China's Anti-Corruption Drive

[greengiraffe]

China seeks our help chasing its corrupt cadres

THE AUSTRALIAN OCTOBER 20, 2014 12:00AM

Rick Wallace

Journalist
Melbourne
CHINA is pushing Australia to help track fugitives from its corruption crackdown as it has emerged that several of Beijing’s most-wanted — including the former head of the nation’s State Grid Corp — are thought to be hiding in Australia.

The Chinese Foreign Ministry confirmed it wanted Australia’s help in tracking corrupt officials as the Abbott government announced an expansion of a visa class that now allows millionaires to get permanent residency here.

Corruption-busters running Operation Fox Hunt — China’s title for the new push to detain and repatriate corrupt officials — are reported to have also pressed other Western governments for help with their activities.

Australia, which has no extradition treaty with China and ­operates the so-called significant investor program, has emerged as a popular bolthole for fleeing fraudsters, according to reports from China.

Gao Yan, a former provincial governor of Jilin, party secretary of Yunan and former chief executive of State Grid Corp, is one of the key targets and is thought to have escaped to Australia with a clutch of other officials.

Caijing, a respected business magazine in China, recently identified seven senior officials or executives of state-owned enterprises who are hiding in Australia. Collectively, they are accused of bribery and embezzlement involving a total of about $1 billion.

According to the magazine, Mr Gao fled to Australia in 2002 as allegations emerged that he and his son, Gao Xinyuan, reaped millions from a rigged bidding process for building an electricity transmission when Gao Yan was in charge of State Grid Corp, which is the largest utility in the world on revenue and owns key electricity distribution assets in Australia, including stakes in SP AusNet, Jemena and Electranet.

Caijing’s report also identified Lan Pu, a former deputy mayor of Xiamen, and Tong Yanbai, a former head of the highway bureau in Hunan province, as having fled to Australia in 1999 and 2004 respectively. Their whereabouts are unknown.

While these fugitives reportedly reached safety, others have been nabbed trying to reach Australia. Liu Tienan, a former vice-minister of the powerful National Development and Reform Commission, was arrested last year with a fake Australian passport and $2 million.

A former senior diplomat questioned China’s timing in raising the crackdown amid free-trade talks with Australia and warned “this is going to be an issue that won’t go away”.

“It is interesting that this is coming out now before Abbott and (Chinese President) Xi Jinping are going to be meeting,’’ he said.

“There is no formal bilateral agreement to cover this sort of thing, so we would find it very difficult to assist. For example, there would be no capacity for Chinese police to come in to do interviews and operate independently here.”

The former diplomat warned that despite assiduous screening from immigration personnel, the significant investor visa scheme would have been exploited by corrupt officials to spirit away ­illegally obtained funds. “In this category of people you are bound to find some people who have got their money from a not necessarily legitimate source,’’ he said.

Of the 436 people to be awarded significant investor visas as of last month, 88 per cent were Chinese. The Abbott government ­recently announced an upgrade of the visa despite fears it could become a pathway for laundering ill-gotten gains.

The visa allows foreigners to effectively buy a four-year Australian visa by investing $5m in approved investment funds. The $15m “premium” significant investor visa announced last week allows them to buy permanent residency for an extra $10m.

Since Mr Xi took control in China he has launched a concerted anti-corruption drive that has claimed high-profile officials including former domestic security chief and politburo member Zhou Yongkang and his ally, Chongqing party secretary Bo Xilai, and seen scores of others jailed and executed. The latest phase of the crackdown is aimed at those who fled or were overseas before they could be captured, and has so far seen 88 corrupt officials repatriated from abroad.

State-run media in China has named Australia, the US and Canada as the most popular destination for corrupt officials and says 150 “economic fugitives” are living in the US. Estimates suggest $2.8 trillion was spirited ­illegally out of China between 2005 and 2011.

Chinese Foreign Ministry ­official Hong Lei told a regular press briefing that chasing fugitives overseas was an important part of the anti-corruption drive.

“We hope that we can work ­together with the Australian side and have Australia’s co-operation in this regard. The corrupt should find no safe haven in foreign countries,’’ he said.

Additional reporting: Scott Murdoch

[greengiraffe]

China vows to strengthen judicial system
DOW JONES OCTOBER 24, 2014 11:00AM

BEIJING-China’s Communist Party vowed to address public frustration with the country’s legal system by making it more independent and professional, even as leaders reasserted their dominance over the courts.

A statement on legal reforms released Thursday by the official Xinhua news agency offered few details on how the party would improve a legal system dogged by allegations of corruption, weak enforcement and a lack of transparency. The statement came at the conclusion of a four-day plenary session of the party’s Central Committee, composed of about 200 of the country’s most senior officials.

