China's Ai Weiwei pays $1.3M to seek tax appeal

[November 15, 2011]  BEIJING (AP) -- Outspoken Chinese artist Ai Weiwei said he deposited a $1.3 million guarantee into a government bank account Tuesday out of concern for his associates after tax officials threatened to turn their investigation into his company over to police.

The move represents a concession by Ai in a dispute that arose this week between the dissident and Chinese tax authorities who say Ai's Beijing Fake Cultural Development Ltd. owes 15 million yuan ($2.4 million) in back taxes and fines, and enables him and the company to challenge the tax bill.

Ai, an internationally acclaimed conceptual artist, was taken away by police to a secret location for nearly three months earlier this year during a wide-ranging crackdown on dissent.

He disputes the government's tax-evasion allegations and says he does not even own the company involved, but added that under China's authoritarian government none of that matters.

"It's very simple," Ai said in a phone interview. "Those in power have the right to do anything and their power faces no restrictions."

The company wants to fight the tax bill but had to put down a guarantee of 8.5 million yuan ($1.3 million) to do so.

Beijing tax bureau officials told Ai's wife Lu Qing, the company's legal representative, that they wanted the bond paid into one of the tax bureau's bank accounts and that if the company missed the Wednesday deadline to do so, the case would be sent to police, Ai said. "They were of course issuing a threat to us, but the threat is real."

Supporters have sent Ai nearly 8.7 million yuan ($1.4 million), but Ai and his company's lawyers said transferring the money into the tax bureau's accounts could be seen as admitting guilt and that if they win the case it would be difficult to get the money back. Instead, Ai was planning to be the guarantor and offer a bank certificate of deposit as collateral.

Ai said he gave in to the tax bureau's demand out of concern for the safety of his associates.

"If you don't do it this way, they might send you to the public security, then the public security organ can use some other procedure, under the charge of refusing to pay taxes, to do what, I don't know," Ai said. "Of course, this would have been very unsafe for a lot of people."

His company's lawyers say the tax bureau's demand is illegal. Repeated phone calls to the Beijing Local Taxation Bureau's propaganda department rang unanswered Tuesday.

Ai said that if the case were to go to the police it was possible that they would detain his wife, because she is the firm's legal representative, and the company's manager and accountant, who he says have been unreachable in the months since his release. He said police could also go after him even though he's not the owner of the company, just a designer.

Ai said the company has 60 days to seek a review of the case.

The artist was the most high-profile target of a sweeping crackdown on activists that started in February in a bid to prevent protests similar to those in the Middle East and North Africa. Dozens of bloggers, writers, rights lawyers and other activists were detained, arrested or questioned. Many have since been released but continue to face restrictions on whom they can see and talk to.

[Associated Press; By GILLIAN WONG]

Gillian Wong can be reached at http://twitter.com/gillianwong.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.