"...the
bigger question is how long will this reformist zeal continue and if it’s really going to change the rules of the game.
Wen Jiabao made similar pledges to stamp out official graft and make government accountable. His tenure ended under a shadow
after The New York Times reported that his family had raked in billions of dollars during his ten-year rule. It’s a
leap of faith to believe that Xi and his peers will act differently. Nomura also seems remarkably naive about the rot
that pervades public life in China. It cites experts in Hong Kong’s Independent Commission Against Corruption (ICAS)
as saying that ending “open and excessive corruption” could be achieved in 2-3 years. Doing the same for the entire
bureaucracy could take “up to a decade,” it opines. To anyone versed in how Asia does business, this is preposterous. It
also misses a fundamental point. The ICAS is independent of its political masters. That’s how it gets to indict tycoons
who are cosy with the territory’s politicians. When big fish fry in China, it’s usually because of, not in spite,
of political allegiances. That’s no way to eradicate corruption. Just ask Russia."
BOTH the new president, Xi Jinping, and the new prime
minister, Li Keqiang, ask to be measured by how they rein in official corruption. They will rely heavily on a third man: Wang
Qishan. Mr Wang, who is 64, now heads the Communist Party’s Central Commissionfor Discipline Inspection, the body that grapples with corruption. More assured and outspoken than most leaders,
he has been given the nickname “Fire Chief Wang” for the times he has been called upon to quell crises. When the
SARS epidemic paralysed Beijing in 2003, Mr Wang replaced a feckless mayor who spent more time covering up the problem than
solving it. Mr Wang also took top jobs in China’s banks during times of financial stress. Fighting corruption will be
much tougher.
China has improved the way it deals with corruption and is increasingly using technology to
combat graft, but experts say preventing the technology from being abused must also be taken into consideration. The
Chinese Academy of Social Sciences published a report on China's rule of law on Monday, which stated that the country's disciplinary
authorities at every level have developed and applied technology to their anti-corruption work, such as online approval platforms
and bribery record systems.
In 2012, a system tracking companies and people
who pay bribes was put into effect, which means prosecutors can check nationwide bribery information online, according to
the report, adding that the country has made great progress on bribery prevention in this way. The government in Hainan province
developed an online system to prevent officials from intervening in administrative examination and approval, while Ningbo
city's government, in Zhejiang province, also carried out electronic monitoring of administrations, the report said.
Corruption in the Chinese military, which may
include officers who drive luxury cars, live in opulent homes and pay for vacations with public funds, undermines the army’s
effectiveness, a retired major general wrote in a commentary. Corruption hurtChinamore
than a century ago, when its modern naval fleet was defeated by Japan, Major General LuoYuanwrote...“Combat
effectiveness is more undermined by corruption than anything,” Luo wrote. “It is hard to imagine that a corrupt
army can vanquish the enemy and win victory.”
Excessive consumption and corruption, especially on the part of state officials who are supposed
to be public servants, does make a mockery of the "serve the people" ethos at the heart of good governance. China faces a
destabilising inequality gap, so the waste of public resources on empty gestures - like showy motorcades, honour guards, over-the-top
banquets, glitzy hotel receptions and lavish gift- giving - not only squanders funds needed elsewhere, but fuels indignation
while eroding social harmony and self-respect.
Despite his revolutionary communist pedigree, it is unlikely that Xi will be saying "Farewell,
my tycoon" any time soon, though. The get-rich-quick ethos launched by the canny "capitalist roader" Deng Xiaoping is still
the default ideology in a nation bereft of meaningful ideology. Fawning over the rich and powerful and dispensing bribes to
officials, typically in the hope of cementing connections, has already become a way of life. Laws that are mercilessly enforced
when applied to little people rarely apply to the rich and connected in so-called communist China. The corruption and crony
capitalism openly promoted by Deng's successor, Jiang Zemin, still runs deep, even though Jiang has been out of the limelight
for a decade.
China’s lunar new year holiday is the busiest time of year for
the Zhengzhou East long-distance bus station. But officials in Shuyuanjie village, the district that owns it, complain that
every bus rolling out of the station is a reminder of the revenue lost through corruption. Fan Jianhui, the local Communist
party secretary, has seized control of the station to run as his private business and despite street protests and complaints
by local officials, there has been no investigation into his activities. The
case illustrates the struggles of China’s ruling party to ensure basic standards of governance even as itsnew leaderspledge to root out corruption. Xi Jinping, the new party chief,
said last month that the party must fight “tigers and flies at the same time”, adding that no exception would
be made in probing graft no matter who was involved. Orders for cadres tocut down
on extravagant banquetsand adopt
a more humble lifestyle have resonated with the public. The speedy investigation and suspension of some officials exposed
for alleged corruption on the country’s vibrant social media has raised expectations. But most experts caution that
the party will not get far while it refuses outside scrutiny.
Tales of shady business practices abound in China - fake revenues, phony invoices, sham factories
- but until recently, the problem seemed confined mostly to Chinese companies.No longer.
Concern is growing about risks to U.S.-based multinationals in a country where American audit
regulators are locked out by the Chinese government and bribery and fraud are routine.
Questions about transparency and integrity weigh heavily on China, the world's second-largest economy,
as it assumes greater economic leadership and responsibility. These doubts test its ability to adhere to international standards.
Stories of business deception - confirmed by corporate sleuths, former business executives,
court filings and experts on accounting in China - are commonplace.
2012
was the annus horribilis of the “trial by Weibo” of government officials, their public humiliation and ultimate
sacking in disgrace. More than ever before, last year witnessed multiple cases where government officials were implicated
in sex videos and other corruption scandals that first appeared in full public view on the Chinese Internet and led ultimately
to their dismissal. If it wasn’t already before, the public image of government officials of various ranks in China
was in crisis in 2012.
In
light of this situation, the Crisis Management Research Center at Renmin University (中国人民大学危机管理研究中心)
in Beijing earlier in January this year published a report entitled “The Public Image Crisis of Government Officials”
(官员形象危机2012报告). As the Yanzhao Evening News (燕赵晚报)
from Hebei province today explains in a front page story, the Crisis Management Research Center surveyed 24 cases
of corruption that became public knowledge on the Chinese Internet in 2012 so as to divine some trends and patterns in corrupt
behavior among government officials in China. Their findings included that 95% of corrupt government officials keep mistresses,
and more than 60% of these corrupt officials are openly cohabiting with their mistresses. Yet this is merely the beginning.
Among other findings, the Crisis Management Research Center report highlighted
the following personal characteristics of the officials involved as well as aspects of the investigations that were carried
out:
Age: Twelve of the 24 officials were older than 50 (although the
age of the officials in question could not be exactly verified in eight cases). Interestingly, the oldest corrupt official
among the 24 was Bo Xilai, who was aged 63 at the time of being investigated for corruption. The youngest person among the
24 was a 25-year-old village official from Sichuan province.
Rank: The majority of the 24 cases involved officials holding the
rank of Party secretary at the county level. As a former member of the Politburo, Bo Xilai was the highest ranking, followed
by Li Chuncheng, the former deputy secretary of the Sichuan provincial Party committee.
Timing of exposure: Of the 24 officials, there were only six for
whom it was not possible to verify exactly when their misdeeds became widespread knowledge on the Internet. The first man
to be “outed” in 2012 was Yang Cunhu (杨存虎), former Party secretary for Jingle county (静乐县)
in Shanxi province, whose womanizing and apparent “caught in the act” (床照风波) misdeeds
became known on Weibo in January. Yet the floodgates only opened in October 2012 when He Guoqiang (贺国强),
Politburo member and secretary for Party disciplinary inspection, announced that 660,000 Party officials had been investigated
for corruption in the preceding five years, and 24,000 officials had been transferred to judicial authorities as criminal
suspects. On the eve of the 18th Party Congress, He’s statement was interpreted as a sign of a new offensive from the
highest levels against corruption in the Party, and the dominoes of corrupt officials immediately began to fall one after
the other, totaling 13 cases in the three months up to December alone.
