Debt de­fault­ers

Pres­sure ap­plied to debtors who ig­nore court ver­dicts

China Daily (USA) - - 1 - Con­tact the writer at caoyin@chi­nadaily.com.cn

On Oct 8, her first work­ing day af­ter the Na­tional Day hol­i­day, Liang Wen­juan, from Chifeng, a city in the In­ner Mon­go­lia au­ton­o­mous re­gion, found her­self stranded in Ji­uzhaigou, Sichuan prov­ince.

The en­ter­tain­ment man­ager had at­tempted to buy a plane ticket, but her credit card was re­jected be­cause Hong­shan District Peo­ple’s Court in the au­ton­o­mous re­gion had added Liang to its on­line black­list of de­fault­ers, which meant she was sub­ject to a range of re­stric­tions, in­clud­ing a ban on buy­ing rail or plane tick­ets.

The ac­tion was taken be­cause Liang had taken a bank loan of 250,000 yuan ($36,850) in 2011, but failed to keep up the re­pay­ments. The district court or­dered her to re­pay the debt, but she ig­nored the rul­ing.

By Oc­to­ber, the com­bined prin­ci­pal and in­ter­est had soared to 400,000 yuan. It was then Liang dis­cov­ered her name had­been added to a black­list in­tended to make life so in­con­ve­nient for debtors and oth­ers who ig­nore court rul­ings that they feel com­pelled to re­pay out­stand­ing debts and ac­cept the verdict.

“I dis­cov­ered I couldn’t buy a ticket for a flight back home. I was told my name had been added to the black­list be­cause of my re­fusal to abide by the court rul­ing,” she said. “Ac­tu­ally, I had al­most for­got­ten about the case. I had to clear the debt straight­away be­cause I was des­per­ate to get home.”

Later the same day, one of Liang’s em­ploy­ees de­posited 400,000 yuan with the court, bring­ing the five-year dis­pute to an end. Later, Liang’s name was re­moved from the black­list and the re­stric­tions were lifted.

The black­list is in­creas­ingly be­ing used to dis­rupt the lives of de­fault­ers and oth­ers who fail to com­ply with court rul­ings and en­sure full, rapid re­pay­ment.

Sta­tis­tics pro­vided by the Supreme Peo­ple’ s Court, the na­tion’ s top ju­di­cial body, show that be­tween 2013 and last year, the courts con­cluded 9.44 mil­lion verdict-en­force­ment cases— a rise of more than 28 per­cent from 2010 to 2012— and 3.2 tril­lion yuan was re­paid, an in­crease of 110 per­cent over the same pe­riod.

In March, the top court at­trib­uted the de­vel­op­ments to the im­pact of the black­list and the re­stric­tions levied in con­junc­tion with govern­ment de­part­ments.

Ori­gins

The black­list partly has its ori­gins in a 2010 case han­dled by Yang Haichao, a judge at Haid­ian District Peo­ple’s Court in Bei­jing, when a debtor who owed a com­pany 100,000 yuan went to ground.

“I ac­ci­den­tally dis­cov­ered that he had sev­eral thou­sand yuan in an ac­count at China Agri­cul­tural Bank, so I im­me­di­ately rushed to the bank and froze the ac­count,” Yang re­called. “It was a rel­a­tively small sum so I thought it might not mat­ter. Later I got a call that changed my mind.”

The caller was the debtor, who told Yang he wanted to re­pay the money as quickly as pos­si­ble. “I was sur­prised ini­tially, but I re­al­ized he had been forced to pay be­cause I had frozen the ac­count he used for his mort­gage pay­ments. He told me that his credit rat­ing at the bank would be af­fected if didn’t pay his mort­gage, which made me re­al­ize that block­ing debtors’ as­sets might be a good way of en­forc­ing ver­dicts,” Yang said.

His idea pre­dated the first de­fault­ers’ black­list, pub­lished in 2013, and helped to prompt co­op­er­a­tion with govern­ment bodies. “The courts fi­nally took the ini­tia­tive on verdict en­force­ment,” he said.

