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    Fraud Allegations Test China’s Philanthropy

    Billionaire Chen Guangbiao’s defamation lawsuit against Caixin Media highlights growing pains of charity sector.
    Sep 23, 2016#charity#media

    An escalating dispute between a controversial Chinese philanthropist and a major news outlet has resurrected the question of fraud in China’s booming charity sector.

    Caixin Online, one of China’s leading business news outlets, published an article Tuesday questioning whether Chen Guangbiao was a top philanthropist or top scammer. The report cited unidentified critics who alleged that Chen reported donations that had never reached charitable causes. 

    Chen is the billionaire owner and chairman of Jiangsu Huangpu Recycling Resources, who is known as much for his colorful media appearances as for his philanthropy. Chen has become widely recognized in the country for his high-profile charity activities since 2010, when he gave away wall-high stacks of cash in person. His 2012 autobiography said he had donated more than 2 billion yuan ($300 million) to charity.

    But Chen’s eyebrow-raising antics have attracted attention, criticism, and controversy, with many questioning the authenticity of the donations and Chen’s motives. According to China's charity laws, individuals, businesses, and organizations are eligible for tax benefits if they donate to charity. 

    On Wednesday, Chen filed a defamation lawsuit against Caixin Media, the group behind Caixin Online, demanding a public apology as well as 1 million yuan in damages. Then on Friday morning, Chen held a press conference, live-streamed on his Weibo microblog, to counter the accusations.

    The press conference at Chen’s company headquarters was no exception to the billionaire’s trademark style. Chen addressed the audience of reporters against a white backdrop decorated with colored photocopies of invoices, with bundles of documents lined up on a table.

    “All the finance books are here on the table,” Chen said during his 40-minute appearance, pointing to the bundles. “You can take them and make a summary.” But he refused to take questions from the floor crowded with approximately 50 journalists, including a reporter from The Paper, a sister publication of Sixth Tone.

    Chen said that he had made good on 99 percent of his promised donations, with the remainder to be finalized in phases. He said not one cent of his donations had come from others, or his company’s accounts. 

    Caixin Media did not immediately respond to calls and emails from Sixth Tone requesting comment.

    The dispute between Chen and Caixin has put the issue of charity fraud in the spotlight once again, as philanthropy grows in China. In 2015, more than 65 billion yuan was donated to China’s social organizations and civil affairs authorities, an increase of 8.3 percent from the previous year, according to statistics from the Ministry of Civil Affairs.

    According to a report from Harvard Kennedy School on China’s 100 top philanthropists from September 2014 to August 2015, though the majority of philanthropists donate to state-affiliated charities, donors are increasingly launching their own charities. Nearly one-fifth of the donors the report identified operated their own foundations.

    But the thriving sector is attended with growing pains, which the government is trying to address with tighter regulation. China’s new charity law, which came into force on Sept. 1, requires all charity organizations to be registered with the civil affairs authority.

    The same day, the Ministry of Civil Affairs announced that a charity foundation named Cixiao Foundation for Senior Citizens in Special Hardships had been deregistered for fraud because founder Han Xuechen had effectively transferred nearly all of its funds to two companies owned by him and his son under the guise of charity programs.

    Many of Chen’s followers continue to support him in spite of the fraud allegations.

    “No matter what the media said, there is no perfect man, and I still admire the real charity work that Brother Biao has done,” one commenter on Weibo said, calling Chen by his nickname.

    “It’s so hard to be a good person nowadays,” another comment on the same post said.

    (Header image: Chen Guangbiao at the news conference in Nanjing, Jiangsu province, Sept. 23, 2016. IC)