Main grounds for investigation: Eight of the 24 corrupt officials
were sent down for crimes that involved women, e.g. rape or intercourse with minors. These included Lei Zhengfu, Li Xingong,
and Yang Cunhu. The rest of the cases involved economic crimes. There’s also some peculiar cases, e.g. that of Yang
Dacai (杨达才), a.k.a. “Watch Brother”, who faced “trial by Weibo” and ultimate
dismissal for being seen wearing various expensive watches.
Length of time from exposure to dismissal: Of the 18 cases where
the time of first exposure and investigation could be exactly determined, the shortest length of time was 12 hours, and the
longest 40 days.
Chinese radio and television stations are to ban
advertisements for expensive gifts such as watches, rare stamps and gold coins, the Xinhua state news agency said on Wednesday,
as part of a push by the government to crack down on extravagance and waste. Such advertisements had "publicized incorrect
values and helped create a bad social ethos", the State Administration of Radio, Film and Television (SARFT) said in a release,
Xinhua said. The ban comes after repeated calls from Xi Jinping, China's president-in-waiting, for a renewed fight against
graft. But it could take a toll on luxury product manufacturers who advertise on Chinese television and radio.
A Chinese mining equipment company at the centre of an
alleged accounting fraudwas also involved
in a web of insider loans and asset transfers prior to its purchase by Caterpillar Inc., public filings show. The
transactions, while not illegal, should have sounded warnings about the company's finances when the U.S. firm came calling
last year, corporate governance experts said.The world's largest maker of tractors and excavators said last week it was writing off most of the $654 million value
of its purchase of ERA Mining Machinery Ltd.after uncovering "deliberate, multi-year,
coordinated accounting misconduct" at its subsidiary Zhengzhou Siwei. Caterpillar said an internal
investigation had uncovered improper accounting of inventories, revenuerecognition and cost allocation at
Siwei, designed to overstate the profitability of the business in the years before it bought it. Corporate
disclosures from ERA filed prior to the takeover show some unusual transactions, including directors lending the company cash
at relatively high interest rates and asset-shuffling between Siwei and related parties.Investors
and corporate governance experts say these were potential red flags that should have prompted Caterpillar and its team of
lawyers, accountants and bankers to ask some searching questions before pulling the trigger on the deal.
Xi Jinping, general secretary of theCentral Committee of the Communist
Party of China(CPC),
on Tuesday told members of the CPC's disciplinary arm that the CPC will unswervingly fight corruption and work to restrain
official power. The most quoted phrase from Xi's speech was "Power should be restricted by a cage of regulations," which
some believe connects with the theories of classic Western political philosophers. Xi explained that such a cage refers to
sound disciplinary, prevention and guarantee mechanisms to ensure that people do not dare to, are not able to and cannot easily
commit corruption. The speech has received a warm welcome, as well as comments indicating increased expectations, from public
intellectuals and netizens.
The most effective way to contain corruption is the prevention of
corrupt activities rather than the prosecution of corrupt officials.
Unfortunately, in China today, fighting corruption has largely relied
on the prosecution of corrupt officials rather than reforming the political, economic and social systems which provide fertile
soil for corruption. This is because the financial benefits of countless rent-seeking opportunities are so large that no one
wishes to reform the system.
Furthermore, fighting corruption is just like a wolf chasing a herd
of sheep. Any sheep running slowly and left behind by the rest of the herd gets caught by the wolf. In other words, only those
individual corrupt officials who fail to become members of corruption groups are vulnerable to prosecution; and those who
are able to be part of a corruption group can protect each other effectively to avoid being investigated and prosecuted.
As a result, dealing with corruption in China will rely on the party’s
ability and willingness to reform the political system so that power is not highly concentrated and controlled by one person
or a group of people. In addition, any political group with common economic interests should be broken up by moving people
around to different positions on a regular basis. The media should be allowed to investigate and freely criticise wrong-doing
by party and state officials.
It doesn’t take much to cast doubt on a Chinese company’s
financial reports these days. The country is a kleptocracy run by -- and for the benefit of -- the Communist Party elite,
who have allowed securities fraud to flourish. In addition to tolerating frauds by Chinese companies with U.S. or Canadian
stock listings, China’s government routinely obstructs overseas regulators’ investigations. Muddy Waters, a tiny
research firm led by an American short seller named Carson Block, has done more to expose Chinese stock scams, including Sino-Forest
Corp., than all of the world’s governments combined. It is only prudent for investors to start with the assumption that
the books of every publicly traded Chinese company are cooked. (To be fair, the same also may be true of the world’s
biggest banks.) Capital markets work best when the information that companies report is credible. When it isn’t, and
when laws don’t exist or aren’t enforced, investor confidence is easily shaken. Even an obscure news report about
an anonymous letter can have the ring of truth and send a big manufacturer’s stock careening.
A high-profile effort by the Chinese government to build
affordable houses for the millions priced-out of the country's property market is marred by official corruption, state run
media said on Saturday. China in 2010 launched a massive “affordable housing”
drive as part of an effort to defuse widespread discontent about the country's house prices, which have skyrocketed over the
last decade. The program, which aims to build 36 million affordable units by 2015, was championed by Li Keqiang, who assumed
the ruling Communist Party's second most powerful post in November and is set to succeed Wen Jiabao as premier in March. China
invested more than 820 billion yuan (US$129 billion) in the program last year, official media said. But government officials
have “easily amassed dozens” of newly-built affordable apartments, and “have taken away housing units specifically
intended for disadvantaged groups,” according to state-run news agency Xinhua.
Chosen to lead
the cleanup is Wang Qishan, 64, who until recently was China's economic-finance czar and now is chief of the Party's anti-corruption
body.Wang's political skills will be put to test in his new job. Corruption has long been a major
public complaint, and there is certainly no shortage of cases. In the past five years, China has punished 668,400 people for
"Party discipline violations" and more than 24,600 suspects have been referred for investigation, according to China Daily.
There are various ways to acquire ill-gotten wealth and just as many to hide them. Some spirit millions of cash out of the
country. Others stash them in luxury villas, expensive jewelries and accessories -- or business ventures by relatives and
associates. Still others blow their loot enjoying sybaritic lifestyles, lavishing wealth on mistresses or simply gambling
it away in casinos.
An
anti-corruption drive in China has netted suspects that include an executive accused of cavorting with gigolos, a young woman
who owns 11 apartments, a provincial official with 47 mistresses and a vice-mayor with ties to a drug gang. Many alleged misdeeds
were exposed by internet users – mostly whistleblowers and rogue journalists – and promulgated via unusually freewheeling
coverage in state-owned media. Another, less vaunted government clampdown – this one on dissenting views – leaves
little hope for a Chinese people-power renaissance. Over the past week authorities have surreptitiously replaced an outspoken
editorial in a liberal newspaper with brazen propaganda, scrubbed an open letter calling for constitutional governance from
the internet, and closed down an outspoken Beijing-based magazine for advocating political reform. Communist party secretary
Xi Jinping said corruption could lead to the “end of the party”. His administration has ruthlessly singled out
venal officials and is implementing a series of regulations to limit displays of official waste. Yet analysts say thatXi’s anti-graft driveis
only skin-deep, and that party leaders will be hard pressed to eradicate corruption while maintaining their perennially hard
line on dissent.
China's Communist Party promises to fight official
corruption, which has become a major problem in the country, more vigorously in 2013. The anti-graft drive by the party will
include heightened efforts to wean its members away from extravagance, bureaucratic behaviors and abuse of power..."The fight
against corruption is still arduous under the new circumstances, and a small number of party members have a weak sense of
responsibility...
