Corruption Soars Under Jiang (Part I)
Table of Contents- Jiang Mianheng, Elder Son Jiang Miankang, Younger Son Jiang Zhicheng, Grandson Other Jiang Family Members
Section 1: Perfect Storm for Massive Corruption
A Failed Ideology
Corruption is the norm among many nation states and communist China is a leading example. Under Jiang Zemin’s reign, corruption increased in its reach and frequency.The collapse of the former Soviet Union and eastern European countries showed the world that communism as a political system was dead. About the same time that the communist satellite countries were casting off the ideological chains of communism, the 1989 Tiananmen Square massacre occurred. While the Chinese regime managed to survive, the hopes for freedom and an end to corruption were dashed by the automatic guns and tanks crushing the bodies of the young protesters. It dealt a fatal blow to whatever hope the Chinese people still held for their communist party. As the idealism quickly faded after the Tiananmen massacre, Jiang Zemin, as the newly installed party secretary, needed to rebuild the new regime on a different foundation. Officials’ morality fell to new lows. His cronies became wholly corrupted, committing crimes and making illicit gains without any restraint while Jiang’s family amassed prodigious wealth. By looking away, Jiang was able to buy the loyalty of the 80 million party members.
Abuse of Power
Jiang Zemin is a very different leader from his predecessors, Mao and Deng. Mao ruled China for more than a quarter century. His authority was cemented during the early years when he led the revolutionaries to take over the country. Deng won respect for his experience of long years in the military and his rise after pulling through the chaotic times under Mao.Jiang had nothing to boast about on his resume and many of his contemporaries were more seasoned and accomplished communist cadres. He was handpicked to take the top position simply because he chose to side with Deng during the 1989 student crackdown. Understandably, he had a weak power base in his first years. To build up his clique of supporters, criminal activity was allowed in exchange for loyalty.
Li Changchun, Jia Qinglin, Chen Liangyu, Zeng Qinghong, Zhou Yongkang, and all the others in Jiang’s faction made a fortune from smuggling, land sales, and other means that government control enabled. Officials of all ranks, high and low, swiftly lined up under Jiang Zemin’s banner.
Jiang Zemin, who had little in the way of achievements in the Party, the military, or the country, miraculously established his power base within a few years, by catering to human greed and self-interest. A transitional figure thereby acquired a firm foothold, and held sway over the Chinese political landscape for twenty years.
Normal Market Economy Impeded
The China under Jiang was also a China of high economic growth. The Chinese Communist Party needed to grow economically in order to buy support from the Chinese masses and loyalty from corrupt officials.Although a high growth economy provides a strong material foundation for corruption, the latter ensures that it will be impossible for a sound market economy to thrive.
First, the economy is stuck with a model that is heavily government-driven and encumbers private entrepreneurship. In China, land is owned by the state. Key industries such as banking, machinery, manufacturing, telecommunications, energy and natural resources, and transportation are dominated by state enterprises. The most visible economic activities are large-scale infrastructure building and public projects. This type of an economy provides a multitude of opportunities for bribery and corruption, as governments at different levels are deeply involved. It is acutely resistant to a transition toward a real market economy that features protection of personal property, emphasis on efficiency, innovation, competition, and entrepreneurial risk-taking.
Second, the economy creates a very unequal society. In recent years, people have been shocked over and over again by the amount of money embezzled by the “tigers” amid the ongoing anti-corruption campaigns. Although the nation is better off in terms of absolute level of income, the ever growing wealth gap has made hundreds of millions fall behind. Today’s China has similar number of billionaire families as the U.S. and Japan, but also has most hard-working people earning a few dollars a day. Further, the attitude of offspring of the well-off is not healthy. As securing a government position is a much quicker and easier way than hard work to bring about personal advances, either financially or socio-politically, the system incentivizes most college graduates to chase after government positions.