In a country where the notion that the ruling elite should be restrained by law has never held sway, few expect the party to allow a truly independent judiciary. The announcement that the theme of the plenum would be about rule of law nonetheless raised expectations that the party would take concrete steps to transfer at least some of its power to the legal system.

“They need a strong judiciary to capture, or to resolve, all the disputes on the streets,” said Fu Hualing, a professor of law at Hong Kong University. “Basically, you’re creating a sphere of autonomy over which you don’t have total control in the end. That’s the sacrifice.”

In past plenums, the party has often followed up initial statements with more details in a broader policy paper a week or so later. For now, Thursday’s communiqué offered few clues as to the party’s seriousness about moving beyond paying lip service to rule of law.

“I was looking for a bit more,” Mr. Fu said. “It’s pretty dry-there’s not much you can squeeze out of it.”

While the meeting, themed “governing the country according to rule of law.” took place against the backdrop of a sweeping anticorruption campaign, Thursday’s statement also provided no updates about a closely watched investigation into elder statesman Zhou Yongkang.

The focus on law demonstrates Chinese President Xi Jinping ’s recognition that the old trade-off that previously defined politics in the country-breakneck economic growth and increasing standards of living in exchange for an unquestioning acceptance of party authority-no longer holds, some analysts said. As the wealth gap grows and disputes proliferate, the Communist Party is under pressure to show that it can govern cleanly and fairly.

The party indirectly acknowledged floundering public confidence in China’s courts, but at the same time it described the party’s continued leadership of the legal system as a “fundamental requirement” and “basic safeguard” of rule of law.

Even the translation of the term at the heart of the meetings-fazhi, composed of characters meaning “law” and “to govern”-has run into ambiguous territory. In official media coverage of the meetings, the phrase in English has been rendered as “rule of law.” However, many China scholars argue it should be translated as “rule by law.”

It is an important distinction in China, where courts, police and prosecutors are controlled by the party and where the constitution-which guarantees freedom of speech and religion, among other liberties-has been shunted aside when it conflicts with party interests.

Steps the party said it would take to improve the credibility of the courts included a new mechanism to prevent official interference in court decisions as well as the separation, on an experimental basis, of judicial decision-making from enforcement. It also set an outline for new types of courts that would appear to take some legal authority away from local politicians.

The statement sets up a framework to begin “compromise between the party intervention and judicial independence,” said Zheng Yongnian, a political scientist at National University of Singapore.

“They are talking about the legal system in a very narrow sense,” said Mr. Zheng. “The goal of course is the continuous survival of the Communist Party.”

China’s civil justice system ranked 79th of 99 nations on an index meant to measure its standards for rule of law, published in March by the World Justice Project, a Washington-based advocacy group.

The legal blueprint set Thursday broadly slots into an anticorruption strategy set by Mr. Xi almost two years ago when he thundered into office with steps that analysts said were aimed at restoring public confidence in the party. He has instituted new behavioral rules for officials that crimp frivolous public spending, such as on travel and entertainment, and backed them up with a wave of arrests.

But the party provided little fresh perspective on corruption on Thursday, and stayed notably silent on the fate of Mr. Zhou, a once-feared Politburo Standing Committee member who was officially put under investigation in July for suspicion of discipline violations, a term that typically refers to corruption. Political analysts say it remains very likely Mr. Zhou, 71 years old, will be ejected from the party. It’s not known where Mr. Zhou is held and he isn’t reachable to comment.

The statement reiterated party findings of suspected corruption by several Central Committee members ousted earlier, many of whom have ties to Mr. Zhou.

More details on Mr. Zhou’s fate could emerge this weekend. Before Thursday’s meeting ended, China’s government flagged plans for a plenary meeting Saturday in Beijing of the party’s secretive antigraft investigative service, the Central Commission for Discipline Inspection.

In terms of reform proposals outlined Thursday, a pledge to introduce public outreach could herald the introduction of traveling circuit courts of the kind used in Imperial China, and could provide an opportunity for the central leadership to hear gripes that might otherwise be snuffed out locally, Mr. Zheng said.

Another proposal for regional courts would link the systems of various provinces and likely make them answerable directly to Beijing, thus preventing local or provincial officials from interfering in decisions, said Mr. Fu of the University of Hong Kong. But another proposed idea, for a prosecutorial agency that would take responsibility for public-interest cases, could represent a setback for rule of law by taking power to sue the government out of the hands of lawyers and nongovernmental organizations, he said.

“They want to strengthen the hand of the government,” he said. “There’s no room for civil society in this vision.”

[greengiraffe]

Chinese bribes stashed in Sydney

AFR Weekend investigation Lisa Murray, Samantha Hutchinson, Angus Grigg and Lucy Gao
710 words
25 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

A Chinese government official ­convicted of corruption channelled at least $1.2 million to his family in Sydney, in the clearest example yet of how ­Australia is being used as a safe haven for illicit funds.