China is finally tackling corruption, that is good news. Corruption has become so pervasive
that it is jeopardising social stability, leading to misallocation of resources and capital and stymying the progress that
China has made in raising the general level of prosperity and wellbeing. Wang Qishan, who is spearheading the anti-corruption campaign,
is an apt choice for the task. He knows how financing in China works, having run China Construction Bank. Because of his age, the 64-year-old will be on the
Politburo Standing Committee for only one term, which means he has little to lose. And he has no children...
High quality global journalism requires investment. Please share this article with others using
the link below, do not cut & paste the article. But those who do business in China remain sceptical. To many, the anti-corruption
drive is merely a form of score-settling. Money continues to leave China, as more and more wealthy people put their money
out of the reach of their peers. The stock market in China has always been influenced more by capital flows than by economic fundamentals. That means the beneficiaries
of the anti-corruption campaign are more likely to be Hong Kong property developers than listed Chinese companies. That is
also why the hedge fund managers who like luxury goods as a proxy for the growth of corruption in China continue to hold the
shares of companies such as Richemont and Prada. Mainland sales of watches and jewellery may go down
but sales offshore are likely to continue as prudent Chinese continue their extravagant purchases – just not in China
itself.
There are 80 million party members in China, competing
for about 40,000 important local positions. China experts say that these jobs are now routinely bought and sold, often for
huge sums, with the winners soliciting graft from subordinates and local businesses. The corruption isn’t limited to politics. Top military positions are also
obtained by bribes, with the winners harvesting millions. U.S. experts say that a one-star general can expect to receive up
to $10 million in gifts and special deals; a four-star regional commander can make $50 million or more. This out-of-control corruption frightens China’s new
leaders, who know that the public is increasingly angry about dirty dealings by public officials. But Xi and many of his fellow
rulers are known as “princelings” because their families have grown rich from their closeness to power. They want
to clean out the stable without burning it down.
“The anticorruption storm has begun,” People’s
Daily, the party mouthpiece, wrote on its Web site this month. The flurry of revelations suggests that members of China’s new leadership may be more serious
than their predecessors about trying to tame the cronyism, bribery and debauchery that afflict state-run companies and local
governments, right down to the outwardly dowdy neighborhood committees that oversee sanitation. Efforts began just days after
Xi Jinping, the newly appointed Communist Party chief and China’s incoming president, warned that failing to curb corruption
could put the party’s grip on power at risk. “Something
has shifted,” said Zhu Ruifeng, a Beijing journalist who has exposed more than a hundred cases of alleged corruption
on his Web site, including the lurid exertions of Mr. Lei. “In the past, it might take 10 days for an official involved
in a sex scandal to lose his job. This time he was gone in 66 hours.”
China’s new leadership, which was introduced to the world in mid-November
and is helmed by Communist Party chiefXi Jinping, has made combating the country’s endemic corruption one of its publicly
stated missions. In late December, Xinhua, China’s state news agency enumerated a list of eight don’ts to fit
these more austere times. Floral displays and welcome mats for official delegations are now prohibited, according to regulations
from the Political Bureau of the Chinese Communist Party’s Central Committee. So are clusters of waving schoolchildren
dispatched to greet visiting dignitaries. State employees traveling overseas should keep an eye on the size of their entourages.
Closing roads or otherwise disrupting traffic to smooth a government official’s journey will no longer be tolerated...
Not to be outdone by the Communist Party, the Central Military Commission, which supervises the People’s
Liberation Army, issued 10 regulations of its own, including the banning of alcohol from its receptions.
An alternative hypothesis was suggested to me years ago by a veteran China-watcher. "The Chinese
would like you to think, 'Official so-and-so was exposed for corruption, and then lost power.' It would be more accurate if
you understand that 'Office so-and-so lost power - and was therefore exposed for corruption.' " New leaders bring new followers,
with new demands. Corrupt old cadres are replaced, but not the corrupt system.
Abstract: This paper compares corruption
in China over the past 15 years with corruption in the U.S. between 1870 and 1930, periods that are roughly comparable in
terms of real income per capita. Corruption indicators for both countries and both periods are constructed by tracking corruption
news in prominent U.S. newspapers. Several robustness checks confirm the reliability of the constructed corruption indices
for both countries. The comparison indicates that corruption in the U.S. in the early 1870s — when it’s real income
per capita was about $2,800 (in 2005 dollars) — was 7 to 9 times higher than China’s corruption level in 1996,
the corresponding year in terms of income per capita. By the time the U.S. reached $7,500 in 1928— approximately equivalent to China’s real income per capita in 2009
— corruption was similar in both countries. The findings imply that, while corruption in China is an issue that merits
attention, it is not at alarmingly high levels, compared to the U.S. historical experience. The paper further argues that
the corruption and development experiences of both the U.S. and China appear to be consistent with the “life-cycle”
theory of corruption — rising at the early stages of development, and declining after modernization has taken place.
Hence, as China continues its development process, corruption will likely decline.
Yang Hongwei, the former governor of Chuxiong
Yi autonomous prefecture in south-westChina, was in the dock on Thursday accused of
taking some 10.11 million yuan (£1m) in bribes and using the money to purchase 17 properties in Yunnan province and six in
Melbourne, Australia. Mr Yang – dubbed the "druggie governor" by Chinese media - was toppled in April 2011 following
allegations of corruption and living an "indecent life". Mr Yang was also accused of having a penchant for "Kaku", a potent
mix of herbs and opium.After he was ejected from office, GoKunming, a local blog, attributed his downfall to the "voracious
consumption of alcohol, drugs, women and bribes" and claimed he was known for his "superlative drinking abilities".
74-year-old female general manager
of Shanghai’s Gongxin Engineering Construction Supervision Centre Co Ltd, given life sentence for corruption involving
over $7.4 million.
Taiwan Nantou county mayor summoned
along with...seven people, most of them county officials.Investigators found a tea leaf can in magistrate's office containing
$10,306...alleged kickbacks in the case amount to approximately $343,540.
Former manager of Foshan City (Guangdong Province)
Chancheng District Postal Bank Major Accounts Department, sentenced to death for illegally collecting deposits from 198 clients
amounting to $212 million.
Shenzhen Shajing Street Party Working Committee
secretary charged for taking bribes totaling $3.2 million.
Shenzhen policeman sentenced to 14 years in prison
for embezzling $452,800
At the time when some China skeptics are busy explaining their skepticisms over the pledges
made during the 18th National Congress of the Chinese Communist Party CCP Beijing has surprised us in its own way again Days
after the once-in-a-decade leadership transition in the CCP the government seat in Zhongnanhai has displayed
unparallel urgency and determination unseen in the previous administration in implementing the long-delayed reforms in China
As like the past party congress the decades-old problem of widespread corruption has been brought to the fore again within
the leaders’ statements in the highest party occasion last month However there are notable two differences that set
aside the recent party congress from its forerunners First is the unusually strong tone on the issue of corruption by the
outgoing Chinese president himself Hu Jintao The fact that such statement as “reform or risks the collapse of the party
and the state” is being shouted by a cautious and cool-headed leader as Hu marked a departure from the previous settings
where such remarks are regularly made instead by the Chinese premier Wen Jiabao Then not long after the end of the party congress
the incoming China’s president and the new party secretary Xi Jinping delivered another speech at a CCP politburo “learning
session” in which capturing Hu’s statement reiterated again the threat of corruption toward the future of the
party and the country while calling for all party cadres to strictly obey the party constitution and “reject all unhealthy
trends and influences” a reference to corruption.
Lurid reports of Chinese officials sportingluxury watchesor
promoting theirtwin mistressesare
being hailed by state media as proof of a corruption crackdown -- but real reforms remain a distant prospect. Less than a
month after Xi Jinping ascended to China’s most powerful post as head of the Communist Party and proclaimed the scourge
of graft an existential threat to the ruling organisation and the country, official outlets are striving to show action is
being taken. Several senior Chinese officials have been placed under investigation, including thevice party headof
Sichuan province and a former deputy mayor of the manufacturing hub of Shenzhen.
