Tag Archives: Crime

A $2.7 Trillion Plunder of China

More money flowed out of China illicitly over the decade to 2010 than out of the next nine countries together on Global Financial Integrity’s (GFI) newly published list of countries whose wealth is being syphoned off abroad by crime, corruption and tax evasion.

We are talking serious money that is finding its way into offshore tax havens and developed countries’ banks, even allowing for GFI’s conservative tallying of the sums. Total outflows from China in 2001-2010 were $2.7 trillion; the next nine countries collectively, $1.7 trillion, with Mexico the largest individual country with illicit outflows of $476 billion. Over the decade, China’s illicit outflows have accounted for just under half the world total.

China’s average illegal outflows amount to $274 billion a year. Easing of capital controls has, if anything, increased the flow of hot money. By virtue of its enormous economy, though, China has an outflow to GDP ratio that is lower than many developing countries. It is still an enormous theft.

The heavily preferred method of transferring illicit capital is through the corrupt misinvoicing of trade. GFI calculates that the trade misinvoicing is larger than 10% of exports in almost all years. China’s “social, political, and economic order…is not sustainable in the long-run given such massive illicit outflows,” says GFI Lead Economist Dev Kar, one of the authors of the report.  If the new Xi leadership needs reasons for cracking down on corruption, GFI has 2.7 trillion of them.


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Angola Deports Suspected Chinese Gangsters

This is one of the darkest sides yet of China’s commercial push into Africa. Angola, China’s biggest trading partner on the continent and home now to more than 250,000 Chinese, has deported 37 Chinese nationals accused of kidnapping, armed robbery and running extortion rackets and prostitution gangs.

The alleged gangsters, both men and women, have returned to China in the custody of a special police unit that Beijing sent to Luanda in July. The picture above is from TV footage of their disembarkation, handcuffed and with their faces partially masked. They will now face trial at home. They are said to have preyed on other Chinese, including businessmen they held hostage for ransom and women they brought to Angola on the promise of well-paid jobs but then forced into prostitution. Ministry of Public Security officials say the special police unit broke up 12 such Chinese gangs operating in Angola. A further 24 accomplices were arrested in Fujian and Anhui.

The scale and violence of the gangs’ activities in Angola, which included killing five of 14 kidnapped businessmen last year and burying some of them alive, had started disrupting Chinese firms’ business operations, and tarnishing Chinese businesses’ already less than shining reputation with locals, to such an extent that Beijing felt it necessary to exert the long arm of its law half way around the world. It is the first time police have undertaken such an action in Africa. This Bystander suspects it won’t be the last.


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Worms And Elephants In The Gu Kailai Trial

This Bystander is starting to wonder which of the few but tantalizing details revealed at Gu Kailai’s brief trial for allegedly murdering British businessman Neil Heywood will open up the can of worms on which the Party is trying to keep a tight lid.

The court heard that Heywood demanded £13 million in compensation from Gu’s son, Bo Guagua, now studying in the U.S., for a failed property investment for which he had been promised ten times that much, and threatened to “destroy” Bo if payment was not forthcoming. The court also heard that former Chongqing police chief  Wang Lijun, who triggered the outing of the affair by making the murder allegations to the U.S. consulate in Chengdu, allegedly conspired with Gu to frame Heywood with a drugs bust, and then tried to cover up the Englishman’s murder after the event.

The first detail may lay end up laying bare the web of lucrative business dealings engaged in by  the country’s powerful politically elite, and their ability to transfer large sums of money out of China. The second pushes the Haywood murder closer to Gu’s husband, disgraced Chongqing Party boss Bo Xilai, to whom Wang was right-hand man and enforcer of the politician’s crackdown on organized crime in Chongqing. Bo, who is now under disciplinary investigation and who has not been seen in public for weeks, is the elephant in the courtroom in this case.

The former would be an embarrassment to the ruling elite, if no more than what most Chinese already assume to be the case. The second is far more awkward. It risks exposing not only political corruption but also the ugly infighting that led to Bo’s ousting, a marked contrast to the veneer of unity that the Party’s top leadership likes to portray.


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Gu Kailai Trial Closes

We said it would be swift. It was. Gu Kailai’s trial for the murder of British businessman Neil Heywood opened and closed within a day. A court official, reading from a statement outside the court, said that the wife of disgraced politician Bo Xilai did not contest the charge. He also said that it was Gu who poured the fatal poison into Heywood’s mouth. Her motive was said to be that she feared for the safety of her son in a dispute between Heywood over money. State media has a detailed account of the prosecutor’s case here.

The next step will be the announcement of the date of the verdict. Gu and family employee, Zhang Xiaojun, who was also charged in connection with Heywood’s death, both potentially face the death penalty. The emergence of a protection of her son line of defense may point to some clemency.

State media also report that four police officers would go on trial on Friday, accused of trying to protect Ms Gu from prosecution. All the loose ends are being neatly tied off.


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China To Reduce Number Of Capital Offences To 55

China executes more convicted criminals every year than any other country. The exact number is a state secret but is estimated to be in the thousands.  Adding up Amnesty International’s figures, this Bystander reckons that China executes more than the rest of the world combined.

