Hidden Fortunes of Chinese Leaders

http://www.nytimes.com/2012/10/26/business/global/family-of-wen-jiabao-holds-a-hidden-fortune-in-china.html?_r=0&pagewanted=all

by tomkit • 14 years ago

139 81 14 years ago

nytimes.com

waterlesscloud• 14 years ago

I saw some foreign policy gurus on Twitter saying that the names of central party leaders are permanently blocked on Weibo, so as to prevent online discussion of them. Which is really interesting.

tszming• 14 years ago

Just tried, the keyword "温家宝" is now being blocked in China Weibo [1], and only limited search results from Baidu [2].

[1] 根據相關法律法規和政策，“溫家寶”搜索結果未予顯示。

[2] 根据相关法律法规和政策，部分搜索结果未予显示。

w1ntermute• 14 years ago

Correct:

Try searching for Wen Jiabao ("温家宝" in Chinese)[0] on Sina Weibo Search[1], and you get:

> 根据相关法律法规和政策，“温家宝”搜索结果未予显示。

Google Translate for this gives:

> In accordance with the relevant laws, regulations and policies, "Wen Jiabao search results are not displayed.

Similar results can be observed with Mao Zedong (毛泽东), Jiang Zemin (江泽民), and Deng Xiaoping (邓小平), all past "Paramount Leaders"[5], as well as Hu Jintao (胡锦涛)[2], the current Paramount Leader, Xi Jinping (习近平)[6], rumored to be the next Paramount Leader. So is Wang Yang (汪洋)[4], the Guangdong Party Chief and likely a big shot in the next generation, alongside Xi Jinping.

Bo Xilai (薄熙来)[3] and Wang Lijun (王立军), recently disgraced officials, are acceptable. Oddly, so is Hua Guofeng (华国锋), a Paramount Leader from the 70s and 80s.

Edit: from Wikipedia[7]:

> because of his insistence on continuing the Maoist line, he was himself outmaneuvered in December 1978 by Deng Xiaoping, a pragmatic reformer, who forced Hua into early retirement. As Hua faded into political obscurity, he continued to insist on the correctness of Maoist principles. He is remembered as a largely benign transitional figure in modern Chinese political history.

Perhaps he is sort of seen as disgraced as well.

0: http://en.wikipedia.org/wiki/Wen_Jiabao

1: http://s.weibo.com/

2: http://en.wikipedia.org/wiki/Hu_Jintao

3: http://en.wikipedia.org/wiki/Bo_Xilai

4: http://en.wikipedia.org/wiki/Wang_Yang_%28politician%29

5: http://en.wikipedia.org/wiki/Paramount_Leader

6: http://en.wikipedia.org/wiki/Xi_Jinping

7: http://en.wikipedia.org/wiki/Hua_guofeng

confluence2• 14 years ago

If I was the Chinese - I'd just give him a codename like the CIA does with their assets.

Then just change it every so often.

justincormack• 14 years ago

There is a lot of that eg see http://en.m.wikipedia.org/wiki/Grass_Mud_Horse

songco2• 14 years ago

Yes, sometimes not only their name, but their family name, which is very common Chinese character..so when you search some thing and include those word, you will get connection reset. You can't imagine some site like sourceforge and slideshare once blocked by gfw...

swaroop• 14 years ago

You should watch http://www.ted.com/talks/michael_anti_behind_the_great_firew...

ttflee3• 14 years ago

Are TED and anti-Great-FireWall movement similar in that they are only shared by a relatively small number of elite youths?

dsr12• 14 years ago

Single page view of the article: http://www.nytimes.com/2012/10/26/business/global/family-of-...

apaprocki• 14 years ago

Related, from a little while ago, "Xi Jinping Millionaire Relations Reveal Fortunes of Elite": http://www.bloomberg.com/news/2012-06-29/xi-jinping-milliona...