A
uniquely Chinese version of the Corruption Perception Index
A
drop in the share price of Moutai, the high-end liquor elites offer as “gifts,” is a signal that investors may
be taking seriously China’s promise to crack down on corruption. Moutai is the country’s top luxury brand ofbaijiu(“white alcohol”), a popular grain liquor,
and it can cost up to ¥1 million ($160,635) for a vintage bottle. (CBS anchor Dan Rather reportedlydescribed it in the 1970s as tasting like “liquid razor blades”.)
It has long been a staple bribe used in elite political and business circles. In 1989, Chinese Youth News called the liquor,
also known as Maotai, an ”all-purpose grease” for bribing bureaucrats and party cadres. Past
surveys have shown that roughly only1 in 100 of Moutai drinkers bought the liquor themselves. Up to now, investors have been dubious about government promises to root out graft.
Back in March, when outgoing premier Wen Jiabao vowed to stop government officials from spending extravagantly on high-end liquor, shares in Kweichow Moutai, the company
that makes it, fell only slightly. As it became clear that Xi Jinping was slated to be China’s new president, the company
started promoting one of its more modestly pricedbaijiubrands, which conveniently happens to be called Xi Jiu.
Xi seems to be driving the anti-corruption
message home by banningred carpet treatment for Chinese officials as his first major policy move. And this time the market
seems to be taking him more seriously. Shares in Kweichow Moutai began falling shortly before the mid-November party congress
when Xi was anointed China’s new head, and are down about 20%.
In the past week, two corruption cases
have been exposed, not by theCentral Commission for Discipline Inspection of the
Communist Party of China (CCP), but by the mistresses or second wives
of the corrupted officials...The fact that a large number of corruption cases in China have been exposed through sex videotapes
by mistresses or second wives and netizens' collectivehuman flesh searchefforts,
have prompted a lot of discussion online. Some praise the mistresses for standing up against corruption, whilst some criticize
the CCP and the government for not taking the leading role to fight corruption...We have to admit that in all these years, the second wives have become the
deadly weapon against corrupt officials. So far numerous corruption cases have been exposed by second wives. Or we can say
that 99% of the corrupt officials have second wives. Statistics show that among the corruption cases from Guangzhou, Shenzhen,
Zhuhai, 100% have second wives. So the army of mistress and second wives has a lot of potential in fighting against corruption
in China.
China’s ruling elite should be forced to disclose their
assets, according to proposals put to the new anti-corruption czar, it was reported Monday as news of another graft scandal
broke.
Pressure on the Communist Party to combat corruption has intensified after a traumatic
year marked by embarrassing revelations of top-level corruption and power abuse. Several top scholars met Friday with Wang
Qishan, who was appointed head of the ruling Communist Party’s top anti-corruption body this month, to put forward proposals
on fighting graft, the state run Global Times reported. Zhou Shuzhen, a professor at Beijing’s People’s University,
called for “a system to publish details of official’s assets as soon as possible”, the report said, adding
that Zhou recommended officials first disclose their property assets. Others also urged greater transparency in government
and an end to privileges for top officials.
U.S. regulators probing potential fraud by China-based
companies increased pressure on their auditors by formally accusing affiliates of Big Four firms of withholding documents
from investigators.
Deloitte Touche TohmatsuCPA
Ltd., Ernst & Young Hua Ming LLP, KPMG Huazhen and PricewaterhouseCoopers Zhong Tian CPAs Ltd. have refused to cooperate
with accounting investigations into nine companies whose securities are publicly traded in the U.S., the Securities and Exchange
Commission said in an administrative order yesterday.BDO China Dahua Co.was
also named by the SEC in the action.
The auditors claim Chinese
law prevents them from assenting to the SEC’s demands, hindering U.S. efforts to probe allegations of fraud that have
wiped 61 percent from a gauge of Chinese and Hong Kong stocks traded in North America since January 2011. Failure to reach
an agreement on cross-border access to records may prompt U.S. regulators to seek to deregister the firms, saidPaul Gillis, professor atPeking University’sGuanghua School of Management
"Corruption killed my parents -- the rapid expansion (of the railway network) and the 'business
as usual' system in China where bribes are a way to conduct business," he told AFP in an interview in Shanghai. "I have no
personal qualms with that guy," he said, referring to Liu. "It's the system. The signal system went into operation without
testing and that only happens when bribes are paid." Nearly 200 people were injured in the crash, among them his older brother...
Having at least one “ernai”, a Chinese way of calling
a mistress, the “second wife,”, has become a must among Chinese officials. “A man without a mistress is
useless. A man with two or three mistresses is a VIP. A man with five or six lovers is an animal,” sums up the current
view on the topic, the Central News Agency reported. Of course, having an extra-marital relationship is a wildcard for any
public figure. When giving discipline courses to Communist party cadres, a Guangdong official from the Central Discipline
Inspection Commission drew attention to the “woman issue” of Chinese officials by using the example of Xu Qiyao,
the former Director of the Construction Department of Jiangsu Province. He kept 140 mistresses and used to boast that among
them were a mother and her daughter. He bragged about this as “killing two birds with one stone. The Global Times
added that the mistresses often become officials’ own personal time bombs because of jealousy when the official has
drifted off to another lover, or because their demands haven’t been satisfied...According to official statistics from
Guangzhou, Shenzhen and Zhuhai, among the investigated officials alleged of taking bribes, nearly 100% of them have at least
one mistress. “This means that in Chinese officialdom their mistresses have formed a mighty team of anti-corruption
busters," the Global Times wrote, quoting the Gongshi Net, a Chinese website for China’s pro-reform movement.
InIndebted Dragon, Professor Lynette Ong from the University of Toronto discusses
how the Chinese economy relies on land as collateral to borrow money while paying the interest on the loans by selling and
leasing the land.Ong notes this makes China susceptible to two problems:
a real estate bubble and political instability stemming from displaced farmers who land has been taken from them. The
subtitle to Ong's article is "The Risky Strategy Behind China's Construction Economy".
I suggest "Ponzi Scheme" is a more apt description than "Risky Strategy". Let's take a closer look.
On the surface, China has secured a measure of international
help in this anti-corruption fight by starting to cooperate with the International Association of Anti-Corruption Authorities
(IAACA) and TI a decade ago. However, most exchanges are low-key and cautious, as many officials do not believe the international
NGOs are purely here to help. "Just as some in the West are biased against China, China has prejudice and bias toward the
West too," Ren Jianming, a professor from the School of Public Policy and Management at Beihang University, told the Global
Times. Through Ren's work in China's cooperation with TI and IAACA, he sees this international cooperation as a helpful
platform rather than foreign intervention, calling it a chance for China to show its efforts and seek help to deal with this
pernicious issue. Ten years ago, almost all TI staff viewed China as a country with a poor human rights record and virtually
no social organizations, recalls Liao Ran, a senior program coordinator with the organization. As the only Chinese employee
at TI, Liao tried to persuade his international colleagues that China was worth working with. "To engaging with China, it
is not easy to find the right way. But if we did't go there, we had already got lost," he told them. However, many government
officials in China viewed this as a "humiliation" and showed no interest in cooperation. Zhao Zenghui, a Shanghai discipline
inspection official, reportedly stated at a meeting that some government officials called for caution before working with
TI as it might have "a hidden motive."