Thievery and Cronyism Abound
Corruption was the defining characteristic during the Jiang era.By its nature contagious, corruption typically engulfs whole organizations or families. Take the case of Zhou Yongkang, who was the head of several entities: China National Petroleum Corporation, the CCP in Sichuan Province, and the Communist Party’s Political and Legal Committee. Together these involved a large number of his henchmen in the oil industry, Sichuan provincial government, and legal and judicial authorities. Additionally, his son, brothers, nephews, and relatives by marriage were all drawn in.
In 2012, the corruption investigation of Luo Yinguo, the head of the CCP in Maoming, Guangdong Province, was made public. The case involved 303 officials at the city and lower levels. Luo was arrested under the charge of accepting bribes using his official position, as well as possessing a large quantity of unexplained assets.
Section 2: First Family Sets Moral Tone
China Affairs, an overseas Chinese website, asserts that Jiang Zemin has a secret Swiss bank account with at least U.S. $350 million. In Bali, Indonesia, Jiang purchased a mansion as early as 1990, which had a market value of U.S. $10 million. The purchase was arranged by former Chinese Foreign Minister Tang Jiaxuan.[2]Jiang Mianheng, Elder Son
In the 1980s, Jiang Zemin sent his eldest son Jiang Mianheng to study in the United States. In 1992, when Jiang became the head of the party, the government, and the military, he called back his son. In January 1993, Jiang Mianheng started work in the Shanghai Metallurgy Research Institute, and rose to the director’s position within four short years. As Jiang Zemin’s power further consolidated, Jiang Mianheng began to reach out to the business world.In 1994, Jiang Mianheng paid a nominal amount to purchase Shanghai United Investment Company (SUIC), a government-owned company worth 100 million yuan, and launched his career as “telecom king.” Although the deputy director of Shanghai Economic Commission had put in a huge effort to plan and set up the SUIC, three months after SUIC was put into operation, he was suddenly sacked, and Jiang Mianheng was helicoptered in as chairman and general manager. At the time, nobody at SUIC knew who Jiang Mianheng was.
Although on the surface SUIC is a state-owned enterprise, it might be better described as Jiang Mianheng’s personal property. Because he was the son of Jiang Zemin, his business always made money. At that time, Jiang Mianheng was visited often by Chinese and overseas business tycoons. Within a few years, Jiang Mianheng established his telecom empire. In 2001, SUIC had more than ten companies under its control, including Shanghai Information Network, Shanghai Cable Network, and China Netcom. Business coverage included cable, electronic publishing, CD production, and e-commerce.
Jiang Mianheng was famous in Shanghai’s business circles for sitting on the boards of numerous companies across several important economic sectors of the city. He was even involved in Shanghai’s tunnel and metro systems. One anecdote has it that when one businessman was taking a Shanghai Airlines flight, he accidentally discovered from a picture of the airline’s board members in the travel magazine that Jiang was one of them. Jiang Mianheng was known as the telecom czar of China and the Big Brother of Shanghai.
Before Jiang Zemin was to resign as the chair of the Central Military Commission, Huang Ju, Jiang’s confidant and then head of the Chinese Communist Party’s committee in Shanghai, launched construction projects to build two residences for Jiang in the city. When Jiang Mianheng decided to develop its telecom empire, using Shanghai as his base, Huang gave him the green light all the way from the application for approval to the bank loans.
At the 2001 Fortune Global Forum in Hong Kong, Jiang Zemin introduced Jiang Mianheng to international celebrities and multinational tycoons so as to enlarge the network of his son’s empire. In July 2001, immediately after the announcement of Beijing’s success in bidding for the 2008 Olympic Games, Jiang Mianheng inked large orders with those firms. Jiang Mianheng became the highest representative of the collusion between business and government.
China Telecom was the state monopoly that provided the nation’s landline and internet services. In 2002, Jiang Zemin gave orders to split China Telecom into two: China Netcom and a newer and smaller China Telecom. China Netcom, grabbing away all of China Telecom’s assets and services in ten northern provinces, was under the de facto control of Jiang Mianheng.
