Financial fraud is
becoming more salient in China. Interestingly, of late, we have witnessed a
number of "fraudster frauleins" – a few women entrepreneurs who
scooted (or tried unsuccessfully to scoot) after relieving a number of gullible
lenders of rather large sums of money. Ms. Zhang Hong, boss of a medical
devices company in Nanjing in Jiangsu province, went missing with her son a few
weeks ago. Along with her went a sum of RMB 500 million which she owes to
several hundred private lenders. In another case of the "most beautiful
boss", Ms. Gu Chunfang was apprehended in Shanghai, having earlier tried
to make herself scarce with an equally large sum of money. While the temptation
for these skilful and attractive operators is strong, the punishment in China
is disproportionately severe. Ms. Wu Ying, another comely entrepreneur from
neighbouring Zhejiang Province, is facing a death sentence for crimes involving
similar fund raising.
In China it is not easy for small and medium enterprises to borrow from banks to finance their operations. Most banks are state-owned and they tend to favour lending to state-owned enterprises. On the other hand, China's large body of savers are finding it difficult to find attractive returns, as interest rates are low, the stock market has been sluggish, and the property market is on a strong leash. The lure of double-digit returns through private lending, therefore, is not insignificant. Hence there is a healthy demand as well as supply for private lending.
The effect of
pulchritude on human emotions and behaviour is a complex subject. Daniel
Hamermesh, an economist at the University of Texas, has been frequently writing
about “pulchronomics” or the linkage of looks and economics. In a recent book
called “Beauty Pays” he professes that, over a lifetime, a good looking worker
in America might on average make $230,000 (in terms of today’s wages) more than
a relatively plain one. Beauty generates the confidence of competence
and trust. Research has shown looks of the candidates play a significant role
in voters’ choice. And given the number
of cases of fraudulent frauleins in China, one can possibly at least raise the
hypothesis that Chinese men of substance find themselves reaching more readily
for their wallets when confronted with a woman of grace.
In the meanwhile the
Supreme People’s Court of China has overturned the death sentence for Wu Ying
and ordered a retrial. It is not known whether the defendant’s good looks and
youth were a part of the factors which led the judges to overrule the severe
punishment. But research does show that
good looking offenders do get away with lighter punishments.