The most common form
of protection for otherwise vulnerable entrepreneurs is in the form of an investment from one of the private equity firms
in which the princelings figure prominently. The most well known of these is, of course, New Horizon Capital, the firm started
in 2005 by the son of then vice-premier Mr Wen. While he is no longer running his investment firm day to day, he still has
links to it (and investors in it include many foreign banks)...From abroad, observers
prefer to believe that this dynamic is purely domestic. But foreigners may also be affected. For one thing, they employ the
princelings. Mr Wen’s daughter Lily worked for Lehman Brothers, Jiang Zemin’s grandson Adrian worked forGoldman Sachsbefore joining one of the
local private equity firms, Boyu. The daughter of Wang Yang, governor of Guangdong province, works forDeutsche Bank. The daughter of Chen Yuan, head of China Development Bank and himself the son
of Chen Yun, one of the most venerable of the princelings, worked for Morgan Stanley before attending Harvard Business School...In addition to employing the princelings, the foreign firms also deploy them. When a foreign bank asked for
a piece of the equity in a potash deal in southeast Asia, the Hong Kong private equity firm approached agreed because “you
don’t say no to a princeling”, according to one executive at the fund...
Admittedly, relationship hires are not always indefensible, although
it would be naive to think that the princelings’ family ties are never a factor. Many of the princelings have had the
best education and therefore boast the qualifications to justify their hiring.
China's leaders have been decrying corruption - and
doing very little about it - for decades. But some corruption experts say there may be reason for a little more hope this
time around.
Turning talk into action, however, will be a tall
order in a country where gift-giving is a pillar of traditional culture, a single political party has a stranglehold on power,
and bribery is pervasive from top to bottom of society. Some 668,000 party members have been punished for corruption in the
past five years, according to official figures that represent only the tip of the iceberg, experts say...The most likely first step, most corruption watchers here agree, is some
kind of “sunshine law” obliging officials to declare their income and assets, although it is unclear how credibly
such declarations might be verified.
Chinawill
ban executives from state-ownedbanksand financial companies from spending extravagantly on cars and houses,
state news agency Xinhua said, in Beijing's latest effort to clamp down on corruption and official waste.
The 12 regulations, issued jointly by the Ministry of Finance,
the Ministry of Supervision and the National Audit Office, come after Communist Party chief Xi Jinping warned that the party
risks major unrest and the collapse of its rule if corruption is allowed to run wild inChina. They also come amid growing public anger over widespread graft. China is sensitive to anything that raises suspicions
of corruption...
China’s
new Communist chief Xi Jinping has warned that corruption has the potential not only to destabilise the party but also bring
about the collapse of the country. Xi told a closed door meeting of members of the new Politburo of the Communist Party
of China (CPC) overthe
weekend that rampant corruption in other countries had recently brought about large-scale unrest and collapse of governments.Referring to an old Chinese proverb, Xi said: “Things must first rot, before worms grow.”
Without taking the name of any country, or directly
referring to Arab Spring phenomenon, Xi said that in recent years a number of regimes collapsed because of a “long-term
accumulation of contradictions” of which corruption was a “very important reason.” Xi said that large number
of facts revealed if the problem of corruption becomes increasingly severe it will lead to the ruin of the party and the country.
China's new leader
Xi Jinping is highlighting corruption as a scourge that could bring down the Communist Party, though he has yet to offer any
specific new proposals to stop it. In a weekend speech that was carried Monday by the official Xinhua News Agency, Xi told
the new 25-member Politburo that the party must be vigilant against graft, noting that corruption in other countries in recent
years has prompted major social unrest and the collapse of governments. "The large number of facts tells us that if the problem
of corruption becomes increasingly severe, it will lead to the ruin of the party and the country!"
The claims about Premier Wen Jiabao's hidden family assets prompted Beijing to blockThe
New York Times'English and Chinese websites, but many viewers scaled the
Great Firewall to find the news. Ironically, this revelation yielded little applause and harvested mostly disbelief and indignation
among Chinese readers in and out of the country. Such reactions not only reflect the political reality of today's China but
also provide important clues about its social transition. The story claimed members of Wen's family had utilised their status
to amass huge fortunes in an official-take-all society. Discussing possible corruption among top leaders' families is taboo
in China, but this article explored the subject at length in public, putting all corrupt Chinese officials on notice that,
under the keen lens of the international media, there is no safe haven.
For the family of ex-Taiwanese President
Chen Shui-bian, it’s no longer the properties they bought through a British Virgin Islands shell company in 2008 worth
a combined value of about $2.1 million. According to court documents, the properties — a Manhattan condo and property
in Keswick, Va. — were bought with bribe money. Prosecutors spentmore than two yearstrying
to seize the real estate. The U.S. Justice Department said late Wednesday that both properties were forfeited to the U.S.
government as part of its Kleptocracy Asset Recovery Initiative, which targets the spoils of stolen state assets parked in
the U.S.
Hu sounded the alarm again on the opening day of
the congress, saying corruption could ruin both the party and the nation.The offspring of both Hu and Wen are extremely wealthy.
It is no secret in China that relatives of senior party members invariably rise to hold key positions at state-run companies,
and central and local governments. Those in power realize that this inequality could imperil one-party rule, but they are
seemingly incapable of taking action to address the challenge. Even as far back as the National Congress held 10 years ago,
when Jiang Zemin stepped down as general secretary to be succeeded by Hu, Jiang warned that corruption is self-destructive.
Despite a shared sense of crisis among party leaders, they are stymied in their efforts to stamp out corruption.Xi is one
of the so-called princelings, a reference to the offspring of ranking party members, and has led a life of relative ease since
his childhood.And yet, precisely because of his background, Xi may be able to rein in fellow princelings who flaunt their
elite-ism, which serves only to perpetuate corruption. Unless he eradicates this evil that plagues Chinese society, Xi realizes
that the very foundation of one-party rule could be endangered.
CHINA'S top economic reformer, Wang Qishan, has been charged
with tackling corruption within the ruling Communist Party, with the lesser-known party chief of Tianjin, Zhang Gaoli, set
to take over day-to-day management of the world's second-largest economy...In
his speech at Beijing's Great Hall of the People, Mr Xi repeated warnings by the outgoing Mr Hu and Premier Wen Jiabao that
corruption among Chineseleaders posed the greatest threat
to the survival of the ruling Communist Party, and even of the state.
Earlier this year, a powerful army official gave
an emotional speech describing corruption as a “do-or-die struggle,” and days later, according to widely published
accounts, a prominent general, Gu Junshan, a deputy director of the logistics department, was arrested on suspicion of corruption.
He now awaits trial. The general is reported to have made huge profits on illicit land deals and given more than 400 houses
intended for retired officers to friends. Those excesses may be mere trifles compared with the depth of the overall corruption,
the speech by Gen. Liu Yuan, an associate of the new party leader,Xi Jinping, suggested...
...thedepth
of graft and brazen profiteering in the People’s Liberation Army poses a
delicateproblem for the new leader, one that ColonelLiu and others have warned could undermine
the status of the Communist Party...thearrest of General Gu was probably
just another example of sporadic efforts against big names in the army rather than a concerted campaign
Recognizing that there are limits to what can be
achieved through direct crackdowns, local governments have been seeking novel ways to curb corruption. In 2010, the central
party leadership delivered a list of 52 "Thou Shalt Nots" for senior party and government officials all the way down to the
"county" level of local administration. Among the rules: do not accept goods or invitations to banquets and trips; do not
profit from insider information; do not appropriate public buildings for personal use; do not use taxpayers' money to send
your relatives abroad to study. Figures show a continuous rise in officially acknowledged cases of corruption, from 128,000
in 2008 to 137,000 in 2011. In other words, there has been little improvement since Hu warned, five years ago, during the
last National Congress: "Strong punishment and prevention of corruption determine whether the public supports us or not; they
decide the life or death of the party." Meanwhile, there is deep distrust of judiciary institutions tasked with regulating
corruption.
