Tax Officials Investigate Chinese NGO Aizhixing, Founder Advised Not To Attend Nobel Peace Prize Ceremony

February 3, 2011

On December 22, 2010, Beijing public security and local taxation bureau officials visited the Chinese nongovernmental organization (NGO) Beijing Aizhixing and took with them documents related to the group's finances and project activities. This was the second time in two years that tax officials have inspected Aizhixing; officials found no wrongdoing in the first inspection. The 2010 inspection of Aizhixing follows instances of official intimidation of Aizhixing and Aizhixing's founder, Wan Yanhai, including officials reportedly advising Aizhixing that, if Wan attended the Nobel Peace Prize ceremony honoring Liu Xiaobo on December 10, Aizhixing would face difficulties. The inspection comes amid a general tightening of some controls over NGOs, including new foreign exchange rules that may affect the operations of some Chinese NGOs.

Officials from the domestic security unit of the Beijing Public Security Bureau and local taxation bureau authorities entered the offices of the NGO Beijing Aizhixing on Wednesday, December 22, 2010, and took with them "three large suitcases full of documents" as part of an inspection into the organization's compliance with tax regulations, according to a December 22 Radio Free Asia (RFA) article. Authorities took materials with financial and project information, some dating back to 2002, including funding agreements (with attachments, and financial and donor work reports), account books and vouchers, financial and audit reports, documents related to Aizhixing's property and taxes, and bank statements. A December 22 BBC (Chinese) article reported that Aizhixing acting director Li Xiongbing said that officials informed him that his compliance with the inquiry must be unconditional, and refusal to turn over documents would result in officials "taking them forcibly" and employees, including Li Xiongbing, may consequently face detention, for "resisting enforcement of the law," according to the December 22 RFA article. Li reportedly said that, when tax and security officials visited the group's offices on December 7, 2010, they warned him "...that Aizhixing would have administrative action taken against it for suspected illegal activities," according to a December 8 RFA article. The article quotes Li as saying that officials "demanded that I cut off my relationship with Aizhixing and resign from all my duties." According to the article, "Li said Aizhixing would temporarily stop normal operations and revert to being a group of individuals working from home."

This inspection into Aizhixing's taxes is the second initiated by officials in the last two years. In 2008, local tax officials investigated Aizhixing's compliance with tax regulations for the years 2006 to 2007, after which Aizhixing reportedly obtained a formal document indicating that officials did not find any problems, according to a May 20, 2010, CHRD article (via Boxun) and a March 25 Chinese Human Rights Defenders article (reprinted in Boxun). In 2008, tax officials reportedly allowed Aizhixing employees to be present while officials reviewed the group's original financial records outside of the Aizhixing office, according to a January 2011 Aizhixing report reprinted by China Free Press. In 2010, local industry and commerce bureau officials visited Aizhixing in mid-March, made copies of a document, and reportedly issued the group a statement saying that the Beijing Aizhixing Institute had not used its legally registered name, "Beijing Zhiaixing Information & Counseling Company Limited," on some documents according to an article by Wan Yanhai in the August 10 Equal Rights Review (Vol. 5, 2010, p. 95). According to the same article, later in March, local tax officials wanted to deliver to Aizhixing a "Taxation Inspection Notice" but Aizhixing's director was out of the country, so they agreed to wait to deliver the notice. Authorities reportedly stated that if they found documents in which the Institute had used a name other than their legally registered name, then they would not limit the tax inspection to the years 2008 and 2009, according to the March 25 CHRD article. Officials delivered to Aizhixing the "Taxation Inspection Notice" on April 6, 2010, according to the August 10 Equal Rights Review article and in May, tax officials expanded their inquiry and requested additional documents, some dating back to 2002, according to the May 20 CHRD article and the January 2011 Aizhixing report. At that time, Aizhixing reportedly requested officials to allow Aizhixing employees to be present while authorities reviewed the organization's financial records outside of the Aizhixing office, as they had in 2008, and that officials provide the legal basis for requesting such detailed reports, according to a CECC staff interview. Tax officials reportedly did not agree to Aizhixing's requests, and also did not agree to examine the original records while remaining in Aizhixing's office or to leave copies of original records if they took them outside of Aizhixing's office. According to the December 22 RFA article, based on information from Li Xiongbing, tax and security officials claimed Aizhixing had not cooperated in the initial 2010 inspection by tax officials, offering this as the reason why domestic security officials from the Beijing Public Security Bureau accompanied tax officials on the December 22, 2010, visit to Aizhixing.

The official inspection of Aizhixing follows instances of official intimidation of Aizhixing and Aizhixing's founder, Wan Yanhai, and a tightening of some controls over citizen groups. Wan Yanhai is currently in the United States after leaving China because of reportedly increasing political pressure, according to a May 10 New York Times article. Wan reported in early December 2010 that officials warned a board member of Aizhixing that if Wan attended the Nobel Peace Prize ceremony for Liu Xiaobo, which was scheduled for December 10, Wan would not be allowed to return to China and Aizhixing "would [face] an even more difficult situation," according to a December 22 Boxun article. (For more information about Liu Xiaobo and his award of the Nobel Peace Prize see this CECC analysis.) During December, authorities reportedly cut power to Aizhixing's offices, on one occasion for 10 days around the time of the Nobel Peace Prize award ceremony, according to the December 22 RFA article. Authorities reportedly began an investigation of a printing company that made educational materials for Aizhixing, and between January and April 2010, government officials from 10 agencies reportedly scrutinized Aizhixing and its activities, according to the August 10 Equal Rights Review article (p. 95, 97). Additional instances of official actions toward Wan Yanhai and Aizhixing are described in these Associated Press articles (via ABC News) (March 2, 2010) and (May 10, 2010), this Boxun article (June 17, 2010), and this Amnesty International briefing (July 8, 2010).

During 2010 and 2009, Chinese officials have tightened controls over some of China's social organizations possibly based on political criteria and have targeted some groups that receive funding from overseas sources (for more information see the CECC 2010 Annual Report (pp. 160-163) and the CECC 2009 Annual Report (p. 204). In 2010, authorities issued new foreign exchange rules and reportedly may be enforcing them selectively in a manner that may target groups working on projects and issues that the government deems "sensitive" (see this CECC analysis). The Chinese government's tightening of controls over and targeting of some social organizations may contravene both Article 35 of China's Constitution, which states that "[c]itizens of the People's Republic of China enjoy freedom of speech, of the press, of assembly, of association, of procession and of demonstration[,]" and Article 22 of the International Covenant on Civil and Political Rights.

For additional information on the official harassment of Aizhixing and other Chinese citizen groups during 2010 see the CECC 2010 Annual Report (pp. 161-163).