By Jiang Xueqing

Xu represents victims of the Sanlu baby milk powder scandal on December 31, 2008. Photo: CFP

At 5 am on July 29, Xu Zhiyong, founder of legal aid organization the Open Constitution Initiative, was taken away from his home by the police in Beijing. His colleague Zhuang Lu, who’s in charge of accounting for the organization, was also arrested.

The office of the Open Constitution Initiative was raided by the Beijing Civil Affairs Bureau on July 17. Officials claim the Gongmeng (pinyin of Open Constitution Initiative) Law Research Center of the Open Constitution Initiative has been running illegally as a non-governmental and non-profit organization since it is not registered at the bureau. They seized the computers of the research center, confiscating office supplies and research papers such as the Civil Rights Defense Brochure and China Human Rights Development Report 2005.

Officials from the Beijing Municipal Office, State Administration of Taxation and the Beijing Local Taxation Bureau also visited the organization on the same day. They declared the organization had received contributions from Yale University in 2006-08 but failed to file tax accordingly. Therefore the organization was ordered to pay 187,424 yuan in back taxes and fined 1,242,100 yuan ($181,843) – five times the contribution – the highest possible level of financial punishment.

Six days after the raid, the Open Constitution Initiative applied for administrative review. Xu Zhiyong argued the Gongmeng Law Research Center is an internal organization of Open Constitution Initiative and so doesn’t need to be registered at the civil affairs bureau.

Lawyers representing Open Constitution Initiative attended hearings held by taxation bureaus and explained to officials that contributions from Yale University were used for specific research and a non-profit purpose. The organization did not provide any service to the university. Therefore the bureaus should not tax the contributions.

What happened to the Open Constitution Initiative has been widely discussed by fellow domestic non-governmental organizations (NGOs) in China.

“It’s not unusual for a corporation to have flaws in taxation,” said Lu Jun, chief coordinator of the Beijing Yirenping Center, a non-profit organization devoted to helping patients fight discrimination and protect their own rights.

“Considering it’s the first time the Open Constitution Initiative has been found to have such flaws, taxation officials could remind it and request it to pay the insufficient tax, rather than forcing it to the edge of bankruptcy by imposing a harsh fine of more than a million yuan.”

Surprise raid

Lu said the clampdown on the Gongmeng Law Research Center lacked any sound legal basis, as all corporations can have an internal organization or department taking on corporate social responsibility.

The Global Times made phone calls to the Beijing Municipal Office, State Administration of Taxation on July 30. A staff worker at the administrative office said it was inconvenient for her to release any information about the case because it was still in the judicial process.

An interview request sent to the Beijing Civil Affairs Bureau on August 5 has not yet received a reply.

A key element of the case lies in the registration of the Open Constitution Initiative. If the organization were registered as an NGO instead of a corporation, it would enjoy tax relief.

“We’ve submitted our application for registration at the Beijing Civil Affairs Bureau several times since 2005, but they have never given us any reply,” Xu said during an interview with the Global Times in June.

Some scholars and domestic NGO leaders showed sympathy for the organization, saying Xu had no other choice. It’s extremely difficult to register as an NGO, according to them.

Yu Jianrong, a researcher at the Rural Development Institute, Chinese Academy of Social Sciences, stated in an article: “The identity dilemma for the Open Constitution Initiative is a tragedy for our society.”

There are three common ways for domestic NGOs to obtain legal status to run in China.

The first is to be affiliated to a State-owned university, association or institute. The second is to become a subordinate of a government functional department in a relevant field and then register as a non-profit organization at a local civil affairs bureau. The third is to register as a corporation at a local administration for industry and commerce.

But in the real world, it’s hard to find a functional government department willing to accept an NGO as its subordinate, according to NGO leaders. Most organizations have to register as a corporation or even start running without a legal identity.

“For government officials, the less trouble the better,” said Zhang Shuqin, president of the Sun Village, a non-governmental charitable organization providing foster care and education for the children of convicts.

If a government department allows an NGO as an affiliate, the department will have to take responsibility for monitoring, supervising and auditing the organization, as well as coordination between the organization and civil affairs bureaus, according to State Council regulations. Such a burden has scared away many departments of government.

The Sun Village used to be a subordinate project of the China Charity Federation. The project was cut in 2003 during a reform of the federation and the village lost its legal status.

“If the Sun Village is a corporation, the worst that would happen is we would close down, but we also had about 50 kids whose parents were sentenced to death or life imprisonment,” Zhang said.

“What could we do – leave them to the China Charity Federation, to the local government or throw them out on the street?”

She constantly paid visits to government departments and associations such as the Beijing Civil Affairs Bureau, the Red Cross Society of China Beijing Branch, and the All- China Women’s Federation. None was willing to take the Sun Village as an affiliate. Today, the village still runs without a legal status.

“Those NGOs that operate without proper registration are likely to be banned if they displease powerful people,” Lu said.

He told the Global Times that the Xinjiang Snow Lotus HIV/AIDS Education Institute, for example, was banned in 2006 because it offended the local authority.

Registration headaches

Parents carry a victim of the Sanlu milk scandal in a Wuhan maternity hospital, Hubei Province, on September 16 last year. Xu offered to represent all the victims of the scandal in their quest for justice.