In the year 2000, media reported a new joint venture: Shanghai Hongli Semiconductor Manufacturing Co., headed by Jiang Mianheng and Winston Wong. Wong was the son of Taiwan’s business tycoon Wang Yung-ching. (He uses a different English spelling of his father’s name, a common practice.) Shanghai Hongli was planned to be built in Shanghai’s Pudong district, with a total investment of U.S. $6.4 billion. Three years later, Shanghai Hongli started operation.
At the time, Winston Wong’s personal wealth stemmed from his father, while he actually did not have any of his own. Wong told the media that his portion of the investment came not from him, but from Jiang Mianheng, who was the real boss. Of course, Jiang Mianheng’s money was not from himself either, but from China’s public purse. Wong was let go without a penny because of his extramarital affair that disappointed his father.
According to Hong Kong media, an investigation of land appropriation by Zhou Zhengyi implicated both sons of Jiang Zemin. Jiang Mianheng reportedly snatched a piece of land in the Putuo district of Shanghai in a similar fashion as Zhou seized the land in the neighboring Jing’an district. Like Zhou’s land grab, Jiang Mianheng’s land theft was approved by the local government.
Jiang Miankang, Younger Son
The Siemens bribery scandal was first exposed in 2006. Between the mid-1990s and 2007, a number of subsidiaries of Siemens were suspected of paying rebates and other forms of bribes to win project bids. According to Germany’s Wirtschaftswoche magazine, about 90 percent of Siemens business in China was brought in through a third party, meaning some outsider from the government or a powerful political family was influential in the deal. About half of Siemens’ operations in China involved bribery.Investigators found that Jiang Miankang, the younger son of Jiang Zemin, who worked for Siemens, was part of the scandal. Siemens was able to win the bid for Shanghai’s subway train thanks to Jiang Miankang. After that deal closed, over 90 percent of Siemens’ China business was handled via Jiang Miankang acting as the middle man. However, Jiang never mentioned his Siemens work experience on his resume.
At that time, pressed by the American and German courts, Siemens gave the Chinese government a name list of who received the bribes. As the names on the list were too sensitive, Li Changchun, member of the Standing Committee of the Politiburo of the CCP, personally ordered for investigators not to disclose the list.
Jiang Miankang was originally a radio technician, but before his retirement, Jiang Zemin placed him in the military. With little in the way of contributions or outstanding achievements, Jiang Miankang was promoted all the way to the rank of major general and a bureau chief under the PLA’s General Political Department. Xu Caihou, then vice-chairman of the Central Military Commission, was Jiang Zemin’s buddy in the military. It was Xu who gave the green light to Jiang Miankang’s promotions all the way up. Xu became the highest-ranked officer in the history of the People’s Liberation Army to be investigated for corruption. After Xu Caihou was dismissed, a number of lieutenant generals and major generals came under investigation.
Amid the corruption case of the 2006 Shanghai pension scandal, former Shanghai party chief Chen Liangyu, together with twenty-some officials, was implicated and removed from office. In August 2011, WikiLeaks disclosed a December 2006 cable from the U.S. Consulate General in Shanghai to Washington, revealing that sons and daughters of several top leaders of the Chinese Communist Party were also involved, including Jiang Zemin’s elder son Jiang Mianheng and younger son Jiang Miankang.
At that time, Hong Kong media claimed that Jiang Zemin’s elder son Jiang Mianheng was involved in the Zhou Zhengyi case. Shanghai civil rights lawyer Zheng Enchong said that Jiang Mangkang was also in the game. Twenty-some news reports and complaints, including information provided by a few Shanghai city officials, mentioned Jiang Zemin’s two sons.
According to attorney Zheng, the Shanghai government worked out an arrangement with Zhou that enabled him to lease eight pieces of land in the commercial Jing’an district of Shanghai without reimbursement. As a matter of fact, Jiang Mianheng got one piece under the name of the Shanghai United Investment Company, and Jiang Miankang got another piece under the name of the Shanghai Municipal Government Construction Committee.
