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Fallen Chinese official and wife rose in politics and business

As Bo Xilai moved up in China's Communist Party, his wife, Gu Kailai, and her family prospered, often in dealings with the government.

April 24, 2012|By Barbara Demick, Los Angeles Times
  • Gu Kailai, left, and Bo Xilai in 2007. Until recently, the two were a power couple in China.
Gu Kailai, left, and Bo Xilai in 2007. Until recently, the two were a power… (China Foto Press )

BEIJING — The intersection of money and politics in China has rarely been so glaring as in the case of ousted Communist Party official Bo Xilai and his wife.

While her husband was mayor of the booming northern port of Dalian in the 1990s, Gu Kailai represented foreign clients negotiating with the city. But she also represented the city in a lawsuit against a U.S. company, and then wrote a book about her experiences that included photographs of her with U.S. Sen. Edward M. Kennedy and Dianne Feinstein, Henry and Nancy Kissinger, and others.

Local businesses courted the powerful couple. The head of the city's largest conglomerate flew her and her son to London to visit the exclusive Harrow boarding school and later paid the tuition, according to someone who accompanied them.

Meanwhile, Gu's oldest sister started a company listed in official documents as the exclusive printer for the National People's Congress and several government ministries. It also won approval to print at least some of the new social security cards that will be issued to most of China's 1.3 billion people. Other family members are on the boards of related companies.

Gu, 53, is now being held on suspicion of poisoning British businessman Neil Heywood, who allegedly helped the family smuggle money out of China to invest overseas. Her husband, whose ambition and Maoist revival irritated the senior leadership, has been sacked from his positions as Communist Party secretary of Chongqing and as a member of the 25-member ruling Politburo.

Not until a party official falls from favor does his personal wealth come under scrutiny, so the case has exposed some ordinary truths about how the political elite and their children have used their positions to make extraordinary fortunes.

"There were many others who were doing the same things as Bo Xilai and his wife, but they did it earlier and they were smarter," said Jiang Weiping, an investigative journalist from Dalian who fled China after being imprisoned for publishing state secrets.

Bo and Gu started amassing money and power in Dalian, where Bo was posted until 2000. After serving as China's minister of commerce, he moved to Chongqing in 2007, where his campaign to bring back revolutionary songs and crack down on organized crime drew wide attention. By that time, Gu appeared to be devoting much of her attention to building a future for their son, Bo Guagua.

It is unclear whether any of the family's tangled financial dealings along the way were illegal. Conflicts of interests that would make regulators blanch in other countries are commonplace in China. Communist Party ethics rules don't rise to the level of law, and enforcement is weak.

"Using power to make money is as common as water running down a river in China. There is no precise formula for how it is done, but it is facilitated immensely by an opaque policy process and regulatory framework," said Scott Kennedy, director of the Research Center for Chinese Politics and Business at Indiana University.

The murder investigation against Gu is one thing, said Victor Shih, an expert on the Chinese political economy at Northwestern University. "But if the investigation focuses on influence peddling, every politician in China is guilty of that," he said. "You have princelings running all kinds of consultancies in China."

In the parlance of Chinese politics, princelings are the offspring of the Communist Party leadership, a sort of red aristocracy. Bo's father, Bo Yibo, was one of the party's founders. Gu is the youngest daughter of Gu Jingsheng, a prominent general.

The couple met in the 1980s. Gu was the sister-in-law of Bo's first wife, an army surgeon. In the midst of Bo's messy divorce, Gu followed him to Dalian, where he rose to become mayor in 1993.

Gu was as charismatic and ambitious as her husband. Fresh out of the prestigious Peking University law school, she opened a practice that she described in a brochure as the "first independent law office founded by a woman in China." She called it Horus L. Kai, a name she often used for herself, the first part borrowed from the Egyptian falcon deity representing war, sun and hunting.

Although people today are calling her the "Lady Macbeth of China," in the 1990s her friends joked that she would be the country's Jackie Kennedy.

"Gu was very smart; she was gracious, polite, unassuming. Quite frankly, I'm kind of astounded by all these allegations about her because it doesn't sound like the person I knew back then," said Robert Schenkein, a public relations consultant who worked on the U.S. legal case.

Although Dalian's population of about 5.5 million was modest for a Chinese city, it was booming. Gu's firm represented foreign clients who wanted to get a piece of the action.

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