Banks
face a risk from money laundering in China because of large flows of illicit money, weak controls and the difficulties of
screening names, said a new report from research and consulting firm Celent...Money laundering is “a big issue” in southern China, Celent said, because of the
informal nature of capital flows there. “Money changers, institutions and individuals who act as remittance agencies
enable money transfers between counterparties in China and Hong Kong, often in violation of foreign exchange regulations,”
it said. With increased international
exposure to the yuan as its use grows in commerce and finance, the report urged regulators and financial institutions, “to
step up efforts to curb money laundering activities.”
Six decades after Mao Zedong's triumph,
there are signs corruption is seriously undermining the Communist Party's legitimacy. The fast-growing Chinese middle class
is emboldened and using the internet to vent its anger. In such circumstances, Mr Hu and Mr Xi could hardly have avoided an
issue the party leadership would doubtless prefer to see swept under the carpet. Confronting it, however, is no easy matter.
Doing so challenges long-entrenched interest groups. We wait to see whether Mr Xi will be prepared to reinvigorate the reforms
promised when Mr Hu assumed power 10 years ago.
Plaintiffs...allege
that in 2008 they were trying to acquire Shanghai Atrip Medical Technology Co. Ltd. (SMT), a Chinese company that distributes
hospital equipment and operates dialysis centers. They made use of a complex variable interest entity (VIE) structure in which
a U.S.–listed company they controlled called...would own SMT through a series of offshore vehicles and a wholly owned
foreign enterprise in China...plaintiffs say roughly $1.4 million allegedly went to pay professional fees, including an
unstated amount to DeHeng, which was hired as Chinese counsel to both SMT and AAXT, as well as the various entities,
with Lv serving as lead adviser...
According to the complaint,
Lv provided a legal opinion letter stating that the VIE structure was sound. But the plaintiffs claim they were misled about
the ownership of one of the vehicles involved in the transaction. That entity, Kamick Assets Ltd., turned out to be controlled
by a man named Shao Ganghua...
Shortly after
the deal closed in April 2008, the suit claims, Shao used his control of Kamick to clean out a bank account containing the
plaintiffs' $10 million investment.
Chinawill
ban executives from state-ownedbanksand financial companies from spending extravagantly on cars and houses,
state news agency Xinhua said, in Beijing's latest effort to clamp down on corruption and official waste.
The 12 regulations, issued jointly by the Ministry of Finance,
the Ministry of Supervision and the National Audit Office, come after Communist Party chief Xi Jinping warned that the party
risks major unrest and the collapse of its rule if corruption is allowed to run wild inChina. They also come amid growing public anger over widespread graft. China is sensitive to anything that raises suspicions
of corruption...
China’s
new Communist chief Xi Jinping has warned that corruption has the potential not only to destabilise the party but also bring
about the collapse of the country. Xi told a closed door meeting of members of the new Politburo of the Communist Party
of China (CPC) overthe
weekend that rampant corruption in other countries had recently brought about large-scale unrest and collapse of governments.Referring to an old Chinese proverb, Xi said: “Things must first rot, before worms grow.”
Without taking the name of any country, or directly
referring to Arab Spring phenomenon, Xi said that in recent years a number of regimes collapsed because of a “long-term
accumulation of contradictions” of which corruption was a “very important reason.” Xi said that large number
of facts revealed if the problem of corruption becomes increasingly severe it will lead to the ruin of the party and the country.
China's new leader
Xi Jinping is highlighting corruption as a scourge that could bring down the Communist Party, though he has yet to offer any
specific new proposals to stop it. In a weekend speech that was carried Monday by the official Xinhua News Agency, Xi told
the new 25-member Politburo that the party must be vigilant against graft, noting that corruption in other countries in recent
years has prompted major social unrest and the collapse of governments. "The large number of facts tells us that if the problem
of corruption becomes increasingly severe, it will lead to the ruin of the party and the country!"
The claims about Premier Wen Jiabao's hidden family assets prompted Beijing to blockThe
New York Times'English and Chinese websites, but many viewers scaled the
Great Firewall to find the news. Ironically, this revelation yielded little applause and harvested mostly disbelief and indignation
among Chinese readers in and out of the country. Such reactions not only reflect the political reality of today's China but
also provide important clues about its social transition. The story claimed members of Wen's family had utilised their status
to amass huge fortunes in an official-take-all society. Discussing possible corruption among top leaders' families is taboo
in China, but this article explored the subject at length in public, putting all corrupt Chinese officials on notice that,
under the keen lens of the international media, there is no safe haven.
Hu sounded the alarm again on the opening day of
the congress, saying corruption could ruin both the party and the nation.The offspring of both Hu and Wen are extremely wealthy.
It is no secret in China that relatives of senior party members invariably rise to hold key positions at state-run companies,
and central and local governments. Those in power realize that this inequality could imperil one-party rule, but they are
seemingly incapable of taking action to address the challenge. Even as far back as the National Congress held 10 years ago,
when Jiang Zemin stepped down as general secretary to be succeeded by Hu, Jiang warned that corruption is self-destructive.
Despite a shared sense of crisis among party leaders, they are stymied in their efforts to stamp out corruption.Xi is one
of the so-called princelings, a reference to the offspring of ranking party members, and has led a life of relative ease since
his childhood.And yet, precisely because of his background, Xi may be able to rein in fellow princelings who flaunt their
elite-ism, which serves only to perpetuate corruption. Unless he eradicates this evil that plagues Chinese society, Xi realizes
that the very foundation of one-party rule could be endangered.
CHINA'S top economic reformer, Wang Qishan, has been charged
with tackling corruption within the ruling Communist Party, with the lesser-known party chief of Tianjin, Zhang Gaoli, set
to take over day-to-day management of the world's second-largest economy...In
his speech at Beijing's Great Hall of the People, Mr Xi repeated warnings by the outgoing Mr Hu and Premier Wen Jiabao that
corruption among Chineseleaders posed the greatest threat
to the survival of the ruling Communist Party, and even of the state.
Earlier this year, a powerful army official gave
an emotional speech describing corruption as a “do-or-die struggle,” and days later, according to widely published
accounts, a prominent general, Gu Junshan, a deputy director of the logistics department, was arrested on suspicion of corruption.
He now awaits trial. The general is reported to have made huge profits on illicit land deals and given more than 400 houses
intended for retired officers to friends. Those excesses may be mere trifles compared with the depth of the overall corruption,
the speech by Gen. Liu Yuan, an associate of the new party leader,Xi Jinping, suggested...
...thedepth
of graft and brazen profiteering in the People’s Liberation Army poses a
delicateproblem for the new leader, one that ColonelLiu and others have warned could undermine
the status of the Communist Party...thearrest of General Gu was probably
just another example of sporadic efforts against big names in the army rather than a concerted campaign
Recognizing that there are limits to what can be
achieved through direct crackdowns, local governments have been seeking novel ways to curb corruption. In 2010, the central
party leadership delivered a list of 52 "Thou Shalt Nots" for senior party and government officials all the way down to the
"county" level of local administration. Among the rules: do not accept goods or invitations to banquets and trips; do not
profit from insider information; do not appropriate public buildings for personal use; do not use taxpayers' money to send
your relatives abroad to study. Figures show a continuous rise in officially acknowledged cases of corruption, from 128,000
in 2008 to 137,000 in 2011. In other words, there has been little improvement since Hu warned, five years ago, during the
last National Congress: "Strong punishment and prevention of corruption determine whether the public supports us or not; they
decide the life or death of the party." Meanwhile, there is deep distrust of judiciary institutions tasked with regulating
corruption.
Banks
face a risk from money laundering in China because of large flows of illicit money, weak controls and the difficulties of
screening names, said a new report from research and consulting firm Celent...Money laundering is “a big issue” in southern China, Celent said, because of the
informal nature of capital flows there. “Money changers, institutions and individuals who act as remittance agencies
enable money transfers between counterparties in China and Hong Kong, often in violation of foreign exchange regulations,”
it said. With increased international
exposure to the yuan as its use grows in commerce and finance, the report urged regulators and financial institutions, “to
step up efforts to curb money laundering activities.”
