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Chinese checkers

The corruption case against one of China’s most powerful politicians signals a rewriting of rules.

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 Zhou served as party chief from 1999 to 2002. “Because of his connections to energy, land and the internal security system, in effect the family had kind of carte blanche to go into anything they wanted,” said Andrew Wedeman, a professor of political science at Georgia State University who studies corruption in China.

In all, the holdings examined by The Times are worth at least 1 billion renminbi ($160 million) although that estimate is based on a limited assessment of each company’s value and does not include real estate or overseas assets, which are more difficult to identify and assess. Even so, these assets make Zhou the third member of the nine-man Politburo Standing Committee that ruled China from 2007 to 2012 to have family members with documented wealth exceeding $150 million.

No evidence has emerged that proves Zhou, 71, was involved in the investments or did anything illegal. Nor is it clear that his relatives violated any law or actively used their relationship with Zhou to secure deals. But Xi appears confident that he has enough evidence to eliminate Zhou’s influence.

The son of a beet farmer who caught eels as a sideline, Zhou rose to become one of the most feared politicians in China. He began his career as an oil field technician, spending more than a decade in the 1970s and 1980s working his way up the administration overseeing the Liaohe Oil Field in northeastern China. He kept rising through the ranks until he became head of CNPC, the nation’s largest energy company, which accounts for more than half of China’s oil production and three quarters of its gas production. Zhou later became party chief of Sichuan. In 2002, he was appointed minister of Public Security and, in 2007, he joined the Politburo Standing Committee, the party’s top echelon, and assumed control of the body overseeing the police, courts and intelligence agents.

At least three of Zhou’s relatives profited from CNPC’s rise: his oldest son, Zhou Bin; Zhan; and his sister-in-law, Zhou Lingying, the wife of a younger brother. Zhou Bin, 42, is majority owner of a Beijing company that sells equipment to Liaohe as well as to CNPC oil fields in three other provinces, corporate records show. His mother-in-law, Zhan, 71, owns companies selling natural gas with CNPC in two provinces. Company records show she owned 80 per cent of it when it was set up a decade ago. Its assets climbed more than six-fold in the years after Zhou Yongkang joined the Politburo Standing Committee in 2007, to $27 million in 2012.

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