A Death in the Lucky Holiday Hotel
Page 27
After Xu’s arrest was gradually made public, more information has come to light. Xu allegedly paid the tuition and living expenses of Bo Guagua, the son of Bo Xilai, and covered most of Gu Kailai’s overseas travel expenses. In addition, Xu had shelled out millions of yuan for actresses and models to sleep with Bo. In one incident, when a news anchor in Dalian became pregnant after having an affair with Bo, Xu paid her 10 million yuan to keep quiet. One official media report said Xu was facing charges of match-fixing and violation of China’s financial regulations—one accusation was that in 2009, he had mortgaged a plot of land that did not belong to his company to obtain a loan of 150 million yuan (US $24 million), from a local bank.
During the trial of Chongqing’s former police chief, Wang Lijun, on September 9, 2012, Xu was named in the official transcript:
In April 2009, one of Wang’s immediate family members was transferred to a working position in Beijing. Not having a residence in Beijing, the family member of Wang received two apartments in Beijing bought by Xu Ming at a price of 2.85 million yuan [US $449,583]. The apartments were registered under the name of Wang’s father-in-law. After the deal, Wang gave his thanks to Xu in person. In July of the same year, Wang, at the request of Xu, instructed law enforcement departments in Chongqing to release three people who were under detention.
Xu’s name also appeared in both of Gu Kailai’s confessions, alleging he had helped plot Heywood’s murder by filing false charges that Heywood was a drug trafficker. These mentions herald tough sentencing for Xu in the coming year. Xu’s story is a reminder that many Chinese billionaires have followed a similar curve. The most recent was Huang Guangyu, who traveled to Beijing in 1990 from his rural village in Guangdong province. With 4,000 yuan (US $645) in his pocket, he started his Gome Electrical Appliances Holdings, which became China’s second-largest home appliance retailer. He was ranked as mainland China’s richest person by Hurun’s China Rich List from 2005 to 2008, with assets reaching 4.3 billion yuan (nearly US $700 million). In 2008, when he was forty-one, a Beijing court sentenced Huang to fourteen years in prison for illegal business dealings, insider trading, and corporate bribery, charging that Huang directly bribed or instigated others to bribe five government officials with 4.5 million yuan (US $725,000) in cash and properties from 2006 to 2008 in exchange for corporate benefits.
Huang’s sentencing led to the downfall of a group of senior officials at the economic crime investigation bureau of the Ministry of Public Security, the State Administration of Taxation’s inspection bureau, and the economic investigation division of the Beijing municipal public security bureau. The assistant minister of public security was also investigated for accepting bribes from Huang.
Before Xu’s detention, several of his friends expressed their concerns to him. One day in 2000, Xu had a business meeting with a colleague in his office. Over the course of the conference, Xu’s phone rang. It was from a deputy district chief in Dalian, who asked if Xu was willing to talk to Bo Xilai in an attempt to secure him a promotion. The colleague, who overheard part of the conversation, quit a few months later. “I knew that Xu Ming would get into trouble someday,” he told Southern Weekend. “He was tied too closely with the interests of certain leaders.” The colleague warned him, but Xu ignored his words.
The misfortunes of Xu and other prominent Chinese businessmen highlight the close and yet precarious relations between Chinese government officials and businessmen. In China, businessmen rely heavily on government officials. It is not uncommon for a millionaire to bow to the needs of a tiny government agency director, who might control the local policies and resources, and could make the businessman’s wealth evaporate overnight. During a recent visit to central China, I learned that the owner of a local supermarket chain had offended a senior official at the municipal People’s Congress by refusing to donate money to one of the official’s pet projects. A year later, the businessman was notified that the shopping center, where his flagship store was located, would be demolished to make way for an office building. The notice came right after he had renewed a ten-year lease and invested heavily in the store. Even though the city government would compensate him for part of his costs, the loss of the prime location effectively destroyed his business.
Because politics and businesses are so intertwined, many business-people in China are more politically astute than scholars. Many who visit New York would invite me out for dinner to discuss politics. During our conversations, I’ve noticed, they are very well informed and have a deep understanding of intricate political issues. When I inquire about the types of political connections they have in China, most of the big businesspeople are friends with the provincial party chief, the governor, the mayor, or Politburo members.
The attraction seems to be mutual. Officials are increasingly dependent on businesspeople to underwrite their own family expenses. Officials realize that unless they can find a way to convert their power into cash, they will end up with nothing after they retire. In the 1980s and 1990s, bribes from businesses came in the form of a red envelope with several hundred yuan of cash or a gift card or unlimited access to a certain bank account. That has evolved into diverse methods of bribery, where a wealthy businessperson is treated like an official’s private treasurer or underground office manager. He quietly pays for big purchases made by the official’s family members. Some officials, such as Bo Xilai, even ask their business partners to purchase houses or pay their children’s tuition abroad. In some cases, a businessperson will make an official or his family member a silent investor in an enterprise. The deal is a win-win situation—the official obtains a certain percentage of the company for nothing and without the knowledge of the public or the party, and the businessperson gets the necessary political protection or a certain government contract.