Documents released by a Beijing court show the bribe was paid into the Australian bank accounts of Su ­Guanlin and his wife Qian Yi.

They are the son and daughter-in-law of ­disgraced railway official Su Shunhu, who last Friday was convicted of ­corruption in China and jailed for life. As part of the bribes, the younger Su was also paid more than $2 million by a company associated with his father and the couple received generous ­wedding gifts.

Over the past four years, they have bought and sold houses and ­apartments worth around $4.5 million across Sydney, according to property searches.

But Ms Qian, a 29-year-old accountant, insists the properties have nothing to do with her father-in-law. "Everything we own is in our name," said Ms Qian when contacted by phone. "It's ours. It has nothing to do with him."

Su's conviction comes as China ramps up its international co-operation efforts to weed out corrupt officials who have sent their assets or fled ­overseas in a campaign dubbed ­"Oper­ation Fox Hunt".

According to the US-based non-profit group Global Financial Integrity, $US2.8 trillion ($3.2 trillion) was spirited illegally out of China between 2005 and 2011.

The Australian Federal Police said it regularly co-operated with Chinese authorities and had worked with them on drawing up a priority list of targets.

A spokesman said the agency had "no information to offer" on Su's case.

Su was convicted of abusing his ­position as deputy chief of the railway ministry's transport department by accepting 25 million yuan ($4.7 million) in bribes paid in cash, bracelets, ­diamond jewellery and gold bars.

At the time, China's railway freight development had not kept pace with the country's rapid economic growth, leading to capacity shortages.

As a result, the railway ministry, which has since been dismantled, became a magnet for corruption.Money 'given' to son, daughter-in-law

According to the judgment released by the court, Su's lawyer defended his client by arguing he was not ­"evil-minded" and had not squandered the money. Rather, he had used most of it to pay for the education and ­living costs of his son and daughter-in-law.

Property searches reveal the younger Mr Su and Ms Qian bought a house in Killara for $1.35 million in April last year. Neighbours said the property, which is slated for demolition and a $500,000 rebuild, had been vacant for months.

They also sold a property in Breakfast Point last year for $2.5 million and are linked to a $550,000 apartment.

They appear to have bought an apartment in Wolli Creek off the plan in October 2010 for $400,000. "I am an accountant and my ­husband is working for a wholesale company," said Ms Qian. "We're both working and doing things. We're not just waiting for money to be handed to us."

However, according to the court ­documents detailing the case against the elder Su, money was handed to the young couple while they were living in Australia.

When AFR Weekend visited the younger Mr Su and Ms Qian's property in Killara, it was abandoned.

The garden was overgrown and mould had started climbing the ­external walls. An industrial steel fence ­fastened with a rusty bike lock blocked access to the palm tree-lined pool area.

A neighbour, who declined to give her name, said it had been more than two years since she last saw the couple at the home.

"It's such a shame what's happening to the place," she said. "It used to be in good shape and they've just let it go to rack and ruin."

Key points The son of a jailed Chinese railway official has over $4m of property in Sydney. Almost $3 trillion may have been illegally spirited out of China.


Fairfax Media Management Pty Limited

Document AFNR000020141024eaap00033

[greengiraffe]

dirty money next door

1755 words
25 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

Special investigation Australia is a popular hiding spot for corrupt Chinese officials to hide their money. Angus Grigg, Lisa Murray, Samantha Hutchinson and Lucy Gao follow the money trail.

At a Chinese wedding the passing of red envelopes to the bride and groom is customary. They are usually filled with a few hundred dollars in cash to celebrate the marriage but, at the 2008 wedding of Su Guanlin and Qian Yi, two gifts were far more generous. The first contained 100,000 yuan ($18,200), a present that would have filled at least 10 red envelopes. The second was a more compact $US10,000 ($11,400).

While substantial, these two wedding gifts were just the beginning of what Su, the son of a powerful Chinese railway official, would receive during his time in Australia.

After his father, Su Shunhu, was ­sentenced to life in prison for corruption by a Beijing court last Friday, an investigation by AFR Weekend has pieced together the money trail between China and Australia.

Using court documents from the trial, along with property and company searches in Australia, it provides the first detailed account of Australia's status as a favoured destination for the funds of corrupt Chinese officials. Court documents show the money began flowing to Australia in the months after Su and Qian were married.

They reveal that $1.2 million was transferred to their Australian bank accounts between December 2008 and January 2010.

The money was wired to Australia from both the industrial city of Nanchang, south west of Shanghai, and Hong Kong in ­16 separate instalments.

Since it began landing in Australia, the couple have bought and sold around $4.5 million worth of property in Sydney.

Their situation is not unique.

