VZCZCXRO2070
PP RUEHCN RUEHGH RUEHVC
DE RUEHSH #0220/01 3251005
ZNY CCCCC ZZH
P 211005Z NOV 07
FM AMCONSUL SHENYANG
TO RUEHC/SECSTATE WASHDC PRIORITY 8258
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 7975
RUEHGV/USMISSION GENEVA PRIORITY 0524
RHEHAAA/NSC WASHDC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 SHENYANG 000220 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EAP/CM, DRL 
 
E.O. 12958: DECL: 11/21/2017 
TAGS: PHUM PINR PINS SOCI CH
SUBJECT: INVESTOR PROTESTS ROCK SHENYANG 
 
Classified By: CONSUL GENERAL STEPHEN B. WICKMAN.  REASONS: 1.4(B), 
1.4(D) 
 
¶1. (C) SUMMARY: A relatively small group of protestors 
assembled outside Consulate General Shenyang early in the 
afternoon of 21 November to protest the failure of 
ant-farming health-product company Yilishen to pay dividends. 
The protests were not directed at the United States, but 
rather at the Chinese government, which the investors believe 
should be helping them to recoup their losses.  Police were 
aware of the planned protest well in advance and had added 
extra guards in riot gear to the consulate perimeter prior to 
opening of business.  The police, including both Public 
Security Bureau and Diplomatic Security Bureau personnel, 
were effective in moving the protestors away from the 
consulate.  While there was some violence, it appeared 
relatively minor.  The police herded the people out of the 
area, but did not appear to make any arrests.  Taxi drivers 
told consulate staff that a protest numbering in the 
thousands was taking place outside Shenyang City's Party 
Headquarters.  End Summary 
 
¶2.  (U) On the heels of protests outside of the Liaoning 
provincial government the preceding day, approximately 
125-200 Chinese assembled in ShenyangQ,s small diplomatic 
district on November 21 to protest the failure to pay 
dividends and the expected closure of Ant Power (Yili Shen), 
a Shenyang-based company that for the past nine years has 
spearheaded a nationwide pyramid scheme promising riches to 
investors who bought shares in their black-ant-based, 
traditional Chinese medicine product company.  Rumors that 
arrests and seizure of assets were imminent may have prompted 
investors to take to the streets. 
 
¶3.  (SBU) Crowds of both angry investors and curious 
onlookers started to appear outside the U.S. and Japanese 
consulatesQ*-adjacent to one another on the south side of the 
square that hosts the various consulates--at roughly 1240 and 
continued to swell.  PeopleQ,s Armed Police (PAP), Public 
Security Bureau (PSB) and Diplomatic Security Bureau (DSB) 
personnel quickly streamed into the area, setting up security 
cordon around all five consulates in the immediate area. (CG 
spotted a convoy of at least seven buses and police vehicles 
carrying fully armed riot police streaming toward the street 
as he walked back from a popular Japanese restaurant.) 
 
¶4. (C) Poloff walked the crowds before 1400, encountering 
many angry investors who pleaded with him to Q&reportQ8 about 
their situation to the U.S. government.  Despite undercover 
police snapping photos and uniformed PSB personnel watching 
from a close distance, one initially reluctant crowd of 30-40 
protestors shed its shyness and shared its stories.  One 
peasant woman, crying, explained that she had lost all RMB 
300,000 (USD 40,000) that she had invested in the scheme, 
leaving her without any promise of a Q&future.Q8  (Many 
others Poloff encountered had invested less--RMB 100,000 (USD 
13,300) was one figure that kept recurring.)  Most appeared 
to be working-class, Shenyang urbanites, but Poloff also 
encountered a handful of clearly well-educated, well-dressed 
Shenyang residents.  All of them bitterly accused the 
government of Q&permittingQ8 Ant Power to swindle them and 
then refusing to compensate them for their losses.  Asked why 
they had assembled before the U.S. Consulate, protestors 
explained that while Ant Power had no American ties, an 
Q&international impactQ8 was needed to force the PRC to 
intervene.  A plainclothes DSB officer intervened after 
roughly five minutes and demanded Poloff return to the 
Consulate, pulling him by the arm out of the crowd, 
explaining disingenuously that he was doing so to Q&assureQ8 
PoloffQ,s safety; the police officer refused to answer all 
questions put to him about the protest. Once back at the 
ConsulateQ,s entry control point, PAP officers demanded that 
Poloff and other assembled staff enter the Consulate proper. 
 