Re­stric­tions

By the end of Au­gust, the per­sonal de­tails of nearly 5 mil­lion peo­ple in con­tempt of court, in­clud­ing their names and iden­tity card num­bers, were open to pub­lic scru­tiny, ac­cord­ing to the court’s sta­tis­tics. The mea­sures mainly tar­get debt de­fault­ers who are able to re­pay the money but re­peat­edly refuse to do so.

Since June 2014, the top court has been col­lab­o­rat­ing with govern­ment de­part­ments, es­pe­cially the rail and civil avi­a­tion au­thor­i­ties, to deny de­fault­ers ac­cess to rail and air trans­port.

By Aug 31, the sys­tem had re­buffed more than 4.7 mil­lion at­tempts to pur­chase plane tick­ets, along with 1.55 mil­lion bids to buy seats on the high-speed rail net­work.

“What we want to do is make peo­ple who refuse to com­ply with court ver­dicts feel in­con­ve­nienced in ev­ery as­pect of their lives,” said Meng Xiang, di­rec­tor of the top court’s bu­reau of verdict en­force­ment.

Meng said 44 govern­ment de­part­ments are cur­rently work­ing with the court, and the re­stric­tions have been ex­tended to ar­eas such as on­line shop­ping, run­ning busi­nesses and buy­ing real es­tate: “Our goal is to con­trib­ute to the estab­lish­ment of a ‘merit sys­tem’ in so­ci­ety.”

In­for­ma­tion net­work

In re­cent years, Yang, the judge in Bei­jing, has wit­nessed a change in the way ver­dicts are en­forced.

“In 2010, our court didn’t even have an in­ter­nal net­work to share in­for­ma­tion about de­fault­ers, let alone a plat­form that would al­low us to work with banks and govern­ment de­part­ments,” he said. “I had to visit banks sev­eral times a week to dis­cover what prop­er­ties a debtor owned.”

Now, a high-speed net­work that links courts with banks means prop­er­ties can be de­tected with just a few clicks of a mouse, ac­cord­ing to Yang.

In Septem­ber, the cen­tral lead­er­ship is­sued a reg­u­la­tion or­der­ing govern­ment de­part­ments to co­or­di­nate en­force­ment with the courts to fur­ther strengthen the merit sys­tem.

The rule stip­u­lates that peo­ple in con­tempt of court will face re­stric­tions if they ap­ply for govern­ment sub­si­dies, and they are barred from work­ing in the fi­nan­cial sec­tor or be­com­ing board mem­bers of State-owned en­ter­prises, re­sult­ing in more than 66,000 sug­gested ap­point­ments be­ing blocked.

They also face tougher ex­ams if they ap­ply to join the civil ser­vice, the army or the Com­mu­nist Party, and they are not al­lowed to stay at ho­tels rated three-star or higher. The chil­dren of de­fault­ers are barred from study­ing at ex­pen­sive pri­vate schools.

Zhou Qiang, pres­i­dent of the Supreme Peo­ple’s Court, has re­peat­edly stressed that adop­tion of the mea­sures should be a pri­or­ity for grass­roots courts, with the aim of solv­ing the prob­lem within three years. “Cases only end for lit­i­gants when they are re­paid,” he said.

Along with the merit sys­tem, tech­no­log­i­cal de­vel­op­ments have made it eas­ier for the courts to track de­fault­ers, ac­cord­ing to Yang.

“A prose­cu­tor’s role is to pur­sue de­fault­ers, but we used to find it hard to keep up with them be­cause they used high-tech equip­ment to keep one step ahead. We have only re­cently started us­ing sim­i­lar equip­ment and tech­niques. At the same time, we need other play­ers, such as the in­dus­trial and com­mer­cial au­thor­i­ties, to help us block them or tell us where they are,” he said. “When peo­ple in all walks of life com­bine against those who refuse to ac­cept court ver­dicts, we’ll win the day.”

CAO BOYUAN / FOR CHINA DAILY

Po­lice of­fi­cers es­cort a man from the Zhong­guan­cun Ding­hao Elec­tronic Mall in Bei­jing af­ter he was de­tained for re­fus­ing to re­pay an eight-year-old debt.

ALY SONG / REUTERS

Peo­ple pass an elec­tronic screen dis­play­ing the per­sonal de­tails of debt de­fault­ers at Shang­hai Rail­way Sta­tion.

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