China's Gao Shan heads home to face charges on $130M fraud ring after eight years hiding in Vancouver

Tristin Hopper | August 13, 2012 7:46 PM ET

AP Photo/Jose Luis Magana

Eight years after he slipped out of China to take up a quiet suburban life in Vancouver, Gao Shan, the accused mastermind of a $130-million embezzlement ring, has returned home to face fraud charges.

The sudden surrender ends Mr. Gao’s careful eight-year bid to evade the international reach of Chinese authorities.

Reportedly, the ex-banker “came to the conclusion that if he ultimately going to be sent back anyway it might be better if he was sent back voluntarily,” said Clive Ansley, a B.C. litigation lawyer who practiced in Shanghai for 13 years.

Mr. Gao is the former manager of the Bank of China branch in Harbin, a city of 10 million near the Russian border. According to Chinese authorities, between 2000 and 2004 Mr. Gao was the ringleader of a scheme to siphon cash from corporate accounts.

‘I don’t think the Chinese government likes to talk openly about it — it’s kind of embarrassing that they couldn’t find these potential criminals before they left the country’

Only weeks before the alleged fraud was discovered, say Chinese officials, Mr. Gao boarded a plane to Canada. Just before leaving, the banker reportedly told colleagues he was merely going to Beijing for surgery. He also instructed a colleague to hold onto his cell phone and leave it on. “Mr. Gao appears to have been trying to create the illusion that he was still in China,” reads the transcript of a 2007 Canadian immigration hearing.

Arriving in Vancouver on New Year’s Eve, 2004, Mr. Gao was quickly sponsored for permanent residency by his wife and daughter, who had been living in Canada since 2002. According to the RCMP, Mr. Gao kept a “low profile” in Canada, carefully keeping his name off mortgage records, vehicle registrations and utility bills. Only after a 2006 car crash did he and his wife reveal their address to authorities.

Soon after, Mr. Gao was arrested by Canadian border officials for misrepresentation. According to immigration authorities, Mr. Gao’s wife failed to report that he was an employee of the Bank of China.

At the time or his arrest, reported the Immigration and Refugee Board, the couple had “been living in relative modesty, with no obvious display of excessive spending.”

As many as 4,000 Chinese fraudsters have fled overseas in recent years, taking with them as much as $50-billion in ill-gotten funds, according to estimates by Chinese media. “Most of them are still living the high life in foreign countries,” wrote the Shanghai Daily on Tuesday.

Ever since Mr. Gao and the Li brothers were traced to Vancouver, the case has fuelled Chinese accusations that Canada, in particularly, is a haven for the country’s financial fugitives.

“I don’t think the Chinese government likes to talk openly about it — it’s kind of embarrassing that they couldn’t find these potential criminals before they left the country — but it’s understood by the Chinese community that there are plenty of [economic crime] suspects living in Canada,” said Jia Wang, assistant director of the University of Alberta’s China Institute.

‘The mortality rate among prisoners with a high political profile is extremely high’

The most high-profile was Lai Changxing, an alleged smuggler dubbed “China’s most wanted fugitive” by state-run media. Accused of running a multibillion-dollar smuggling operation in China’s southeast Fujian province in the 1990s, Mr. Lai fled to Vancouver in 1999. He was deported to China in July, 2011 after a federal court dismissed his application for refugee status. In May, a Chinese court sentenced him to life in prison.

Canadians should take it as a “compliment” that they are favoured by economic criminals, noting that fraudsters are attracted for the same reasons as legitimate Chinese millionaires. “For criminal suspects, it’s not easy to find a place as friendly and multicultural … in which they can live on the money they embezzled or stole,” said Ms. Wang.

Perhaps more importantly, Canada does not extradite criminals who could face the death penalty. Although China has softened its stance on executing economic criminals, extreme economic crime remains a capital offence.

Canadian officials were assured that Mr. Lai would evade torture or death — even though Chinese officials had already executed 14 people in connection with his smuggling ring. Li Dongzhe and Li Donghu, Mr. Gao’s alleged accomplices, were also promised a fair trial before their voluntary return to Chinese soil, which occurred several months before Mr. Gao.

Mr. Ansley remains skeptical. “Put it this way; the mortality rate among prisoners with a high political profile is extremely high,” he said. Lai Changxing’s brother and accountant, for instance, both died in prison under mysterious circumstances.

In refugee proceedings, Mr. Lai told Canadian authorities that the same fate awaited him in Chinese custody. “He thinks that something will happen to him while he’s in jail in China, that he will die of some mysterious illness or something bad will happen to him,” Darryl Larson, a member of Mr. Lai’s defence team told Postmedia on the eve of his client’s deportation.

Both Mr. Lai and Mr. Gao have maintained their innocence, with Mr. Lai adding that the charges against him were politically motivated.

When it comes to the Chinese judicial system, said Mr. Ansley, it is difficult to know for sure. “The Communist Party, some years ago, discovered that accusations of financial corruption are very effective ways of bringing down people who have angered the Communist party in some way,” he said.