Four Ways Corrupt Officials Flee China

By Xu Yiyang
Xu Yiyang
Xu Yiyang
October 16, 2012 Updated: September 29, 2015

A Hong Kong magazine has published new details of how corrupt officials in communist China flee the country, taken their vast, ill-gotten wealth and stowing it overseas with them.

To pave the road, many first send their children abroad either for business or education—then, after the children have obtained permanent residency, usually through an investment program, the officials begin transferring their assets. Finally, they find a pretext to abscond.

The October edition of Face Magazine describes four of the main pretexts for escape that corrupt officials use.

The first is to flee while on official visits—those are plentiful. Gao Shanzeng, the former president of a China Bank in the northern city of Harbin (there are thousands of such branch offices across the country), traveled to Canada 18 times on “official business.” He was actually preparing his final exit. Government officials like Lu Wanli, former head of Guizhou Provincial Transportation Department, and Jiang Jifang, former head of the Henan Tobacco Bureau, fled to foreign countries while on supposed official duties.

Another way is to join a tourist group, and then make a transfer once they have left China and enter another country illegally. As trade and tourism between China and Southeast Asia nations increases, countries in the region are feasible destinations for mid-level corrupt officials.

Yet another method involves using false identification to apply for a passport. Former vice director of the Zhejiang Province Building and Construction Bureau, and former vice mayor of Wenzhou City, Yang Xiuzhu, left China with her family using passports obtained with fake identification documents.

Finally, Chinese officials can use companies already abroad that provide a full complement of services for the fleeing cadre. The fees are steep, but they can assist in the purchase of houses and mansions, launder money, and understand the legal and tax loopholes of the locales they operate in.

About 1.18 million government officials and their relatives set up permanent residence in foreign countries between 1995 and 2005, according to remarks made by anti-corruption expert and professor of Central Party School, Lin Zhe, in 2010.

The Communist Party recognizes corruption as a fatal threat to its rule, but the incentives created by the one-party system, and the lack of an independent judiciary, have so far made it impossible for the Party to prevent.

That ambivalence was on display in June 2011, when the Chinese Central Bank accidentally published a report saying that since the mid-1990s Chinese officials have taken an estimated total of 800 billion yuan out of the country. These included cadres in the administration, national security agencies, judicial system, and state-owned enterprises. The report was quickly pulled from the Central Bank website.

At the end of 2011, serious capital outflow from China was being reported, as wealthy Chinese and officials fled the country.

The Chinese Communist Party is currently in the middle of a leadership transition, with the 18th Congress convening in November. The political turmoil triggered by Bo Xilai’s fall has caused many to feel a sense of crisis. Capital flight has continued apace.

Read the original Chinese article.

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