There were 386,916 official and unofficial NGOs registered with the Ministry of Civil Affairs by the end of 2007. That number only accounts for NGOs registered at civil affairs bureaus across the country. A far larger number of NGOs are either registered at local administrations for industry and commerce or not registered at all, according to Lu.

The Beijing Yirenping Center belongs to the larger group. It was visited by a police officer and two plainclothes officers from the Cultural Market Administrative Law Enforcement Office of Beijing on July 29. The officers said they received a report that the center was involved in publishing without a license. They searched the center and confiscated more than 90 copies of China’s Anti-Discrimination Legal Action Newsletter.

Lu explained to them that printing documents like fliers and newsletters is a major task of NGOs. Otherwise they would not be able to publicize relevant laws and information to the public.

The newsletters were published in small numbers and given out free at seminars, not public places. Therefore they should not be taken as a publication.

Revenge

Lu suspected the incident was an act of revenge on the center by someone offended by what they did.

“Wealthy and powerful people have increased dramatically in the last few years without being restricted properly,” he said. “They have intensified attacks and retaliation on NGOs providing legal aid.”

His concern is shared by Guo Jianmei, a lawyer who has been working for the public interest for 14 years. She considered public interest lawyers as people with lofty ideals, high moral standards and a great sense of social responsibility. The challenges, risks and pressure they face are beyond the imagination of people in other professions, according to her.

Guo founded the Center for Women’s Law & Legal Service of Peking University in 1995. She was under pressure and couldn’t sleep at one time, worrying how far she could go.

“Chinese NGOs offering legal assistance and consultation are like seedlings rooted in stone cracks, trying to survive in an unfavorable environment,” she said.

“Society is unlikely to provide a flexible political environment within 10 years for us to speak out openly about what’s on our mind. How can we develop in such a situation?”

With 14 years of practical experience, she realized legal aid NGOs often had to be run in a Chinese way for survival and development. They must open channels to government to make themselves heard, building up connections with officials, counselors and lawmakers.

“I was reluctant to butter up the government because of a sense of personal honor,” she said. “I thought it was unnecessary to act according to the will of officials. However, as other NGOs got into trouble one by one, I was thinking hard and realized I couldn’t distance myself from the government, but had to join the mainstream.”

She came to see opening up government channels as a strategy to achieve the goal of working independently with greater freedom.

The pressure endured by NGOs was even bigger a few years ago, according to Xu. The predecessor of the Open Constitution Initiative was refused renewal of its registration with the Beijing Administration for Industry and Commerce in 2005. He had to re-register the organization with a new name.

“The political environment is becoming flexible, and society is moving forward,” he said to the Global Times during an interview in June.

“Some reformers within the system are trying to win support from the government, while we are striving for tolerance of the authority.”

Peng Jian, a lawyer with the Open Constitution Initiative, said members of the organization were considering filing bankruptcy. At the same time, he and Lin Zheng, assistant of the organization, were still attempting to represent victims of the Sanlu baby milk powder scandal.

Chen Yang also contributed to this story.

No legal system: experts

By Wang Yuan and Liu Xuan

Popular support for NGOs has taken off spectacularly in 2008, claimed the founder of China’s first NGO academic research center at Tsinghua University in Beijing.

“For Chinese grass-roots NGOs,” Wang Ming said, “the key to surviving and thriving … is to maintain and utilize a sound relationship with authority.”

Successful dialogue with government officials could help NGOs avoid falling victim to tax issues, said Fu Tao, an NGO researcher based in Beijing.

Tax is a problem facing all NGOs that register as corporations, he said.

“Intentionally or unintentionally, it is an institutional trap,” he said, “providing a basis for selective enforcement by the government.”

It’s true that many domestic NGOs have a hard job fund raising, said Fu, because any potential corporate sponsor rarely receives tax breaks for contributing to them.

Unless they are government-registered, the standard Chinese NGO will often struggle for help from Chinese society, he said.

Nonetheless, focusing on this private corporate versus government work unit registration issue misses a much more important, larger point, he believed.

“We should think about whether the existing system should open a space for advocacy organizations like Open Constitution Initiative and Yirenping, which on behalf of the public interest and disadvantaged people, try to push for social justice and rule of law by challenging people or government departments with vested interests.

“If it can’t, even if all NGOs successfully register with civil affairs bureaus, a policy of selective enforcement will persist, just offering different excuses.”

NGOs split into two types: charity-based and advocacy groups, he said.

“Our government has been providing more space for charity-based NGOs in recent years, as it realizes these NGOs can help resolve social conflicts and contradictions by redistributing wealth.

“But advocacy groups are still being treated standoffishly because they are regarded as troublemakers.”

Standing off was a misguided approach in the long term, he argued.

“People’s awareness of their civil rights is rising. There will be more and more people using existing laws or promoting law to protect civil rights. “

NGOs are newborn things to Chinese society. With the improvement of the legal system in China, regulations for NGOs will gradually be reformed to meet increasing public demand, a Beijing-based NGO researcher told the Global Times under condition of anonymity.

“Adapting to the current legal system is a necessity for NGOs to expand their role in the future, which will also grant more opportunities to contribute to the betterment of the legal system,” he said.