The Chinese government has repeatedly raised concerns about Australia's popularity with corrupt officials in its state-run media. After Australia expanded its Significant Investor Visa scheme earlier this month, the ­Chinese government specifically warned Canberra not to create a safe haven for ­corrupt officials.

Over the past decade, those officials have been drawn to Australia's political ­stability, clean air and robust legal system, which ­provides some of the strongest protection for individuals facing criminal charges ­anywhere in the world.

This flow of money out of China has reportedly boosted demand for houses, filled universities and fuelled spending on luxury goods right across the Australian economy. But the party may be coming to an end as Chinese authorities and the ­Australian Federal Police increase co-operation to seize and repatriate the ­proceeds of crime.

The Chinese are calling it "Operation Fox Hunt" and the numbers involved are staggeringly large. The Washington-based ­Global Financial Integrity group has estimated that $US2.8 trillion flowed out of China illegally between 2005 and 2011.

The Central Commission for Discipline Inspection, China's top corruption fighting body, estimates the figure could be as high as $US1.5 trillion for this year alone.

This is the backdrop to Chinese President Xi Jinping's crackdown on corruption, which has lasted longer and targeted higher-level officials than most thought possible.

Xi's efforts are designed to help bolster the legitimacy of China's Communist Party and reduce public anger at these giant sums ­spirited out of the country. Since Xi's ­campaign began in ­November 2012, 180,000 party cadres have been sanctioned. The elder Su is the latest of these, and his trial provides a surprisingly detailed glimpse into the money trail.

His trial came to an end last Friday when the 2nd Beijing Intermediate People's Court sentenced Su to life in prison after finding him guilty of receiving 25 million yuan in bribes for providing preferential access to the rail freight network.

Su's defence counsel told the court he was so poor growing up that he was forced to collect garbage and sell the recycling to buy school books. But, like many government officials, his fortunes changed in the early years of last decade, due to China's rapid economic growth.

From 2003 onwards Su found himself as the ultimate decision-maker on which ­companies could use the rail network to transport their goods.

As demand for rail freight vastly ­outstripped supply, he had the power to decide if a load of coal would be stranded at a rail siding or if goods would remain on the factory floor.

In 2008 the state-owned Economic Observer newspaper reported that just 35 per cent of all requests for rail freight could be met. It said securing the use of a ­single railway carriage could cost 100,000 yuan in bribes, plus the actual freight charge.

In pleading guilty to accepting bribes, the elder Su said he took the money to pay for the education and living costs of his son and daughter-in-law. But given Su's elevated position – he was the deputy director of the transport department within the ­Ministry of Railways – the reported sums look to be grossly understated.

This is often the way, as Chinese courts, which are beholden to the Communist Party, need to present enough evidence to warrant a lengthy jail term without ­revealing the true scale of corruption in the government.

It's therefore a fair assumption that Su's illicit gains were far larger than the ­published figures.

In March a railway official far more junior than Su was convicted for receiving $US21.5 million in bribes in just 22 months.

It's also a fair bet that more than $1.2 million of Su's money found its way to Australia.

The court documents hint at this. They show that the younger Su, who is thought to have studied in Australia, was paid nearly $2 million by another company associated with his father. Court documents show the younger Su was on the payroll of a trading company even though he never participated in a management meeting or had any involvement with the business.

The transcript is silent on whether this money ever came to Australia, but there's no indication the younger Su or Qian felt ­insecure in recent years as Xi's corruption campaign continued to arrest ever higher ranking officials.

Despite his father being officially placed under investigation in July 2011, the couple have made no attempt to disguise their ­activities.

And nor do they appear to have been short of cash.

In April last year they paid $1.35 million for a house in Killara, which has remained empty since and is now slated for ­demolition and a $500,000 rebuild.

Property records show the couple settled on this house before selling a townhouse in Breakfast Point for $2.5 million. They are also linked to a $550,000 apartment in Rhodes, which is the registered address for a company they established, and another apartment in Wolli Creek, which they appear to have bought off the plan in ­October 2010 for $400,000.

But it is the home in Killara which stands out. It typifies suburban ordinariness, while the plans lodged with Ku-ring-gai Council suggests a couple building a family home.

The only hint of something potentially out of place is their age – he is 32 and she is 29, according to ­company filings lodged with the Australian corporate regulator.

That is slightly on the young side for a ­couple building a five-bedroom, two-storey home that will be worth at least $2 million when completed.

And this is not the couple's first big real estate investment.

As a 25 year-old in 2010, Qian outlaid $2.2 million on that townhouse in Breakfast Point. Just seven months later her husband paid $400,000 for the apartment in Wolli Creek. The townhouse was bought just three months after the 16 payments totalling $1.2 million were transferred into Su's ­Australian bank account. And both ­properties were purchased during the time Su was paid $2 million from a Chinese ­company seeking favours from his father.