Six decades after Mao Zedong's triumph,
there are signs corruption is seriously undermining the Communist Party's legitimacy. The fast-growing Chinese middle class
is emboldened and using the internet to vent its anger. In such circumstances, Mr Hu and Mr Xi could hardly have avoided an
issue the party leadership would doubtless prefer to see swept under the carpet. Confronting it, however, is no easy matter.
Doing so challenges long-entrenched interest groups. We wait to see whether Mr Xi will be prepared to reinvigorate the reforms
promised when Mr Hu assumed power 10 years ago.
The most openly ambitious general in the People's Liberation Army appears to have been sidelined
following his self-styled ''do-or-die'' fight against corruption in military ranks. General Liu Yuan, after missing out on
promotion to the Central Military Commission, was also absent from the ranks of 250 party and military luminaries who appeared
on stage for Thursday's opening of the 18th Party Congress...
Liu, like Bo, upset power brokers by speaking boldly about problems in domestic politics and
taking unconventional moves against corruption...
In particular, Liu stepped around the military hierarchy and trampled over the hidden rules
of patronage to dislodge a notoriously corrupt general, Gu Junshan. General Gu was deputy director of the People's Liberation
Army logistics department, where General Liu was political commissar, and is now under investigation.
General Gu was known to be close to the outgoing vice chairman of the Central Military Commission,
Xu Caihou, who in turn was a protege of former president Jiang Zemin. Liu Yuan's lonely anti-corruption campaign earned rare
public plaudits from other military officials including Liu Mingfu, Professor at the PLA National Defence University in Beijing.
He said Liu Yuan deserves support for fighting corruption and that he had only succeeded in removing Gu Junshan because of
his princeling prestige.
China’s once-in-a-decade leadership transition began Thursday, with a warning from the country’s outgoing
leader. In a long and wide-ranging speech to mark the beginning of China’s 18th Party Congress, President Hu Jintao
warned that the party and even the country are facing fatal challenges if it does not do more to deal with the problem of
corruption. In his finalremarks as leader of the political party that single-handedly rules 1.3 billion people and
charts the course for the world’s second-largest economy, President Hu had a warning for the Chinese Communist party.
"Opposing corruption
and building an honest and clean government is a clear stance the party has been adhering to and is an important political
issue the people have been paying attention to. If we fail to handle this issue [corruption] well, it could prove fatal to
the party and even cause the collapse of the party and the fall of the state," he said.
The
scandals surrounding disgraced leader Bo
Xilai and other corrupt cadres are a profound lesson for the Communist
party, a spokesman said as delegates gathered in Beijing for China's leadership transition..."Problems
involving Bo Xilai and Liu Zhijun [the former railways minister also facing charges] are severe corruption cases that took
place among senior leading cadres. The lessons have been extremely profound," Cai Mingzhao, spokesman for the congress, told
a news conference. He added: "China is in the middle of a social transition and some areas are prey to corruption. The
punishmentand prevention of corruption is an arduous and ongoing task."
China...is an independent
country full of promising potentials and untapped resources. Through proper allocation and prioritization of resources by thegovernment officialsserving their country, its economy is set to boost and grow fundamentally.
Throughout the years, the opposite has been observed in China and one of the
reasons why theirfinancial systemstagnated is because
of prevalent corruption from the mostpowerful officialsdown to thelocal public servants. According to Pei (2007), about 10 percent ofgovernment budget, contracts and transactions is used as kickbacks and bribes or stolen
without being noticed, questioned and goes undetected by anti-corruption bodies. He also pointed the main reasons in less
technical terms for theawarenessof the citizens of China.
One of the root causes of corruption he cited is the lenience when it comes to republic laws. The probability of a convicted corrupt official being penalized or jailed is less than three percent. This
makes for a"high-return low-risk"activity the officials
exercise. He went to point out that evensmall-scale officialsare able to amass millions
of Yuan without being indicted properly...
Xi Jinping, the man in line to be China’s next
president, warned officials on a 2004 anti-graft conference call: “Rein in your spouses, children, relatives, friends
and staff, and vow not to use power for personal gain.” As Xi climbed the Communist Party ranks, his extended family
expanded their business interests to include minerals, real estate and mobile-phone equipment, according to public documents
compiled by Bloomberg. Those interests include investments in companies with total assets of $376 million; an 18 percent indirect
stake in a rare- earths company with $1.73 billion in assets; and a $20.2 million holding in a publicly traded technology
company. The figures don’t account for liabilities and thus don’t reflect the family’s net worth. No
assets were traced to Xi, who turns 59 this month; his wife Peng Liyuan, 49, afamous People’s Liberation Army singer;
or their daughter, the documents show. There is no indication Xi intervened to advance his relatives’ business transactions,
or of any wrongdoing by Xi or his extended family.
China's Communist Party changes leadership every 10 years. This time, the scandal
surrounding Bo Xilai has muddled up the plans. It has also revealed a number of problems in the party. Power and the abuse thereof; moral and the lack of it; murder and money
- the story surrounding Bo Xilai is enough for a full length thriller - a thriller that has gripped the Chinese public since
February. Bo Xilai created chaos in China's carefully planned change of leadership. At the same time, he also brought to light
uncomfortable truths about the country's leaders. Through
the scandal, a number of things have become clear. For one, there is a deep-seated ideological divide among the members of
the Communist Party, which to the public presents itself as a homogenous, unified entity. Another thing that has become evident
is that the top tiers live in astonishing luxury. They are involved in offshore banking and money laundering and will literally
go over dead bodies if they have to, as Bo Xilai's wife Gu Kailai has proven.
Less than 10 daysbefore the key 18thChinese
Communist Party (CCP) congress opens on November 8, CCP factional struggles took a dramatic turn last Friday, with Premier
Wen Jiabao suddenly facing allegations of corruption...There is widespread anger in the Chinese working class
over high-ranking officials using their political influence to enrich their families. TheNew York Timesexposé on Wen adds
further uncertainty over who will emerge as the new CCP leadership after the congress. The murky factional tensions inside
the CCP are exploding into public view. As the Young Communist League (YCL) faction of Wen and current President Hu Jintao
prepares to put Bo on trial, Wen faces similar allegations to those that brought down Bo: taking “huge bribes”
and using his position to let relatives make “huge financial gains.” The CCP’s Shanghai faction, headed
by former President Jiang Zemin, appears to be benefitting from the scandals.
Buying and selling office is so rampant in China
that it has battered the ruling Communist Party's image as an institution that promotes the competent, not the connected.
The practice continues despite vows by Chinese leaders to eradicate it, and the public has grown increasingly disgusted. Fighting
corruption will be one of the biggest challenges for the party leadership that will be installed in November in a once-a-decade
transition. Anti-corruption crusaders have particularly warned against personnel corruption, saying it inevitably breeds other
forms of corruption as office buyers seek returns on their money. But there have been no recent signs of new action from the
government; the last time a leading official talked publicly about office-buying was two years ago.
"Prepaid cards
are increasingly becoming tools for people to offer bribes to officials and officials usually feel less guilty accepting prepaid
cards compared with accepting cash,"Lin Zhe, a professor of anti-corruption
research at the Party School of the Central Committee of the Communist Party of China said. "There has been debate about the real-name registration system
for prepaid cards since last May. The question now is not about discussing whether the system is feasible,
but how the functioning bodies can get these rules implemented," she said.One of the earliest cases of prepaid card bribery to make
headlines in China occurred in 2009, when Du Hongmiao, deputy chairman of Shengzhou City Committee of the Chinese People's
Political Consultative Conference in Zhejiang Province, was convicted of taking bribes which included more than 180,000
yuan in shopping cards.
China's $50,000-a-year
limit on moving capital hasn't prevented about $225 billion from leaving China, equivalent to about 3% of the nation's economic
output last year. The WSJ's Alex Frangos explains China's money trail in this video.
