Thousands protest over China ant aphrodisiac scheme

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BEIJING, Nov 22 (Reuters) Thousands of people in northeastern China have protested on the streets and surrounded government offices demanding help recovering money from a get-rich-quick scheme to raise ants to make an aphrodisiac tonic.

Hundreds of anti-riot troops and police in Shenyang, capital of Liaoning province, were deployed to stop protesters reaching the provincial government and Communist Party headquarters, residents said Yesterday.

The irate investors from across Liaoning, a rustbelt province striving to attract investment, have demonstrated in Shenyang since Monday and sporadic clashes with police have broken out, they said.

Several thousand protesters gathered near the provincial government offices on Wednesday, a resident told Reuters by telephone.

The investors -- many of them laid-off workers or farmers -- put their savings into Shenyang's Yilishen Group for a scheme in which they raised ants to provide ingredients for a health tonic promising an aphrodisiac boost.

For every 10,000 yuan 1,350 dollars they paid the company as ''deposit'', investors were promised a dividend of 3,250 yuan.

The tonic was promoted on television by Zhao Benshan, the country's best-known comic who specialises in playing innocent bumpkins with a northeastern twang.

But since October, the group has twice delayed payment of dividends, fuelling investor fears that it was on the brink of bankruptcy or that the government might have frozen its funds.

''We strongly demand the government offer a way out for Yilishen!'' read a banner held by protesters as they marched along a Shenyang street. A photo of the banner was posted on Internet and blog sites.

China has seen rising protests from farmers and disgruntled workers as inequality and corruption stoke popular resentment The unusual origin of this latest uproar was a reminder that even as China's economy booms, there are pitfalls that can spark discontent from citizens eager for a share of wealth.

Chinese media have said the scheme collected more than 10 billion yuan from hundreds of thousands of Liaoning residents.

USELESS RUSE? Some local reports have said the ants were a useless ruse for an illegal scam, but the group has survived several probes in the past eight years and investors had previously received their dividends on time, protesters said.

As they looked for reassurance, panicked investors have turned their ire on the government.

''If Yilishen goes bankrupt, the government will be the chief culprit,'' said a message that appeared briefly on domestic Chinese Web sites before it was removed. ''The government will be drinking our blood.'' A Shenyang resident told Reuters that about 1,000 people had collected in front of the company's head office yesterday.

Repeated calls to the office by Reuters went unanswered.

Investors said the group's good relations with the government and its commercials on state television had convinced them Yilishen was legitimate.

''It has been out there for eight years and the government has given the company and the manager so many honours. We thought there mustn't be any problem,'' investor Li Dechun told Reuters.

He said he had poured more than 200,000 yuan into the scheme.

A spokesman for the Liaoning provincial government said officials had been talking to the protesters, and the company's failure to pay dividends was not due to any government action.

''Most of the investors are from the lower class of society.

Some have threatened to take more radical actions, such as blocking trains at the railway station,'' a local resident surnamed Cong told Reuters.

Online discussions about the protests and the ant scheme were quickly removed from Web sites, as were recent news reports about Yilishen. The Group's Web site was also shut, announcing ''service unavailable''.

REUTERS SZ RK0950

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