An Online Scandal Underscores Chinese Distrust of State Charities

One showed her wearing sunglasses and leaning on the hood of a white Maserati. Another revealed her closetful of Hermès handbags. Yet a third showed her sipping a drink in a business-class cabin on an airline flight.

None of it was outrageous by the standards of China's nouveau riche. What ignited a firestorm was the fact that the woman, Guo Meimei, 20, appeared to hold a senior position at the Red Cross Society of China, a government organization that is the country's largest charity. Under the name "Guo Meimei Baby," she had boasted on her microblog that her title was "commercial general manager" at the Red Cross, a claim that had apparently been verified by Sina, the Internet company hosting the microblog.

At the same time, she posted photos and entries detailing her jet-set life, writing of the orange Lamborghini she drove in the south (her "little bull") and the white Maserati she had in Beijing (her "little horse").

Since an Internet user pointed out the scandalous posts in late June, Ms. Guo and the Red Cross have been the most talked-about subjects on the Chinese Internet. The Red Cross of China, which is a member of the International Federation of Red Cross Societies, has denied any ties to Ms. Guo, who some Internet users speculate got her title because she is the mistress or relative of a top Red Cross official. The police are investigating her. Some Chinese news reports said Monday that Ms. Guo was the girlfriend of Wang Jun, a much older man who organizes charity drives for the Red Cross.

Some people fear the scandal and the accompanying increase in suspicions of corruption in charities could deal a major blow to philanthropy here, even as some officials increasingly rely on nonprofit groups to help cope with growing social needs like health care and education.

"People have had doubts for a very long time," said Jia Xijin, director of the Nongovernmental Organization Research Center at Tsinghua University in Beijing. "The issue is public trust or accountability of charities, the accountability of philanthropy organizations in China."

Philanthropy is only beginning to develop here. As more and more Chinese enter the middle and upper classes — Forbes this year listed 115 billionaires in China, up from 64 last year — some are looking to do good through charity donations. The Sichuan earthquake in 2008 led to a rise in civic consciousness, and the next year the government recorded $8 billion in donations.

Flashy philanthropists have emerged, like the recycling magnate Chen Guangbiao. Still, there have been questions raised about whether wealthy Chinese are too stingy, a topic that came up when Warren Buffett and Bill Gates flew to Beijing last year to encourage philanthropy. Some say many Chinese are reluctant to donate their wealth for fear that the money will end up in a corrupt organization.

That fear is mostly rooted in the government's insistence on controlling charity work and promoting its own vast organizations, while setting limits on the activities of private foundations. So large state-run charities, especially the Red Cross, are suspect in the eyes of many Chinese.

Those groups have wide latitude in soliciting donations from the public, and are designated by the government to be focal points of charity collection during times of disaster, when people are looking for any outlet to help the needy. Official figures published in February 2009 showed that the Red Cross collected more than $735 million in donations after the Sichuan earthquake, even though some prominent people, like the real estate tycoon Wang Shi, advised against giving to the group.

Several recent episodes have raised suspicions. In April, a photograph circulating on the Internet showed a $1,500 restaurant bill for a meal had by a small group of people employed by the Shanghai branch of the Red Cross. Then on June 26, in the middle of the Guo Meimei scandal, the National Audit Office issued a report on the Red Cross that listed five financial problems it had uncovered.

One that drew widespread criticism was that the organization, which had an approved budget in 2010 of almost $45 million, had overpaid an equipment procurement contract by $650,000.

A typical online attack during the Guo Meimei scandal came from Yu Jianrong, a prominent scholar at the Chinese Academy of Social Sciences, who said on his microblog that if the Red Cross did not "initiate reform to build an open system, it will lose all credibility with the people. And then I will personally boycott it."

Many Chinese do not trust the Red Cross because of its special legal status — it is one of 25 large organizations that register with an office that answers to both the Communist Party and the State Council, China's cabinet. Virtually all other nonprofit groups in the country are supposed to register with the Ministry of Civil Affairs, which counts 420,000 such entities on its rolls.

"They get public financial support, their staff is paid by the government and their function is to serve as an agency of the government," Ms. Jia said.

The group also has affiliated organizations that are not legally registered at all — one example that has emerged during the Guo Meimei scandal is a shadowy group called the Red Cross of the Commercial Sector, about which there is little information.

In general, only the Red Cross and a smaller government organization, the Chinese Charity Federation, can ask for public donations, Ms. Jia said. During times of crisis, like the Sichuan and Yushu earthquakes, the government might allow other groups to raise money, but officials always put the Red Cross on the front lines of charity drives.

Feng Lun, a real estate mogul who started a charitable foundation under his company, the Vantone Group, said in an interview that the state-run organizations "don't have transparency and aren't efficient enough," largely because they lack managers with professional experience running charities.

The Guo Meimei scandal erupted June 21, when someone on the Chinese Internet pointed out the photographs that Ms. Guo had been posting and the Red Cross job title on her microblog, a Sina Weibo account. Her blog had been marked with a "V," meaning her identity had been verified by Sina, even though she had claimed earlier she was an actress.

Internet users quickly began condemning Ms. Guo. She first defended herself by saying her group was a commercial operation separate from the Red Cross. As public pressure grew, the Red Cross and Ms. Guo said they had nothing to do with each other. Internet users soon pointed out the existence of the murky group called the Red Cross of the Commercial Sector, which has ties to the Red Cross.

The Red Cross reported Ms. Guo to the police on June 24. Two days later, Ms. Guo apologized online for her "stupid and ignorant behavior" and "made-up identity." Paparazzi-style photographs showed her arriving in the Beijing airport on June 27 from Shenzhen, where she also lives, and rushing off in a private sedan. On Tuesday, Beijing News reported that the police had begun an investigation.

Although Chinese newspapers have been running articles and editorials about the controversy, censors last week deleted some of the original microblog posts that accuse the Red Cross of corruption. That scramble to censor underscores the delicate nature of the scandal.

"This is just the beginning of the unveiling of the problems of state-run nonprofit organizations and charities," Mr. Feng said. "I think this can be a positive force to push Chinese civil society to promote more transparency."


Published: July 3, 2011

Li Bibo, Shao Heng and Edy Yin contributed research.

The New York Times

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