 
¶5.  (C) At 1400, crowds began to periodically chant Q&return 
our money.Q8  PSB and PAP forces started to physically clear 
the crowds from the area over the next twenty minutes. 
Several brief clashes erupted.  Econoff witnessed PSB 
officers kicking one protestor already on the ground.  Poloff 
and other ConGen staff watched from the ConsulateQ,s third 
floor as PSB traded punches with several angry protestors. 
Staff saw PSB personnel push and punch several protestors, 
including women.  Generally, however, the violence was 
minimal, and we did not observe anyone being arrested.  The 
protestors simply walked away heading north along the main 
street perpendicular to the blocked street in front of the 
Consulate.  Perhaps because of the visible PSB presence near 
 
SHENYANG 00000220  002 OF 002 
 
 
the Russian and South Korean Consulates (nearly twenty 
vehicles full of crowd control personnel), the protestors 
made no effort to approach these consulates. 
 
¶6.  (U) Ant Power was originally founded in 1998 as Shenyang 
Jingxin Science-Technology Industrial Company.  In August 
1999 the company founded a subsidiary, Shenyang Changgang 
Yibao Liquor Company.  In September 2002, Liaoning Xuyan 
Yilishen Ant Breeding Company, the subject of the recent 
protests was founded.  The entire operation was funded by 
investments in ant farming for which investors were promised 
huge returns.  In November 2006, investors requested help 
from Shenyang City Government when Yilishen quit paying 
dividends.  By February of 2007, both provincial and central 
government law enforcement agencies had begun investigations 
of the company.  Online reports about the investigation 
suggested that central and provincial authorities did so to 
stem Q&potential future social problems." 
 
¶7.  (SBU) Bloggers have protested vigorously over the last 
two days about the scam and the city government's inaction 
and/or complicity in the scheme.  One blogger encouraged 
protestors to consume lots of Q&baijiuQ8 (the local Q&whiteQ8 
liquor of choice) to ward off the cold.  Bloggers complain 
that city police and government officials have protected the 
company and left the investors with no option but to take to 
the streets.  Bloggers went on to say that news of the 
protests was being suppressed The blogs themselves were taken 
down within hours of being posted. 
 
 
¶8.  (U) Company founder and President Wang Fengyou has 
certainly been a darling of the local establishment until 
recently.  He was elected Deputy Director of the Northeast 
China Wine Culture Research Association and is also Deputy 
Director of the China Healthcare Association, and the China 
Industrial and Commercial Association.  In December 2006, he 
was recognized as one the top 100 Private Science and 
Technology Entrepreneurs.  Rumors abound that the company is 
closed and Wang arrested, but Econoff was able to contact the 
company by phone and company staff gave every indication that 
they were still in business. 
 
¶9.  (SBU) The company has not had such good recognition in 
the United States.  The U.S. FDA warned in 2004 that two of 
Ant Power's products, "Actra-RX" and "Yilishen", which 
purport to be natural supplement for treating erectile 
dysfunction, actually contain sildenafil, the patented active 
ingredient in Pfizer's Viagra.  The FDA warning, according to 
bloggers, caused the Hong Kong Stock Exchange to scrap plans 
for an Ant Power IPO.  This, in turn, prompted Ant Power to 
embark on a pyramid investment scheme to keep the company 
going.  However, by fall of 2006 the company could not 
attract enough new investors to keep the scheme afloat. 
 
¶10.  (U) This is not the first time that Liaoning Province 
has faced a major ant farming swindle.  In February 2007, 
Wang Zhendong, President and Founder of Yingkou Donghua 
Trading Company, of Yingkou City, Liaoning Province, was 
sentenced to death for swindling investors in his ant farming 
scheme out of roughly USD 350 million.  Fifteen other senior 
employees of the company were sent to prison.  Like Ant 
Power, Yingkou Donghua was promising returns of thirty-five 
percent.  One local observer noted that it would be very 
difficult to find investors at thirty-five percent, since it 
can be beaten easily in the Shanghai Stock Market. 
WICKMAN