In the 1980s, the Communist Party forbade children of senior leaders to engage in business. But now it is rare to find officials whose children are not using their parents’ connections to do business. This happens at all levels of the government. Sometimes, a businessperson becomes an official’s secret lobbyist, bribing senior leaders on behalf of the official for promotions and pays the media to write positive stories. As a consequence, corruption permeates every level of the party and the government. If an official attempts to stay clean, he or she would be considered a rule breaker who could soon be purged.
With their shared interests, businesspeople and government officials are tied together in one boat. If one side gets into trouble, the other one will go down with it. At the time of writing, Xu is still being detained in an undisclosed location. As the ruling elite is building a strong case against Bo, Xu’s testimony will no doubt play a big role. However, with so much attention focused on Bo, the world seems to have forgotten Xu Ming, the legendary billionaire who once headlined many business and financial publications. Xu’s situation illustrates a sad fact in China—once a businessperson loses the protection of power, he can be crushed like an ant. That was also the very reason Xu Ming clung so closely to Bo Xilai, but unfortunately, Xu was barking up the wrong tree.
THE UNEXPECTED LOSER: “PEOPLE’S PREMIER” OR THE “KING OF SHOWBIZ”?
IN MID-OCTOBER, when an editor at the New York Times reached out to the Chinese government for comments relating to an upcoming article that investigated the financial assets held by Premier Wen’s family members, the officials declined. But Zhang Yesui, the Chinese ambassador in Washington, DC, and the Chinese consul general in New York City personally visited the New York Times headquarters, trying to block the publication of the article, penned by David Barboza, the Times’ Shanghai business correspondent.
“Chinese officials raised six points in the conversation,” said a businessman close to Premier Wen. “They explained the cultural and political differences in both countries and demanded that the Times kill the article about the Chinese premier. The ambassador also threatened that publishing such a negative article about Premier Wen before the Party Congress could serio
usly damage Sino–US relations.”
Such arrogance and a lack of basic understanding of Western journalistic institutions on the part of Chinese officials only confirmed the importance of the article. On October 25, the New York Times published Barboza’s lengthy investigative report on its English- and Chinese-language websites. The article confirmed in considerable detail the rumors about Premier Wen Jiabao’s wife and son circulating on Chinese Weibo and in overseas Chinese media since 2011.
Many relatives of Wen Jiabao, including his son, daughter, younger brother, and brother-in-law, have become extraordinarily wealthy during his leadership, the New York Times investigation revealed. A review of corporate and regulatory records indicated the premier’s relatives—some of whom, including his wife, have a knack for aggressive deal-making—controlled assets worth at least US $2.7 billion. In many cases, Barboza found, the names of the relatives were hidden behind layers of partnerships and investment vehicles involving friends, work colleagues, and business partners.
Barboza’s untangling of the financial holdings provides an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in China’s fast-growing economy.
The article alleged that Wen’s wife, Zhang Peili, had grown rich through her involvement in the diamond trade, while their son, Wen Yunsong, made large profits through private equity and other business deals. Barboza said he found no record of holdings in Premier Wen’s name and that it was not possible to tell from records whether he had assisted his relatives’ business dealings.
The story about Wen Jiabao was picked up by the foreign media around the world, but most Chinese were kept in the dark. The Chinese government blocked the New York Times websites in China three hours after the article was posted. The Chinese Foreign Ministry spokesperson castigated the New York Times as “harboring ulterior motives and blackening China,” while the state media attacked the Times with claims that “there has been an explosion in plagiarism and fabrication by its journalists.” Online discussions that contain the phrases “$2.7 billion” or “Wen Jiabao” were quashed, but bloggers cleverly skirted government censors by replacing Wen Jiabao’s name with baobao, the Chinese word for “baby.” One blogger even brought up Wen’s frequently quoted lines that “people should have the right to access information and supervise the government” to point out the brutal ironies of the situation.
For the general public, it was hard to reconcile the image of the pro-people premier, supposedly one of the cleanest in the Politburo, with that of a man who would allow his family to use his political status to amass $2.7 billion in assets. Although some discarded the report as pure fabrication to smear their beloved premier, many felt duped. “Wen Jiabao is a hypocrite,” wrote a Shanghai-based blogger with the user name of “tusingan.” A Beijing-based journalist agreed: “It’s been a well-known fact among the political community here that Wen’s family is wealthy,” she said. “Even former president Jiang Zemin reportedly teases Wen, calling him the wealthiest person in China. Yet, he howled the loudest during anticorruption campaigns. The article shows how pervasive corruption is. The Chinese proverb, ‘When a man attains enlightenment, even his pets get to ascend to heaven’ sums up the situation well. Officials are now converting political power into money. The New York Times is doing a job that domestic media cannot do.”
Coincidentally, the New York Times article was released on the day the Chinese state media announced that Chinese lawmakers had stripped Bo of his position as a delegate to the National People’s Congress at a bimonthly session, thus removing Bo’s immunity from prosecution. Twenty minutes before midnight, Xinhua issued another news report that the country’s highest prosecution organ had “decided to put Bo Xilai under investigation for alleged criminal offenses, as well as impose coercive measures on him in accordance with the law.”