Tracked down by AFR Weekend, Qian said she was confident the couple's assets could not be targeted under proceeds of crime laws.

"I don't think so, because everything we own is in our name," she said via phone from Sydney. "Because everything we own here isn't associated with him, and it's ours, it has nothing to do with him. He has no ­association with our home."

Qian said she worked as an accountant and her husband was employed by wholesale trading company. "We're both working and doing things. We're not just waiting for money to be handed to us," she said.

Even if the AFP were to target the couple's assets, they appear to be well insulated by the law.

Tom Clarke, a Melbourne barrister who has acted on proceeds of crime matters, says it is still early days for testing laws allowing the recovery of corrupt payments, some of which only came into effect in 2010.

"There are a certain number of ­arguments that remain to be tested in court," he says.

The AFP could seek a court order to seize assets if there is a ­"reasonable suspicion" that they may have flowed from the proceeds of crime or if a ­person had so-called "unexplained wealth", he says. In the latter case, the onus is then on the defendant to prove where the wealth originated.

Clarke says these laws are "onerous and a strong weapon" for authorities to use, but there are a number of potential ­loopholes. "If the assets are in the name of a child then that is certainly going to make it more ­difficult."

The legal landscape is further muddied by China's frequent use of the death penalty – it is estimated to have executed 2400 people last year, according to the US human rights group the Dui Hua Foundation.

The 2006 Treaty between Australia and China on "mutual legal assistance" states that this does not apply in cases where a crime is punishable by death.

Clarke says on some readings this could also apply to corruption matters as they carry the maximum sentence of death in China. "That argument is potentially open," he says.

All this suggests that Chinese authorities could be frustrated by ­Australian courts for many years in their attempts to repatriate funds. This will do nothing for ­Australia's ­bilateral relationship with its largest trading partner. But that is why many corrupt Chinese officials chose to hide their money in Australia in the first place.


Fairfax Media Management Pty Limited

Document AFNR000020141024eaap0002u

[greengiraffe]

China corruption troubles worry Western banks
ENDA CURRAN THE WALL STREET JOURNAL OCTOBER 27, 2014 1:25PM

China’s Qingdao port, where authorities are probing a massive fraud.

WHEN Chinese property developer Agile Property Holdings said this month that its chairman was taken into custody by authorities, the disclosure was a shock to Western banks that lent the company money.

Foreign lenders in China have been stung by a string of suspected fraud cases and problem loans in the country, as Beijing investigates company executives and seizes assets in a crackdown on corruption.

Agile Property has a large debt payment due in December and has been scrambling to raise funds. It is in discussions with bankers at HSBC Holdings PLC and its unit Hang Seng Bank Ltd, and Standard Chartered PLC for an extension of the $475 million loan.

The company cancelled plans at the start of the month to raise 2.75 billion Hong Kong dollars ($US355 million) through a rights issue. A few days later, the company said it would try again, this time with the fundraising backed by the controlling family, meaning they would have to buy any shares not bought by investors.

When news came that the chairman was taken into custody, it was a shock to banks such as BNP Paribas, HSBC and Standard Chartered that had agreed to underwrite the original offering, and who have also lent the company money.

“It was a surprise to all the banks. We didn’t know,” said one executive at a Western bank with direct knowledge of the matter.

It isn’t clear whether Agile chairman Chen Zhuolin has been accused of wrongdoing. In China, authorities have broad leeway to hold prospective witnesses as well as suspects.

Agile’s shares have fallen 13.3 per cent since a trading halt was lifted earlier this month and are down almost 50 per cent for the year. Its bonds have regained some ground after a sharp sell-off.

A spokesman for Agile referred to disclosure statements made to Hong Kong’s stock exchange.

Half a dozen Western lenders are also locked in legal battles over exposures of around $US1 billion linked to a suspected fraud at Qingdao port.

In another widely reported case, a group of banks including Nomura International lent $US60 million to Chinese shoe company Ultrasonic AG just months before company funds went missing and its then-chief executive disappeared. That prompted the company, which is based in Cologne, Germany, but has many of its assets in China, to talk with creditors to avert insolvency proceedings.

The executive later emerged, telling Chinese media that he had lost his cellphone while in the Philippines and that he hadn’t absconded with company funds. But the company’s chief financial officer has since resigned, citing a lack of progress in finding the missing money.

The spate of suspected fraud cases and growing fears that loans won’t be repaid has raised questions about the effectiveness of scrutiny applied by banks to borrowers.

“In China, nothing is what it appears to be,” said Violet Ho, senior managing director, Greater China at Kroll, the investigative consulting firm.

Western banks have been lending to Chinese borrowers in huge volumes, often via their Hong Kong based subsidiaries.