Jiang Zhicheng, Grandson
Jiang Zhicheng, a.k.a Alvin Jiang, is the son of Jiang Mianheng and grandson of Jiang Zemin. A Harvard graduate, Alvin Jiang once worked at Goldman Sachs, and later sat on the board of an investment firm, Boyu Capital. Boyu got the attention of industry and media by making hundreds of millions of dollars by investing in Cinda International Holdings Limited and Sunrise Duty Free shops at the Shanghai and Beijing airports. Rumors that Alvin Jiang’s commercial successes made use of his family connections quickly spread.In September 2010 Boyu Capital was registered in Hong Kong, with Alvin Jiang serving as the founding director of the board. Later the company changed its name to Boyu Investment Advisory Co., Ltd. (investors included Temasek, a Singapore sovereign wealth fund, an investment fund of Hong Kong business magnate Li Ka-shing). Within one year and half after Boyu was established, it successfully won two large business projects, including the IPO of Alibaba and Cinda International Holdings Limited. No other Chinese investment firm could have accomplished two supersize business deals within such a short period of time.
In early 2011, Alvin Jiang’s Boyu Capital acquired Sunrise Duty Free shops in the Shanghai and Beijing International Airport authorities, which raised some eyebrows. Sunrise Duty Free is commonly viewed as inappropriate even for a State-run business. Boyu was simply phenomenal in terms of its political connections.
Other Jiang Family Members
Jiang Shangqing, Jiang Zemin’s uncle, has two daughters: Jiang Zehui and Jiang Zeling. Jiang Zemin promoted Jiang Zehui all the way to the rank of ministerial official. Jiang Zehui was originally a teacher at Anhui Agricultural University. As Jiang Zemin ascended to the top position, he gave Jiang Zehui a remarkable string of promotions, first as the dean of the School of Forestry at Anhui Agricultural University, followed by president of the Agricultural University, and then finally head of the Chinese Academy of Forestry.Wu Zhiming belonged to Jiang Zemin’s distant family on his mother’s side. Before Jiang became a prominent political figure, Wu had been working as a railway switchman for eighteen years. When Jiang became the head of the Party committee in Shanghai, Wu joined the Communist Party. Later, Wu rose spectacularly through the ranks: vice-ministerial position, member of the Party committee of Shanghai, Party chief and head of the Shanghai Police Station, and finally, the First Commissar of Shanghai’s Armed Police Force.
Tai Zhan is the son of Jiang Zeling, the daughter of Jiang Zemin’s uncle who became his adopted father. (In other words, she became Jiang Zemin’s sister and Tai Zhan became his nephew.) Tai handled things badly when speculating on real estate, and ran up a debt of 11.5 million yuan (U.S. $1.7 million). Tai was sued by the creditors. The court even found that Tai forged an official seal on the property rights certificate. But the case came under huge pressure to dismiss the claims simply because Tai was Jiang Zemin’s nephew. The court had to announce the suspension of the investigation and trial of the case in March 2000, due to pressure from the local party secretary and the head of the court. In the end, Tai Zhan did not receive any penalty and his creditors did not get anything.
For more than a decade, Tai Zhan has been, in his capacity as the nephew of Jiang Zemin (based on the latter’s adopted son relationship to his uncle), putting his hands into real estate, stock markets, and investments in entertainment. Tai once took the positions of general manager and board member of various entertainment companies. Tai also took advantage of his identity as nephew to Jiang Zemin to borrow millions of dollars from Norinco, a Chinese manufacturer of military firearms and ammunition, to engage in stock trades. On Feb. 6, 2012, Chongqing Deputy Mayor Wang Lijun defected to the U.S. consulate and caused a political earthquake. Tai was appointed as Deputy Secretary-General of the Chongqing Municipal Government, a sign that Jiang Zemin’s influence was still present there.
