Thursday, Oct 23, 2014

Chinese checkers

New York Times | Honkong | Posted: April 22, 2014 12:59 am

By: Michael Forsythe, Chris Buckley & Jonathan Ansfield

His son landed contracts to sell equipment to state oil fields and thousands of filling stations across China. His son’s mother-in-law held stakes in pipelines and natural gas pumps from Sichuan province in the west to the southern isle of Hainan. His sister-in-law invested in mines, property and energy projects. In thousands of pages of corporate documents describing these ventures, the name that never appears is his own: Zhou Yongkang, the formidable Chinese Communist Party leader who served as China’s top security official and de facto boss of its oil industry.

But President Xi Jinping has targeted Zhou in an extraordinary corruption inquiry — a first for a Chinese party leader of Zhou’s rank, and put his family’s business interests in the cross hairs.

Even by the cutthroat standards of Chinese politics, it is a bold manoeuvre. The finances of the families of senior leaders are among the most politically delicate secrets in China. The party has followed a rule that relatives of the elite could prosper from the country’s economic opening, which rewarded loyalty and helped avert rifts in the leadership.

Whether to wipe out Zhou’s influence or to send an unmistakable signal to the party elite, Xi appears to be rewriting the rules. He has widened the inquiry into Zhou to include his wife, a son, a brother, a sister-in-law, a daughter-in-law and the son’s father-in-law, all of whom have been taken away by the authorities in recent months, according to relatives and witnesses.

Zhan Minli, one of the few members of the clan who remain free, said Zhou’s granddaughter has been left in the care of a kindergarten in Beijing because the rest of the family is in custody. “It is cruel for a 5-year-old,” she said in an interview in Southern California.

Officially, the Chinese leadership has said nothing about the corruption investigation into Zhou or the detention of his immediate relatives, and Xi’s ultimate intentions about how to handle the case remain a matter of speculation. Some political analysts argue that a leader of Zhou’s status would not face an inquiry of this kind unless Xi regarded him as a direct threat to his power. In other words, Zhou is the loser in a political struggle. His family’s financial dealings lost their immunity only because Zhou fell from favour, not because elite business dealings were being criminalised.

An investigation by The New York Times of the assets held by Zhou’s relatives highlights the considerable sums involved and illustrates how deeply invested members of the party establishment are in industries where political connections are important.

Three of Zhou’s relatives — a sister-in-law, a son and Zhan, the son’s mother-in-law — hold or have controlled stakes in 37 companies across a dozen provinces, from Audi dealerships to property firms, according to corporate documents filed with the government. Seventeen focus on investments in energy, mostly in ventures with the state-owned oil giant China National Petroleum Corp, which Zhou headed in the 1990s. Nine centres on Sichuan province, where continued…

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