The timings of these two events led to claims that Bo Xilai supporters and other conservatives had supplied the newspaper with negative and false information to retaliate against Premier Wen for bringing Bo down. Back in February 2012, two weeks after Wang Lijun’s attempted defection, a party insider alleged that Bo Xilai had hired several Chinese journalists and scholars to dig up dirt on Wen’s wife and son. A large-scale media attack against Wen had been planned in early 2012 to embarrass Wen and weaken his ability to influence his replacement on the State Council. In an Internet article posted on October 23, the anonymous author, who had apparently learned about the pending New York Times article after the newspaper contacted the Chinese government for comments, stated again that more than ten English- and Chinese-language media outlets, including mine, had received stacks of documents relating to Wen’s family in October. “Party conservatives had meticulously organized this despicable smear campaign through foreign media for quite some time to discredit the country’s righteous premier and even the president elect,” said the anonymous author. “The documents included hundreds of pages of company reports and internal memos. Without the help of party insiders, it would not be possible to obtain such confidential material.”
In addition, the article said the documents contained false evidence and speculative statements to mislead the media. In the case of Premier Wen Jiabao, the anonymous author pointed out that the conspirators deliberately attributed other people’s assets to Wen’s family members to sensationalize the impact.
Because David Barboza adopted a Chinese name, Zhang Dawei, during his tenure in China, a blogger searched the Internet and found several online articles with the byline Zhang Dawei about Bo Xilai’s accomplishments in Chongqing. The blogger quickly concluded that David Barboza, aka Zhang Dawei, had been wined and dined by Bo Xilai in Chongqing, and that the facts in his articles should be called into question. A few hours later, other bloggers indicated that it was a mistaken identity and Barboza had never visited Chongqing.
After reading the anonymous writer’s online posting, I contacted several overseas media outlets. None had received “stacks of documents” about Wen Jiabao. During an e-mail exchange in December 2012, Barboza also vehemently denied obtaining any information from party insiders. He said he had started working on the story a year before and his information had come from public records. In addition, he stated in his blog, “Not only were there no leaked documents, I never in the course of reporting met anyone who offered or hinted that they had documents related to the family holdings. This was a paper trail of publicly available documents that I followed with my own reporting, and if I might hazard a guess, it was a trail that no one else had followed before me.”
I also disputed the rumor through an editorial on Mingjing News. “The important issue is whether the Times has presented the facts accurately and fairly,” I wrote. “From the article, we can see that the Times has conducted meticulous research and provided a balanced report. The paper offered opportunities for the Chinese government and Premier Wen to respond and comment on the story, but no one did.”
Even so, some political analysts and the Chinese public remain unconvinced. One analyst charged that the New York Times had degraded itself by becoming a tool of China’s power struggles. Gao Xin, author of The Biography of Premier Wen Jiabao, argued during an interview in Chinese on Radio France International:
I cannot vouch that Wen Jiabao’s family members are innocent. However, if we look around, we’ll see that the families of the majority of the senior Chinese leaders are in business. Why was Wen Jiabao, who is retiring in 2013, singled out? It is simple. By repeatedly advocating democratic reforms, he made many party senior leaders and elders nervous about their future. At the same time, Wen’s high-profile role in the anti-Bo campaign made him the number-one enemy among Bo supporters. Both groups want to destroy his legacy and credibility, making it harder for his successor to continue his liberal policies. Wen has become a vulnerable victim in a new round of power struggle.
However, political analysts a
cknowledged that there had been persistent rumors about Wen’s family finances since 2010 and the volume of such noises started to pick up after Wen had taken on a prominent role in the Bo case. Chen Xiaoping, a US-based scholar, noted:
Since Bo’s dismissal, Wen gave several high-profile talks about the party’s anticorruption efforts, calling for the implementation of laws that require officials to declare their assets. It is natural that Wen’s family finances drew greater media scrutiny. Insiders might have leaked some news tips to the overseas Chinese media. When Western reporters captured the leads, they started to conduct their own independent research. This thoroughly investigated story in the New York Times has put Wen in a politically precarious position, hitting home the message that Bo Xilai was not the only senior official tainted with corruption scandals. Those who threw him out, including the seemingly most pro-people premier, are equally guilty.
KNOWN FOR HIS compassionate and unassuming personality, the seventy-one-year-old Wen Jiabao was seen by the public as an affable, scholarly official who quoted ancient classics in his speeches and understood the needs of ordinary people. He was not a member of the princeling group. Wen mentioned many times in his talks his humble origins: he grew up in an ordinary family in the northern city of Tianjin, his parents were schoolteachers, and they had a hard life when he was young. Journalists addressed him fondly as “Grandpa Wen.” On Chinese New Year’s Day, a time of family reunion, Wen would either celebrate the holidays with a family in the remote rural areas in the country’s far northwest or eat dumplings with coal miners, deep underground in central China. He shed tears and bowed to the families of victims during a mining accident, and held the hands of an AIDS patient in a village devastated by the epidemic due to government denial and inaction. For years, people noticed him wearing the same worn-out down jacket and a pair of broken sneakers during his visits to factories and villages.