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China charity tales: Where philanthropy meets corruption

Paul French in Shanghai, reports on China’s high profile charity corruption.

In my China Column for Ethical Corporation I’ve written repeatedly about the slightly shambolic emergence of charity and philanthropy in China.

For every good news story about the public reacting generously to a tragedy such as the 2008 Sichuan earthquake another story appears about malfeasance or graft in the charity game.

These stories now segue with an outpouring of stories about callousness in Chinese society (witness the outpouring of hand wringing over the little girl knocked over and left in the street in the southern city of Foshan). The Communist Party appears worried about these trends.

As they control the charity sector through their GONGO system and one-Party state ultimately all these problems fall at their door (see previous podcast on GONGOs).

It does seem that there are still systemic problems in China’s charity sector. Chinese financial professionals in Henan Province have called for an investigation into one of China’s most high profile charities, the Henan branch of the Soong Ching Ling Foundation (Soong Ching Ling was the wife of the founder of the Republic of China in 1911, Sun Yat-sen and so is a revered national figure).

The accusation is that the charity has been ‘abusing and profiteering from donation money’ including investing in a US$6.2mn land project in Zhengzhou, Henan’s capital.

The allegation is a serious one as this is not just anonymous donations going astray – this money is from poor farmers who have invested in the Foundation’s “public welfare medical insurance” scheme, run by the Foundation, and supposedly offering better interest rates than the local banks.

The financial experts argue the land deal makes the fund fragile and any collapse would mean huge losses for very poor farmers.

Xinhua has investigated and found the Foundation to have established numerous commercial speculation companies and that shares in many projects were held not by the Foundation but personally by its secretary Zhang Handong.

No official inquiry has been announced yet but the mere fact that this has been reported, that Xinhua has been allowed to dig around ands that the financial professionals who reported it have suffered no known persecution as yet indicates that things were really bad and something may be done…then again…..