Cross-border lending claims in China grew 47 per cent in the 12 months through the end of June, according to the Switzerland-based Bank for International Settlements. China is by far the biggest emerging-market borrower in the world, based on the BIS data.

Much of the lending into China has been driven by banks chasing higher returns as global interest rates remain low. Chinese companies can borrow more cheaply in Hong Kong, where credit is more freely available, than on the mainland.

Typically, according to bankers, the due diligence applied by Western banks to Chinese borrowers includes site visits, meetings with personnel and an analysis of the company’s books. But even with this degree of scrutiny, problem loans are emerging.

“It is very difficult to get a handle on the financials of a Chinese company,” said Kroll’s Ms Ho. “If a bank wants to have a very black and white due diligence questionnaire, they will be hugely surprised and disappointed.”

To be sure, banks are aware of the risks faced when lending in China.

“When we speak to the banks that we own, they are alive to the risk and are managing their exposure across industries and cities in China,” said David Smith, head of corporate governance, Asia, at fund manager Aberdeen Asset Management.

Still, bad loans are starting to spike for Chinese lenders and there are signs of an uptick for foreign banks, too.

“We’ve seen a softening economy in China and when the sea goes out, the rocks appear,” said Keith Pogson, financial-services managing partner for the Asia-Pacific region at Ernst & Young.

Information on nonperforming loans made by foreign banks in China is hard to come by, although most analysts agree that lenders are facing rising risks as China grapples with a sharp downturn in the property market, which accounts for nearly one-fourth of the country’s economy.

“Credit risks of the real-estate sector can potentially generate large spillover effects onto other sectors, suggesting it is closely linked with other sectors through financial channels,” researchers at the Hong Kong Monetary Authority said in a recent paper.

Hong Kong-based banks such as Bank of East Asia have already warned of a spike in bad loans to Chinese clients, albeit from low levels.

“There is definitely a deterioration of credit in the Chinese market,” Mr Pogson said.

Wall Street Journal

[greengiraffe]

I strongly suspect these unfortunate folks are those with weak connections and being rounded up to prove that the new leaders are at work... The big fishes are probably out in the wild already...

China freezes forex accounts
Fox Hunt Samantha Hutchinson and Lisa Murray
498 words
1 Nov 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Chinese authorities are freezing the foreign exchange accounts of Chinese individuals sending money to Australia who are suspected of corruption.

The development comes as China's Ministry of Public Security announced operation 'Fox Hunt', a campaign against corrupt officials living overseas, has netted 180 suspects in just over three months.

A Sydney-based foreign exchange dealer told AFR Weekend Chinese authorities have frozen the account of a Chinese client conducting business between China and Australia.

"When they freeze an account, it's not just one, but usually a whole series of accounts that we use," the foreign exchange dealer said.

"So in this case, the authorities froze the client's foreign exchange account, the local group's settlement account and a separate account used by local brokers."

All accounts blocked by Chinese authorities were domiciled in China. Chinese authorities are unable to access Australian accounts, even if they belong to Chinese citizens.

The dealer spoke on condition of anonymity, citing fears the event would scare other potential clients from using the company. It is the first time in the mid-sized company's trading history any account has been blocked, he said.

"Freezing accounts is happening more and more in China; it's picking up in intensity and frequency particularly as the status of people being taken down in investigations keeps rising," he said.

On Thursday China's Public Security Ministry said on its website that 104 people have been arrested and 76 have surrendered since Fox Hunt was launched on July 22. The officials had fled to more than 40 countries.

China has sent out lists of names to police in other countries and has also said it would be more lenient towards corrupt officials who turn themselves in by the end of the year. The statement makes no mention of Australia, although notes China has asked for help internationally and that has been met with a positive response.

The Australian Federal Police insists it is not formally part of Operation Fox Hunt. However, an AFP spokesman ­confirmed last week it regularly co-operates with Chinese authorities and had worked with them on drawing up a priority list of targets.

The Australian Financial Review on Friday revealed that Gao Xinyuan, the son of China's most famous fugitive Gao Yan who is alleged to have stolen millions of dollars of state assets, set up two companies and purchased a development site in Sydney's Neutral Bay.

A week earlier, the AFR revealed Su Shunhu, a Chinese government official convicted of corruption and jailed for life, channelled at least $1.2 million to his family in Sydney. His son and daughter-in-law in Sydney have bought and sold houses and ­apartments worth around $4.5 million across Sydney

Key points Sydney-based dealer outlines how client's China-based funds were targeted. Beijing says 104 people have been arrested and 76 have surrendered since July.


Fairfax Media Management Pty Limited

Document AFNR000020141031eab10003b

[BlueKelah]

China Seizes Record $33 Million in Cash From Official’s Home

Chinese prosecutors said they seized a record 200 million yuan ($33 million) in cash from the home of a former energy official accused of taking bribes.

