summer of 1999, he was chairman of the Yuanhua Group, which had holdings that included the Xiamen municipal soccer team and a replica of Beijing’s Forbidden City, a tourist attraction north of the city. Just before his fall, he broke ground on what was to be the city’s tallest building, the 88-story Yuanhua International Center.

But according to the Chinese government, Yuanhua, which means Fare Well, flourished because he avoided import duties by paying off dozens of military, police, customs and party officials.

In summer 1999, Beijing decided to crack down on the smuggling ring. Feeling the pressure, Chinese court documents say, Mr. Lai went to the top, offering a $240 million bribe to Prime Minister Zhu Rongji.

Through his lawyers, Mr. Lai asserts that he merely ended up on the wrong side of a political fight in China and that testimony against him was obtained through torture.

On Aug. 14, 1999, Mr. Lai, using a Hong Kong passport, fled with his wife and three children to Vancouver.

Two of his brothers did not move fast enough and were arrested. In June, Chinese government investigators visited Mr. Lai in Canada, bringing along one brother in an attempt to persuade him to come home. Mr. Lai probably knew at that time that the Chinese authorities had jailed eight relatives. He declined to return to China, and the family promptly filed for refugee status.

In Canada, Canadian officials say, Mr. Lai lived an easy life, consorting with members of Chinese gangs, losing at least a quarter of a million dollars at gambling tables, and paying his bills from a $1.5 million account at the Hongkong and Shanghai Banking Corporation. In September, he and his family were found eligible to pursue refugee status, and in October they filed the necessary documents.

Meanwhile, back in southeastern China, things were not going well for the relatives, business associates and government contacts Mr. Lai left behind.

Last month, 12 defendants were jailed for life, and 58 others received lesser jail sentences. The brother who visited him in Canada received 10 years. A brother lured from Australia received 15 years. Death sentences were meted out to 11 defendants. This month, a second round of trials began in Xiamen and other cities for up to 100 suspects.

On Nov. 23, Mr. Lai was arrested in a casino hotel in Niagara Falls, Ontario.

”The Chinese want him back very badly, and Canada seems to be going along with it,” complained Alistair A. Boulton, a Vancouver lawyer who is seeking to have the detained couple released, pending a decision on their application for refugee status. Asserting that back in China the couple would face the death penalty, he said of his clients, ”They do not want to be killed.”

Sometimes, Canada has deported criminal suspects after negotiating promises from foreign officials to forgo the death penalty. But earlier this year, this did not work with China, a country that does not have an extradition treaty with Canada.

In January, Canada deported to China Yang Fong, a 35-year-old Chinese citizen wanted on charges stemming from a 10-year-old computer fraud case that involved $130,000. Canada deported Mr. Yang after receiving promises that he would get no more than a 10-year sentence. Instead, Mr. Yang was executed.

Believing that execution is the fate that awaits Mr. Lai, his lawyer plans to fight any removal from Canada. Mr. Boulton said that if Mr. Lai and his wife were sent to a third jurisdiction, Hong Kong or Panama for instance, they would end up in China ”lickety split.” He added, ”If Canada cannot stand up to China, I don’t see why Panama would.”

So far, prospects for release do not look good. In one hearing, Mr. Murray, the government officer, argued that the Lai family’s unwillingness to surrender their Hong Kong passports showed ”an intention to use those passports to flee Canada when they decide the stove gets too hot.”

Daphne Shaw Dyck, an immigration and refugee board adjudicator, seemed to agree on Dec. 5 when she refused to release the couple on bond, saying a ”huge bond would be unlikely to tether them to Canada as they have a great deal of money, which judging from Mr. Lai’s gambling activities in Canada, they are quite prepared to lose.”

Photo: China accuses Lai Changxing of heading a huge smuggling ring. (Agence France-Presse)

Correction: January 4, 2001, Thursday Because of an editing error, an article on Friday about Lai Chang xing, a Chinese fugitive in Canada, misstated the English-language name of the company he headed, which was at the center of a smuggling scandal. The company, the Yuanhua Group, uses the name ”Fair Well,” not ”Fare Well.”