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Report: Corrupt Chinese Officials Take $123 Billion Overseas
By James T. Areddy, June 16, 2011, 1:10 PM ET
Chinas rulers say corrupt cadres are the nations worst enemy. Now, according to a report that was given widespread coverage this week in local media, Beijing says that enemy resides overseas, particularly in the U.S.
The 67-page report from Chinas central bank looks at where corrupt officials go and how they get their money out. A favored method is to squirrel cash away with the help of loved ones emigrating abroad, schemes that often depend on fake documents.
News of the study got prominent notice this week in Chinese media. A sample headline from page one of the Shanghai Daily on Thursday: Destination America For Chinas Corrupt Officials.
The reports said the study was posted to the website of Chinas central bank. While the PDF document remains widely available in Chinese cyberspace, the report dated June 2008 and identified as confidential no longer appears on the Peoples Bank of China website.
The central bank didnt respond to requests for comment.
Though the report reads like an academic study, it doesnt cite a clear conclusion.
Instead, it is broken into two main sections, the first starting with estimates that up to 18,000 corrupt officials and employees of state-owned enterprises have fled abroad or gone into hiding since the mid-1990s. They are suspected of pilfering coffers to the tune of 800 billion yuan, or $123 billion a sum that works out to 2% of last years gross domestic product.
The higher ranking they were, the report says, the more likely they were to go to Western nations. Top destinations for high-level thieves included the U.S., Canada, Australia and the Netherlands.
Lower ranking officials taking less substantial sums went to the West indirectly, such as through Hong Kong, or sought safe haven in nearby countries like Thailand, Malaysia, Mongolia and Russia.
The somewhat juicier second section of the report deals with how they got money out. Here the report names names, but primarily only in the cases of those who were caught.
In one case, Xu Fangming, a former Ministry of Finance official allegedly deposited roughly 1 million yuan into the bank account of a son studying abroad. In another, Cheng Kejie, a top politician got his mistress settled in Hong Kong and funneled money to her.
Some of the stories are well known. Among the most notable is the tale of Zhang Jian, a former Communist Party chief of Haimen in Jiangsu province, who famously dumped his ill-gotten 18 million yuan into Macao casinos. According to the report, he funded his 48 visits over two years with credit cards.
Though Chinas appetite for U.S. bonds is more attention-getting, talks with Beijing on cross border money laundering already figure prominently into the Sino-U.S. economic relationship. After the latest Strategic and Economic Dialogue in May, for instance, the U.S. said China agreed to strengthen its money-laundering controls.
Chinas central bank said in the report that it plans to cooperate with foreign governments to plug the holes that allow corrupt officials to escape with their takings from the public till. The central bank has become increasingly involved in international anti-money laundering organizations, including the inter-governmental Financial Action Task Force.
The U.S. Embassy declined to comment on the reports citation of the U.S. as the favored destination for Chinas official theives. The report also neglects to explain why the pilferers seem to prefer the U.S., but the countrys lack an extradition agreement with China is almost certainly a factor.
Report: Corrupt Chinese Officials Take $123 Billion Overseas - Corruption Currents - WSJ
By James T. Areddy, June 16, 2011, 1:10 PM ET
Chinas rulers say corrupt cadres are the nations worst enemy. Now, according to a report that was given widespread coverage this week in local media, Beijing says that enemy resides overseas, particularly in the U.S.
The 67-page report from Chinas central bank looks at where corrupt officials go and how they get their money out. A favored method is to squirrel cash away with the help of loved ones emigrating abroad, schemes that often depend on fake documents.
News of the study got prominent notice this week in Chinese media. A sample headline from page one of the Shanghai Daily on Thursday: Destination America For Chinas Corrupt Officials.
The reports said the study was posted to the website of Chinas central bank. While the PDF document remains widely available in Chinese cyberspace, the report dated June 2008 and identified as confidential no longer appears on the Peoples Bank of China website.
The central bank didnt respond to requests for comment.
Though the report reads like an academic study, it doesnt cite a clear conclusion.
Instead, it is broken into two main sections, the first starting with estimates that up to 18,000 corrupt officials and employees of state-owned enterprises have fled abroad or gone into hiding since the mid-1990s. They are suspected of pilfering coffers to the tune of 800 billion yuan, or $123 billion a sum that works out to 2% of last years gross domestic product.
The higher ranking they were, the report says, the more likely they were to go to Western nations. Top destinations for high-level thieves included the U.S., Canada, Australia and the Netherlands.
Lower ranking officials taking less substantial sums went to the West indirectly, such as through Hong Kong, or sought safe haven in nearby countries like Thailand, Malaysia, Mongolia and Russia.
The somewhat juicier second section of the report deals with how they got money out. Here the report names names, but primarily only in the cases of those who were caught.
In one case, Xu Fangming, a former Ministry of Finance official allegedly deposited roughly 1 million yuan into the bank account of a son studying abroad. In another, Cheng Kejie, a top politician got his mistress settled in Hong Kong and funneled money to her.
Some of the stories are well known. Among the most notable is the tale of Zhang Jian, a former Communist Party chief of Haimen in Jiangsu province, who famously dumped his ill-gotten 18 million yuan into Macao casinos. According to the report, he funded his 48 visits over two years with credit cards.
Though Chinas appetite for U.S. bonds is more attention-getting, talks with Beijing on cross border money laundering already figure prominently into the Sino-U.S. economic relationship. After the latest Strategic and Economic Dialogue in May, for instance, the U.S. said China agreed to strengthen its money-laundering controls.
Chinas central bank said in the report that it plans to cooperate with foreign governments to plug the holes that allow corrupt officials to escape with their takings from the public till. The central bank has become increasingly involved in international anti-money laundering organizations, including the inter-governmental Financial Action Task Force.
The U.S. Embassy declined to comment on the reports citation of the U.S. as the favored destination for Chinas official theives. The report also neglects to explain why the pilferers seem to prefer the U.S., but the countrys lack an extradition agreement with China is almost certainly a factor.
Report: Corrupt Chinese Officials Take $123 Billion Overseas - Corruption Currents - WSJ