For that article, our sites were blocked in China. I'm curious whether NYT will get the block as well.

rudyfink• 14 years ago

According to the NY Times, the parent article is now blocked in China ( https://www.nytimes.com/2012/10/26/world/asia/china-blocks-w... ).

newhouseb• 14 years ago

I've always been amazed (until now) that the NYT hasn't been blocked (when YouTube, Wikipedia, Twitter, Facebook and a bunch of other news organizations are). I can only guess because it's primarily an english publication. During the 2008 Olympics (when I was in China), I was consistently amused that I could read about all the atrocities committed in the name of the Olympics in the NYT from behind the Great Firewall of China.

c1sc0• 14 years ago

I can confirm this. It is blocked in Shanghai

svachalek• 14 years ago

Ditto in Shenzhen.

carbocation• 14 years ago

> For that article, our sites were blocked in China. I'm curious whether NYT will get the block as well.

For those unaware, "our sites" means Bloomberg properties.

kaptain• 14 years ago

NYTimes is blocked in Tianjin. I was able to get the article about half an hour ago but now the entire site is blocked.

songco2• 14 years ago

Of cause NYT will be blocked after the this report, otherwise the gfw guys will lost their job..

jpdoctor• 14 years ago

> I'm curious whether NYT will get the block as well.

And HN too for linking to it.

seivan2• 14 years ago

Most of Governments are corrupt. It's not a inherently Asian thing.

What is an Asian thing is the fact that in most other countries, you can do something about it.

Good luck with that in Asia.

babesh3• 14 years ago

Not true. Look at Russia, Brazil, Mexico, most of the Middle East, etc.... In general, the only thing you can do about it is leave. Few exceptions are where there are enough opportunities that it pays for everyone to benefit or where a small group of people with no resources realize that they need to band together to prosper: Singapore, scandanavian countries, Japan. Notice some of these are in Asia too?

damian20002• 14 years ago

Freedom of the press & internet has a lot to do with this. Indonesia's corrupt president Suharto was toppled in the 1990s only when the press started going after him. When you look at Russia and China, one thing they have in common is restricted press/internet freedom - this keeps the status quo, no change.

seivan2• 14 years ago

Middle East and Russia are in Asia as far as I was told in elementary school. Looking at a world map now some 18 years later, I can see that it's accurate :). Especially for Middle East.

But I can see your point, my take is that it's predominantly happens in Asia. There are some spots of it in Europe as well. Mostly the eastern european enclaves. But they will fall eventually (or be consumed by Russia)

greatabel• 14 years ago

It's about CPC not Asian, more precisely

gojomo2• 14 years ago

I have a theory.

Giant productive societies will be ruled by billionaires. If the society tries to choose otherwise -- whoever else they choose as leaders will become billionaires.

I'm not sure the theory is true, but we may want to prepare mechanisms that still work for checking leaders' power, and attaining an acceptable level of competent and just governance, if it does turn out to be true. I suspect that will require more transparency than China practices.

sachingulaya• 14 years ago

Thelastpsychiatrist.com expoused on this model in his perceptive piece about Paul Ryan enjoying Rage against the Machine.

http://thelastpsychiatrist.com/2012/08/paul_ryan_vs_rage_aga...

Is there a name for this idea?

erichocean• 14 years ago

Thanks for the link, definitely an interesting read.

arrrg• 14 years ago

Angela Merkel isn't exactly rich (certainly no billionaire) and neither are many other European leaders. Even US presidents don't necessarily turn into billionaires.

isleyaardvark• 14 years ago

Congresspeople, too. I'm sure they're extremely comfortable, and you'd find some of the ultra-rich in Congress, but I get the feeling they make less money than you'd expect for someone with a direct influence on a budget of several trillion dollars.

gojomo2• 14 years ago

I included enough qualifiers to prevent such simple falsification-by-trivial-example! Perhaps Germany isn't 'giant' enough. (It only has 80M people compared to China 1.3B, India 1.2B, USA 300M, Russia 141M.)

Or maybe its real behind-the-scenes rulers are still billionaires (despite the particular figurehead officeholders). Or maybe the time required for the 'will be'/'will become' prediction hasn't passed yet.