The confiscation from Wei Pengyuan’s residence was the biggest in an anti-corruption raid since the Communist Party took power in China in 1949, the Supreme People’s Procuratorate said in a statement on its website yesterday, citing Xu Jinhui, chief anti-graft prosecutor in a press conference.

Investigators wore out four of 16 cash-counting machines used to measure the haul, the Chinese online business publication Caixin said in May, when the government first disclosed the probe. China’s largest cash denomination is the 100 yuan note, worth about $16.

President Xi Jinping’s anti-corruption campaign has sought to net both “tigers and flies,” meaning officials of high and low rank. It has ensnared officials nationwide, including Zhou Yongkang, the nation’s former security chief. Xi has called corruption as the greatest threat to the party’s grip on power.

The government said in May that Wei, a former deputy director of the National Energy Administration’s coal department, was under investigation for alleged corruption. Other NEA officials, including the agency’s deputy head and the chief of its electricity division, were being probed, the official Xinhua News Agency said at the time.

The NEA is the government body that supervises China’s energy industry. Its former minister, Liu Tienan, has been accused by prosecutors of securing a phantom job for his son in return for brokering deals and helping obtain project approvals.

Eleven employees of the National Development and Reform Commission are under investigation for alleged corruption, six of whom received “more than tens of millions of yuan” in bribes, Xu said, according to yesterday’s statement. The NEA falls under the jurisdiction of the NDRC, China’s top economic planning body.

Bloomberg Source

================

Wow now we know how corrupt China is. So THAT's where all the cash that bought up Sentosa Cove came from.

Without the Millions flooding the Sydney and Melbourne financial markets which has created something like quantitative easing for the Aus economy, it will be only a matter of time before the Aussie dollar goes down, as it will no longer be a "reserve" currency for the Chinese to convert their ill-gotten gains to.

================

[greengiraffe]

Party time is over

Lisa Murray AFR correspondent
510 words
30 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

Shanghai China's Communist Party has included international ­co-operation to pursue corrupt officials who have fled overseas, among its key ­priorities for legal reform.

It also plans to speed up the ­introduction of new anti-corruption, terrorism and environment laws, increase supervision of the military and improve legal structures, according to a broad ­statement released late on ­Tuesday, which followed an important party meeting last week.

The document was released on the same day as investigators announced that a retired army general, Xu Caihou, had confessed to taking "extremely large" bribes. State-run news agency Xinhua said Mr Xu, former vice ­chairman of the party's powerful ­Central Military Commission, took advantage of his position by handing out ­promotions and accepting bribes paid to him personally and through his family.

The pending trial of Mr Xu, who is suffering from terminal cancer, signals that retired officials will no longer be spared from corruption investigations as has been typical in the past. It suggests the military will remain a focus for Chinese President Xi Jinping's long-running anti-corruption campaign.

Meanwhile, Beijing has formalised its recent moves to seek the help of countries such as Australia, the United States and Canada in pursuing corrupt officials who flee overseas to avoid investigation, taking their assets with them. The plenum document said China would strengthen co-operation with other countries to "pursue stolen goods and fugitives overseas, as well as for repatriation and extradition".

China implemented the United Nations Anti-Corruption Convention for the first time in July year which allowed it to start working with other countries to seize the proceeds of crime. The Australian Federal Police confirmed last week it was co-operating with Chinese authorities in "assisting to trace and restrain illicit assets" and had drafted a target list.

There is mounting evidence to ­suggest Australia is among the popular destinations for officials fleeing China.

Earlier this month, former railway official Su Shunhu was sentenced to life in jail for accepting millions of yuan in bribes, much of which was sent to his son and daughter-in-law living in ­Sydney, according to a Beijing court. The Australian Financial Review revealed last week Mr Su's family have bought and sold properties worth about $5 million over the past four years. However, they insist the purchases had nothing to do with Mr Su.

Mr Xi's anti-corruption campaign has been the signature policy of his administration and it appears the party is attempting to strengthen the ­credibility of its legal system. At the same time, the party made very clear it would retain control.

For the first time, the rule-of-law was set as the theme for the party's regular plenum meeting, which had sparked some hope for an overhaul of the legal system to make courts more independent from the government.

While no specific policies were announced, the plenum document did hint at changes to legal ­structures and the "standardisation of judicial conduct".


Fairfax Media Management Pty Limited

Document AFNR000020141029eaau0001z

[greengiraffe]

AFP onto fugitive money trail

Special investigation Samantha Hutchinson, Lisa Murray, Angus Grigg and Lucy Gao
888 words
31 Oct 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.

The son of China's most famous fugitive spent the five years before his father was placed under investigation for ­corruption setting up two Australian companies and buying a development site in Sydney's Neutral Bay.