One reason is the lengthy list of crimes — 68 of them — that carry the death penalty. That list may now be culled to 55, according to Xinhua.  Some white-collar crimes may come off the list including 13 “economy-related, non-violent offences” such as fraudulent use of financial bills, letters of credit and value added tax invoices. Smuggling gold, silver and other precious metals out of the country would also be exempted. Corruption, considered an economic crime, seems to be one that will still be considered a capital offense. A draft amendment to the country’s criminal code has been submitted for a first reading to the Standing Committee of the National People’s Congress,  so there is a way to go before any change happens.

The number of executions has been falling since 2007 when the Supreme Court restarted reviewing all cases in which a lower court had imposed the death penalty. Xinhua quotes Chen Zexian, a criminal law expert at the China Law Society, as saying that death penalties are mainly imposed for only seven or eight crimes, mostly violent ones such as murder, rape and robbery, so culling the list of capital offences by 13 may not have a significant impact on the numbers, especially as they are all economic crimes.

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China’s Illegal Soccer Punters Caught Up In Pan-Asian Sweep

Earlier this month, Hong Kong police broke an illegal football gambling ring operating across the border into southern China. Little surprise then that China, including Hong Kong and Macau, was prominent in the huge pan-Asian sweep on illegal betting during the World Cup that has resulted in the arrests of more than 5,000 people.

Interpol, which coordinated the arrests in Malaysia, Singapore and Thailand as well as China, raided 800 gambling dens over the course of a month. It says they had taken more than $155 million in illegal bets. It is the third time Interpol has cracked down on illegal football betting since 2007 but neither of the previous two operations, nicknamed Soga 1 and 2, were on the scale of Soga 3.

Betting is mostly illegal in China or a state monopoly, though highly popular. The FT quotes an estimate by China’s Centre for Lottery Studies that Chinese gamblers punt more than $87 billion a year through offshore betting networks. The Hong Kong police operation earlier this month yielded 7 billion yuan ($1 billion) worth of betting slips from mainland gamblers. Both it and the more recent sweep also yielded lots of evidence of links to other illegal activity including corruption, money laundering and prostitution, though there is no evidence yet of any link between gambling on soccer and match fixing at the World Cup, though football is no stranger to  betting-ring-related match-fixing scandals.

At some point the authorities in China are going to have to decide whether to make gambling legal, anathema though it be to many for the obvious historical reasons. That is what recently happened in Malaysia, in the face of opposition from religious conservatives, so the industry could be brought out into the light, severed from underworld gangs and regulated and taxed.

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Chongqing, Corruption And The Next Generation of National Leaders

This Bystander will leave to others the more lurid details of the trial and conviction of the Chongqing “Godmother”, Xie Caiping. The 46-year old has been sentenced to 18 years in gaol for running  illegal gambling dens in nightclubs and casinos, harboring drug users, running protection rackets and bribing police. The court also fined her 1 million yuan, though she is said to have made twice that from her illegal activities. Twenty one other people were sentenced with her, to between one and 13 years in prison.

Her trial was the most spectacular turn in a crackdown on crime and corruption in Chongqing that has been underway since the middle of the year. Hundreds of people have been arrested, including Xie’s brother-in-law and former head of the judiciary in the city, among several high level officials.

In the past decade, as Beijing has sought to open up the West, Chongqing has changed from being a provincial backwater to a free wheeling place dominated by the black societies living off the new money that has flowed in. It became known as the place to gamble and party, with all the dark side — the corruption and the protection rackets — those vices attract. That sits uneasily with the vision of the city having the national standing of a Shanghai or Nanjing that its party boss, Bo Xilai, has been pushing.

Bo is a rising star in national politics, having joined the Politburo in 2007, the same year he was appointed head of the party in the city. It is he who has been behind the crackdown, even though it is revealing a deep connection between mobsters and city officials. Chongqing has also bread another rising star, Wang Yang, who moved up from being city party secretary to party boss in Guangdong. With the 2012 succession to Hu and Wen fast approaching, it is not too much of a stretch to see Chongqing as being used as a proving ground for national leaders, much as Shanghai was a generation ago for Jiang Zemin and Zhu Rongji, who would go on to be president and prime minister respectively.


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Soldier Killed In Chongqing Reflects Rising Armed Crime

Civilian attacks on the military are uncommon, so the report that a soldier standing guard outside a garrison in Chongqing had been shot and killed and his machine gun stolen is notable. The official word is that there was one assailant, but some reports say there were multiple attackers and other soldiers wounded.

Police and the army are treating it as a terrorist attack, though it occurred away from the usual base of operations of the most likely suspects, separatist groups in Tibet and Xinjiang. Last year, two men drove a truck into a group of jogging policemen in Xinjiang, killing 16; that was blamed on Muslim Uighur separatists. This latest attack may have more to do with the rising tide of violent crime. Individuals aren’t allowed to own guns, but authorities have acknowledged the increasing presence of armed street gangs.

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