I realize this is a 'no-true-scotsman' dodge. It wasn't meant to be a rigorous theory, just a thought-provoker. In 'giant productive societies' those people/movements best at marshaling large numbers of workers/machinery/voters will have both political power, and billionaire-like financial assets. The same competencies can acquire both... and power and wealth can be converted both ways (via both corrupt and non-corrupt processes).

babesh3• 14 years ago

Animal farm. The pigs that led the revolution against the humans become the humans.

damian20002• 14 years ago

"All Animals Are Equal. But Some Animals Are More Equal Than Others."

Eliezer• 14 years ago

All numbers are equal to six, but not all sixes are equal to each other.

raverbashing• 14 years ago

Or: "Capitalism is men exploiting men. Communism is the other way round"

pg• 14 years ago

Elizabethan courtiers hid many of their assets behind nominees. If Chinese leaders are also using nominees who aren't family members (I don't see why they wouldn't), the fortunes they control could be a lot bigger than the NYT can discover.

jagira• 14 years ago

Indian leaders are known to hide their illegitimate wealth and other assets behind nominees or shell companies.

Recently, anti-corruption crusaders and media have unearthed some massive hidden fortunes.

http://www.globalpost.com/dispatches/globalpost-blogs/india/...

kamaal3• 14 years ago

What the anti corruption crusaders are likely to unearth might be a very tiny fraction of tiny fractions of illegitimate wealth. They can do nothing as activists themselves. The financial and other powers these people are too powerful to bring them down. The only other way is to go the political route which Arvind Kejriwal is doing now, but we already know to do anything big in politics you will likely not be able to do it, unless you are corrupt yourself and allow donations from other shady sources.

comicjk• 14 years ago

The common Chinese understanding of government is cyclical: each dynasty dispels the abuses of the past when it arrives, then becomes corrupt and is itself overthrown. The current regime is trying to base its legitimacy on "results" - ie growth - not clean government. It is also using nationalism to divert popular attention. This may work. If it doesn't, however, Chinese tradition makes it unlikely that the party leaders will be forgiven. A bloodless transition to democracy is sadly the least likely outcome.

byw• 14 years ago

If I'm not mistaken you're referring to this:

http://en.wikipedia.org/wiki/Mandate_of_Heaven

acslater00• 14 years ago

Well I don't know about the rest of you, but I'm surprised that in a centrally-managed, state-controlled, corporatist economic system, the family of the most powerful individual in the nation would have managed to amass great personal wealth. That just runs counter to all of my instincts, and if these stories are true, it would really be the first time this sort of thing happened throughout history.

I'm shocked, really. I would have thought the People's Republic of China is above this sort of thing.

kamaal3• 14 years ago

Why are you surprised? communist/socialists/welfare state nations have always tended more towards dynasty type dictatorships. Eg: North Korea, Gulf Countries etc.

Freebies, pocket change welfare schemes launched by the government is basically a token bribe given to the public to just shut up, while the leaders are busy in their corrupt practices.

TeMPOraL2• 14 years ago

Poe's law. [0]

I'm pretty sure he was being ironic.

[0] http://en.wikipedia.org/wiki/Poes_law

jfrm• 14 years ago

Putting together communist and welfare state nations is a bit of a stretch. Most of Europe countries are welfare states http://en.wikipedia.org/wiki/Welfare_state

randomafrican• 14 years ago

Actually when one thinks about it, there's little proof that communist/socialist nations tend towards dynasties. Cuba and North Korea are outliers.

_delirium3• 14 years ago

> welfare state nations have always tended more towards dynasty type dictatorships

Living in Denmark, it's a surprise to hear that we're living under a dynastic dictatorship!

Well, technically, we do still have a Queen, but she is not exactly exercising any sort of dictatorial powers.

phreanix• 14 years ago

Yeah he just forgot the /s.

cobrophy• 14 years ago

For me, it wasn't surprising to hear this happening. The scale of it, however, was surprising.

anonymous• 14 years ago

You should add some sarcasm tag to posts like this. Not everybody gets it and I actually wouldn't be surprised if there is one legitimately naive and/or ignorant hackernews poster who could have posted this and meant it.

ttflee3• 14 years ago

For China Inc., the efficiency is fine, but accountability is not that ideal. Consider the cases in which the companies buy their auditors.