Government-run media outlets in China have speculated for years that Gao Yan, a former high-ranking ­Communist Party official, alleged to have stolen millions of dollars in state assets, fled to Australia in 2002.

One source has confirmed the ­Australian Federal Police is ­investigating property linked to Mr Gao's son, Gao Xinyuan. This raises the prospect the Gao family is on a ­target list put together by the AFP and Chinese authorities as part of a joint effort to trace and freeze illicit assets.

Filings with Australia's corporate regulator show the younger Mr Gao, who himself spent five years in a ­Chinese prison for corruption, was a shareholder and director of two ­Sydney-based companies. One of the companies, Jutan Development, was registered in 1997 and the other, Yutan Property, was set up in 1999 to develop the $1.8 million plot at Neutral Bay. It was later renamed Grandeur Estate.

In 2002, at the time his father was facing a corruption investigation in China, Mr Gao and his business partner sold the Neutral Bay development site for about $3 million, according to the purchaser Lucy Cong. However, he remained on the board of Jutan until 2005. Attempts to contact either of the Gaos via associates were unsuccessful.

Two directors and one former employee claimed they were no longer in contact with the younger Mr Gao and no had dealings with his father.

Tracking down officials hiding overseas and confiscating their assets has become a top priority for China's President Xi Jinping, who will seek greater co-operation from regional leaders, including Prime Minister Tony Abbott, at a meeting in Beijing next week.

Earlier this year, the Chinese ­government launched "Operation Fox Hunt," a high-level campaign to locate and bring back officials who have fled overseas. Australia has ­regularly been identified by Beijing as a popular haven for corrupt officials and their families.

The AFP confirmed last week they had drawn up a priority list of targets in co-operation with Chinese ­authorities. Asked on Thursday if the Gao family were on that list, a spokesman said: "we have a long-standing practice that we don't confirm or deny who the AFP may or may not be investigating."

"As such, we are unable to provide any further details in relation to this matter," the spokesman said.

The Australian Financial Review has been told members of the AFP have in past weeks visited the ­Pyrmont apartment building where Gao Xinyuan held a registered office in 1997 and 1998.

According to Chinese media reports, the younger Mr Gao first came to Australia in the second half of 1996, after graduating from the prestigious Peking University. He is said to have spent a year in the country before returning home and establishing a series of businesses related to his father's job as General Manager of the State Power Corporation, which at that time held a monopoly over the electricity sector in China.

The younger Mr Gao then ­reportedly came back to Australia in May 2002, just two months before his father was placed under investigation for corruption.

In September that year the older Mr Gao fled China and is widely reportedly to be living in ­Australia, although this has never been ­confirmed.

In a surprise move, the younger Mr Gao returned to China in October that year, where he was eventually charged with corruption.

He was found to have paid $25,000 in bribes, plus given a Rolex watch to two government officials in exchange for the awarding of ­construction contracts to his ­business partners and was jailed in 2004 for five years.

Documents filed with the corporate regulator show the same date and place of birth for the younger Mr Gao as that used by Chinese media which reference court documents. His 72 year-old father was a famously extravagant party official, who began his career in north ­eastern province of Jilin in the 1960s.

He became governor in 1992, before being promoted to Party ­Secretary of the southern province of Yunnan three years later.

His rise through the party ­continued in 1997, with his appointment as general manager of the State Power Corporation, at a time when China was rapidly connecting ­millions of homes with electricity.

Earlier this year, China's Lanzhou Evening News said the elder Gao had promoted officials who gave ­contracts to his son.

The paper said these contracts were worth nearly 300 million yuan ($56 million), which he later sub-contracted after taking a margin for ­himself. It said the elder Gao had been linked to corruption as far back as 1995, when he was head of the tobacco rich province of Yunnan.

The Financial Review revealed last week another corrupt Chinese ­official, Su Shunhu, had channelled at least $1.2 million to his family in Sydney, before this month being handed a life sentence for corruption.

According to property searches, his family bought and sold properties worth $5 million over the past four years.


Fairfax Media Management Pty Limited

Document AFNR000020141030eaav0000w

[specuvestor]

Wow now we know how corrupt China is. So THAT's where all the cash that bought up Sentosa Cove came from.

Corruption in China is as well known as Indonesia. I salute Yudhoyono for surfacing the issue and also standing firm impartially in cracking down

When foreign commentators scorn at how corrupt Indonesia is because even his own party leaders are indicted, my answer is that by that logic Suharto's regime must be clean because I've never heard of anyone indicted for corruption during his era

I think the same should be applied to China. In fact the long standing understanding is that once your assets are funnelled overseas it should be safe as the Chinese govt cant be bothered to track down so many cases. Xi has shown they can be bothered and it can be done. Will be tricky as it opens a pandora's box especially with the old guards.