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China steps up efforts to keep officials from leaving country

China prosecutors say that 18,487 officials have been caught since 2000 while allegedly trying to flee overseas with ill-gotten gains, according to one report.

June 06, 2012|By Barbara Demick and David Pierson, Los Angeles Times
  • Zhang Shuguang, a Chinese Railway Ministry official, bought this $840,000 house in the city of Walnut in Los Angeles County while reportedly earning just $365 a month. Investigators suspect that he intended to skip out of China.
Zhang Shuguang, a Chinese Railway Ministry official, bought this $840,000… (Irfan Khan, Los Angeles…)

BEIJING — When anticorruption investigators started probingChina's high-speed rail program, they discovered that one of the Railway Ministry's chief engineers owned a five-bedroom, five-bath Mediterranean-style house in Los Angeles County.

Zhang Shuguang had bought the $840,000 house in the city of Walnut nine years earlier when he was reportedly earning just $365 a month. His wife and daughter had moved there, which led investigators to suspect that he intended to skip out of China to join them.

That made Zhang, 56, what the Chinese call a luo guan, or "naked official." The term refers to an official who has sent his family and money abroad and is poised to make a getaway himself. The communist government has been trying to put officials on a shorter leash since 2007, amid a flurry of scandals in which public funds were squandered on mistresses, luxury villas, cars and gambling.

The issue of official corruption has risen to the top of the government agenda this year with the ouster in March of Politburo member and Chongqing party secretary Bo Xilai. Among the myriad accusations swirling around Bo is that his wife moved the couple's money out of the country through trading companies set up abroad with an Englishman, Neil Heywood, whom she is accused of killing. In addition, the couple's son, Bo Guagua, was sent overseas to school, first to Harrow, then Oxford and more recently Harvard's Kennedy School, where he graduated last month.

The practice has become so endemic inChina'sofficialdom that theCommunist Party'stop disciplinary body is enacting an "anti-flight" program to keep people in place. The Central Commission for Discipline Inspection last month reviewed ways to keep people from moving abroad, including confiscating passports and registering family members living overseas as a way to monitor who might be kept out of high positions.

"We should set up a more tight-knit and effective system to prevent lawless state functionaries from fleeing overseas," said Gan Yisheng, the commission's deputy secretary, according to the agency's website.

Chinese prosecutors say 18,487 officials, including executives from state-owned companies, have been caught during the last 12 years while allegedly trying to flee overseas with ill-gotten gains, according to this week's issue of China Economic Weekly. The magazine described the typical "naked official" as a man in his 50s who was approaching retirement and had accumulated at least $13 million.

ThePeople's Bankof China last year inadvertently made public a confidential study stating that 800 billion Chinese yuan ($126 billion at today's exchange rate) had been siphoned overseas by thousands of officials in the government and state-owned companies from the mid-1990s until 2008.

Another report by the Washington-based watchdog Global Financial Integrity, which tracked illicit outflow of money by all people, not just officials, found China led the world with $2.7 trillion (five times as much as runner-up Mexico) illegally taken out of the country from 2000 to 2009.

The top destinations for stashing cash were the United States, Europe, Australia, Canada, Singapore, Malaysia and Thailand. Within the United States, Los Angeles topped the list.

"L.A. is a haven for these kinds of people. They send their wives and kids overseas and they continue to work in China so they can funnel the money here.... These guys want to get their money out of China and keep their identities secret," said Joaquin Lim, a longtime Walnut councilman who met Zhang a few years ago at a friend's home.

Zhang was one of the senior officials developingChina'sbullet trains, a program riddled with cost overruns and allegations of kickbacks. He was fired in March 2011 for what the state press said were "severe violations of discipline," which is often shorthand for corruption, shortly after the sacking of his boss, Railways Minister Liu Zhijun.

The state press announced last week that Liu had been expelled from the Communist Party for taking "huge bribes," but they have not reported yet what has happened to Zhang.

The fact that people send their spouses and children abroad does not necessarily mean they are corrupt — many Chinese prefer a foreign education, for example — but when an entire family leaves, authorities presume that an official does not envision a future in China.

"The big problem is that these officials are losing faith in the Chinese central government. They are just taking care of their family and don't care about China," said He Jiahong, a corruption expert at People's University in Beijing.

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