777466• 14 years ago

Can someone put those numbers in context? Are they large or small compared to what you'd expect/other elites?

rumcajz2• 14 years ago

What are the alternatives? Transferring from state-owned economy to privately owned one has to happen somehow. The experiment with straightforward privatisation, as done in Eastern European countries after 1989 was a disaster at least comparable to what's going on in China now.

_delirium3• 14 years ago

One question might be to what extent the political structure even makes the difference. China's neighbor India has quite different political structures, for example, but shares many of the problems with corruption (perhaps to an even larger extent).

ido2• 14 years ago

In some more than others. Worked pretty well in Czech Republic, Slovakia, Slovenia & Poland.

TeMPOraL2• 14 years ago

> Worked pretty well in (...) Poland.

I don't know. Members of the generation of my mother and my grandmother tend to blame privatization for all the downfall of Polish economy. There is something to that if you look at how railoads are managed right now - it's a stinking pile of corruption and theft, and the surprising thing is that it works at all.

rumcajz2• 14 years ago

Well, I am from Slovakia and the privatisation lead to 10-15 of Mafia-style capitalism. Of course, the situation was and still is much worse further to the east.

jcampbell1• 14 years ago

While the natural response is to be disgusted by the corruption, there is also something else going on here. If startups are defined by growth, China is the land where tons companies are winning startups. For every 1992 dollar of income there are now 15 dollars to spread around.* An astonishing amount of wealth has been created in the last 20 years, and it has spilled on many people.

In the US, when tremendous amounts of value and wealth are created, it also lands in odd places. Think of the early Google chef, or the Facebook artist who are both extremely wealthy. They got the money because tons of value was created and it just landed on them because they were in the right place at the right time.

I am not really making a point other than saying that this is a story of corruption which is terrible, and a story of value creation.

* In the same period, the US has gone from $1 to $2 in real income per capita

blago3• 14 years ago

Unheard of. Ever seen a western politician (or their family) go bankrupt while in office? This runs counter to odds, statistics, etc. The only difference is the methods and the scale.

tlrobinson• 14 years ago

Not that western politicians are squeaky clean, but there's a bit of a difference between not going bankrupt and amassing billion dollar fortunes while in office.

DougWebb• 14 years ago

In the U.S., our politicians get rich(er) after they leave office. Same for appointed government officials. Still a degree of corruption, but not as bad.

blago3• 14 years ago

Not going bankrupt is just a proxy that (in the absence of actual names and numbers) allows us to reason about their habits. It doesn't mean that they only still enough not to go bankrupt :-)

And then there is scale. There is only one western country where money is on a comparable scale.

confluence2• 14 years ago

I assume this with any kind of nexus between politics and business - doesn't matter which country.

I've always found it funny that we pay those who control the budgets of trillion dollar economies so little as compared to their private sector counterparts. I mean - what would you pay the CEO of a trillion dollar corporation?

Paying public servants so little makes it relatively easy to either buy their favour or have their favor bestowed upon you with insignificant sums of money. Give ~1% of yearly profits to campaign finance - get a $10 billion dollar defense contract, or relaxed loans or a stronger monopoly.

It's just legalised bribery.

kamaal3• 14 years ago

>>Paying public servants so little makes it relatively easy to either buy their favour or have their favor bestowed upon you with insignificant sums of money.

I don't think there is any evidence whatsoever that paying the politicians well will take care of the problem of corruption. If nothing it may just remain same or even worsen. Politicians are corrupt because they can steal and get away, they have a lot of power in their hand and they use it.

Think of it this way, if you have means to make $100 billion and you could easily hide that through safe way- What will stop you from doing that? A big fat pay check? I don't think so. So as you can make money easily and get away with it, you will do it. Regardless of what your paycheck actually is.