A Chinese billionaire has been detained by authorities under
suspicion of bribery, shedding yet more light on endemic corruption in the emerging country. According to a report
in the South China Morning Post, Xu Yusho, the president of Invengo Information Technology, which is listed on the Shenzhen
stock exchange, has been arrested for a bribery related to the railways sector.Prosecutors said Xu, who is also a member of the Shenzhen Municipal People's Congress, was
taken into custody following a request by the Zhengzhou Railway Bureau in Henan province.
Online "human flesh searches," a form of vigilante activism
A raft of property scandals uncovered by netizens
have underscored the need for public officials to disclose their assets, which is key for curbing corruption and ensuring
social equity. A government official in Guangzhou, capital of south China's Guangdong Province, was removed from his post
after investigators found that his lifestyle far outpaced his salary. A preliminary investigation announced last week revealed
that Cai Bin, a senior urban management official from the city's Panyu District, and his family own 22 housing units, one
more than the number claimed by online muckrakers who brought the scandal to light. In September, Yang Dacai, a former senior
work safety official in northwest China's Shaanxi Province, was sacked due to a corruption scandal that was exposed after
photos were posted online showing Yang wearing at least 11 expensive wristwatches on multiple occasions. These scandals were
uncovered by Internet users through "human
flesh searches," a form of vigilante activism that involves ferreting out a target's personal information and publishing it
online, to uncover information regarding those officials' property holdings.
Arrest warrants have been issued for three Chinese men who allegedlyoperateda massive Ponzi scheme featuring online stock and feared to have swindled more than
200,000 Chinese citizens out of approximately $384 million. Police have arrested several members of the scam allegedly
masterminded by a Chinese man named Yun (Many Chinese go by only their surname), who remains the only suspect still on the
lam. The scheme operated through a website, Hootoot660, that was based in the United States. Instances of widescale
financial fraud are relatively rare in China, due in part to a booming economy and a government that seeks to tightly control
the spread of unfavorable or harmful news.
"China is different because the Communist Party does not
depend on injections of cash from the private sector. As a result, whereas dirty money was an integral part of the developmental
success in South Korea, Taiwan, and Japan, in China corruption fits the classic definition — the misuse of public authority
for private gain."
What began as investigations into individuals is edging toward a diplomatic
issue for China and the United States. China’s response has hastened that process substantially. After the story came
out, China’s foreign ministry could have brushed it off as a private matter surrounding Wen’s family, or even
defended the Prime Minister by standing up for his probity and virtue. Instead, the spokesmansaidthat it “smears
China and has ulterior motives.” To be precise, the story never made assertions about China, until that statement linked
Wen Jiabao’s relatives to the national image. To make things more complicated, China has now blocked two major American
news organizations (Bloomberg has been blacked out for four months, after a similar story on the incoming President, Xi Jinping),
without official explanation.
Chinahas lost $3.79 trillion over the past decade in money smuggled out of the country,
a massive amount that could weaken itseconomyand create instability, according to a new report.
And
the outflow - much of it from corruption, crime or tax evasion - is accelerating.Chinalost $472 billion in 2011, equivalent to 8.3 percent of its gross domestic
product, up from $204.7 billion in 2000...The developing world overall lost $903billion in illicit
outflows in 2009, with China,Mexico,RussiaandSaudi Arabiain that order showing the largest losses
The political reformers have taken a serious hit. Unless Wen
steps forward publicly to declare his family’s financial holdings, open their books to the public, and indicate the
willingness of his family to face up to the legal consequences of any financial improprieties, his legacy will be tainted
and the opportunity for him to shape future political events severely constrained...
Shining a bright light on
the intricate relationship between wealth and power in China ratchets up the pressure on the new leadership for real change
in the political system. There have
now been three significant investigations into the wealth of the families of three of the country’s most senior leaders,
andcertainly there will be more to come. Compounding the problem for the Chinese leadership, the annual 2011Hurunreport on the wealthiest Chinesereveals thatthe
top seventy members of the National People’s Congress are worth a combined total of $89.8 billion; in contrast, the
net worth of the top 660 U.S. officials is only $7.5 billion. Anti-corruption campaigns cannot address the political rot within
the system—that will require far more fundamental political reform.
The number of officials investigated for corruption and dereliction
of duty has risen this year, a prosecutor said. From January to August, prosecutors across the country had investigated 12.7
percent more officials, for crimes related to their office, from a year ago, according to the Supreme People's Procuratorate.
Of these, 75.9 percent were accused of corruption and taking bribes. The remainder were under investigation for dereliction
of duty. The worst-hit sectors included engineering, construction, rail and transportation, finance and real estate...
Prosecutors across the country have, since last year, examined
and assessed 1,207 major construction programs to make sure corruption did not occur, according to the Supreme People's Procuratorate.
This year, a national system to keep track of bribery convictions has been set up. Individuals or companies that have records
of offering bribes in the past may be disqualified from bidding or denied access to future projects.
The news of the nest egg—whichis
large enough to rank the Wen clan alongside the Marriotts on theForbeslist of richest
families—strikes an especially awkward blow because Wen, nicknamed Grandpa Wen for his attentions to the poor, had put
himself forward as one of the Party’s moral standard-bearers.The story does not
accuse him outright of corruption; it documents a culture of self-dealing and enrichment. The government promptly blacked
out theTimesWeb
site...
It
is one of the curious facts of China today that the state press both marches in step with the Communist Party and also devotes
much of its space to documenting acts of epic plunder and abuses of power. The latest scandal centers on an a man who has
come to beknown in China as
“Uncle House.” He is an obscure
fifty-six-year-old apparatchik named Cai Bin, a senior urban-management official and political commissar from the southern
province of Guangdong who was sacked this week after investigators found that he had somehow acquired twenty-two homes, worth
an estimated six million dollars. With an official salary of less than twenty-thousand dollars a year, Cai was found to be
a prolific taker of bribes, according to the state press. Cai Bin’s many houses were initially turned up by Chinese
Web users, who elevated the case into a national joke and left authorities with no choice but to take action.
Uncle
House comes just a few weeks after “Brother Wristwatch,” a.k.a. Yang Dacai, the former head of the Work Safety
Administration in the province of Shaanxi. He was fired after Web users noticed a photograph of him at the site of a deadly
bus crash. The photo initially attracted criticism because he was smiling beside the wreckage, but the accusations swiftly
evolved from callousness to corruption after peoplezoomed in on his watch,
and compared it to other publicly available photos that showed Yang had a handsome collection ofat least eleven ultra-high-end
timepieces, including a five-thousand-dollar
Montblanc and a ten-thousand-dollar Omega.
Many relatives of Wen Jiabao, including his son, daughter, younger
brother and brother-in-law, have become extraordinarily wealthy during his leadership, an investigation by The New York Times
shows. A review of corporate and regulatory records indicates that the prime minister’s relatives, some of whom have
a knack for aggressive deal-making, including his wife, have controlled assets worth at least $2.7 billion.
The
Chinese economy hemorrhaged US$3.79 trillion in illicit financial outflows from 2000 through 2011, according toa new report[PDF] released today by Global Financial Integrity (GFI), a Washington, DC-based
research and advocacy organization. Amidst increased domestic concern over inequality and corruption, GFI’s
study raises serious questions about the stability of the Chinese economy merely two weeks before the once-in-a-decade leadership
transition.
“I’ve
studied the proceeds of crime, corruption, and tax evasion for decades, and the magnitude of illicit money flowing out of
China is astonishing,” said GFI Director Raymond Baker. “There’s no other developing or emerging economy
that even comes close to suffering as much in illicit financial outflows.”
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culture by agregating and making available on one site sources of news, analysis and opinion about corruption.
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International financing/aid agency program;
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Classic example that can be used in training/seminarsmajor cases of global fraud and corruption.
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