To give you an example Insider trading scandals are happening despite fat CEO compensations.

nikcub• 14 years ago

The most frequently cited example is that Singapore pays its government executives market wages, and they consistently rank in the top 5 least corrupt nations[0]

But so do Australia and New Zealand, and the salaries here in the government sector are much lower than they are in the private sector.

This is a well researched field[1]:

> In a bribery experiment, we test the hypothesis that distributive fairness considerations make relatively well-paid public officials less corruptible. Corrupt decisions impose damages to workers whose wage is varied in two treatments. However, there is no apparent difference in behavior.

There is no link between wages and corruption - there are many, many other factors that make up corruption.

Punishment and likelihood of being caught also seems to not disuade corruption. China has a large and very well funded public prosecutors office that focuses solely on corruption cases, the onus of evidence is low, it is the #1 domestic issue with much political pressure and the usual sentence on conviction is death (frequently plea bargained down to life or less in return for implicating others, but many corrupt officials have been executed).

[0] http://en.wikipedia.org/wiki/Corruption_Perceptions_Index#Ra...

[1] "Fair Salaries and the Moral Cost of Corruption" - [pdf] http://128.243.80.167/cedex/documents/papers/2002-05.pdf

ttflee3• 14 years ago

The prosecution systems in China are led by the local and central party leaders, who actually supervise their administrative counterparts, i.e. the mayors and governors. In several sensitive cases of local government head appointment, the removal of local police and prosecutor heads followed, in a violent way that some of those removed got prosecuted, even committed suicide[1].

IMHO, as the lack of independency in justice and persecution branch go, it is highly doubtful that the prosecutors were not a tool for political use other than purely anti-bribery purposes.

[1] http://english.enorth.com.cn/system/2007/07/09/001760265.sht...

daniel-cussen• 14 years ago

There is no link between wages and corruption - there are many, many other factors that make up corruption.

Yes there is. If public servants are grossly underpaid, or vulnerable, they'll turn to corruption for income or safety (think of a policeman looking the other way in countries like Argentina). In Argentina, for instance, policemen were very poorly paid after the 2001 crash, and at the same time, an incredible wave of crime washed over the country, much like in Greece today. Police started getting paid much less, for a much more dangerous job (the murder rate for policeman rose dramatically). So they simply demanded bribes (long list of ways how to do this) and stayed out of trouble when they could. To compensate for the danger imposed by their job, they started looking the other way more.

viviantan2• 14 years ago

It's rare to see successive and extensive news coverage of corruption among major Chinese Communist Party leaders, and there's been 3 this year already: Bo Xilai in March, Xi Jinping in June, and now Wen Jiabao.

This year's unusual because 7 major members of the Politburo Standing Committee are stepping down and their replacements will be selected at the 18th National Congress of the Communist Party of China. This is the reason the dueling political factions are aggressively ousting eachother, or else stories about corruption would never have made it to major media outlets.

The Congress was originally scheduled to commence November 4th (or sometime just before the US presidential elections) but was suddenly changed to November 8th. I don't think there's been official commentary on the last minute date change, but it's pretty obvious the Chinese party leaders want to know who's going to be the next US president first so they could "adjust" the makeup of of the Chinese political body accordingly.

I'm impressed by Bloomberg's and NYT's coverage. There's so much stuff that gets suppressed, even when tidbits of stories go viral on Weibo, the entire story almost never makes it over to this side of the Atlantic in one piece.

viviantan2• 14 years ago

By Atlantic I meant Pacific, because I'm obviously a geography genius :)

frannk• 14 years ago

they have blocked NYT, making a confirmation in Chinese government way. In china , smart people call Wen a "king of actors".He appears in "CCTV news" everyday as a hard work leader , but we do not believe him .He is so like acting, nearly forgeting he is an asshole. But mass chinses people think, he is a good leader, who will never steal money using his power(because he is a so good an actor). I dont know how can we do as a chinese civalian . I do not believe the next government either.

TechNewb• 14 years ago

If only we could get this detailed reporting on Romney and Obama from the Times. :)

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