In January 2003, Jiang Zemin planted another nephew, Xia Deren, in Liaoning province. Xia sat on the Party’s Standing Committee of Liaoning Province, and served as deputy Party chief of Dalian and mayor of Dalian. Since then, the city of Dalian has become Jiang Zemin’s own backyard. Bo Xilai and Xia Deren mercilessly executed Jiang Zemin’s policy of persecution of Falun Gong practitioners, making Dalian one of the worst areas of the persecution. Xia Deren was sued under the charges of torture and crimes against humanity during his visit to the United States in 2002. In 2004, the United States District Court, Northern District of California, found Xia guilty of the charges.
Section 3: Bribery, Cronyism, and Embezzlement
Yuanhua Scandal
In November 2000, major Western media broke the story of a multibillion-dollar smuggling scandal in the port city of Xiamen in Fujian province. More than a dozen government officials received death sentences, and scores more were convicted of corruption, smuggling, and other charges. Entrepreneur Lai Changxing allegedly built a smuggling empire that brought in more than $6 billion worth of cars, oil, electronics, cigarettes, and other luxury goods since 1996. The smuggling by Lai’s Yuanhua Group, the biggest such case in 50 years of communist rule, cost China billions of dollars in customs taxes.The investigation started in March 1999, when Premier Zhu Rongji received an anonymous tip-off of the scandal. When Zhu vowed to investigate the case all the way down to the lowest rung of society regardless of whomever was involved, Jiang Zemin also expressed that he would show no mercy to whomever was involved. However, soon afterwards, when people around Jiang, such as Jia Tingan and Jia Qinglin were implicated, Jiang’s attitude immediately changed.
One year later, in 2000, a special team that was set up to handle the case, reportedly had accomplished a thorough investigation. During the process, more than 600 people were probed and about 300 received criminal charges. In 2001, Chinese courts issued sentences to 269 defendants in 167 cases involved in the Yuanhua scandal. In July 2001, even before the case was closed, several people were sentenced to death and executed.
Such a cursory investigation showed that Jiang Zemin wished to end the investigation as soon as possible so that his people wouldn’t be found connected with the scandal.
For a case of this size, executing accomplices even before the whole case was fully closed indicates a cover-up of the evidence. The Yuanhua scandal remains an outstanding case because it was hurriedly brought to completion. The reason for doing this was that the case involved Jiang Zemin’s own people. The executions were used by Jiang as his achievements to brag about to the media.
Jia Tingan was Jiang Zemin’s confidant. When Jiang was at the Ministry of Electronics Industry between 1982 and 1985, Jia was his secretary. Jia accompanied Jiang Zemin to Shanghai in 1985 and to Beijing in 1989. Jia was Jiang’s most important secretary and adviser. When Jiang was the General Secretary of the CCP, Jia was the chief of staff of Jiang Zemin’s office between 1989 and 2002. In 2004, Jiang appointed Jia to be the chief of staff of the CCP’s Central Military Commission, and proposed to promote Jia from the rank of colonel to the rank of lieutenant general. Although the proposal was sidelined and blocked by military officials, it is revealing of the relationship between Jiang and Jia.
Jia Qinglin was another Jiang Zemin confidant involved in the Yuanhua scandal.
The Yuanhua scandal involved 70 billion yuan and implicated over 250 local, provincial, and top level officials. The charges? Accepting millions of dollars of bribes to facilitate the smuggling of products such as cars, fuel, raw materials, heavy machinery, and luxury goods to China via the port of Xiamen between 1994 and 1999. From 1993 to 1996, Jia Qinglin was the head of the party and the National People’s Congress Standing Committee in Fujian province. This was the real reason that Jiang Zemin did not want the Yuanhua case to be investigated too thoroughly.
During their early years, both Jia and Jiang worked in the Ministry of First Machinery, and Jiang was Jia’s superior. It was due to this work experience that Jia fell into favor with Jiang. Jia became the deputy secretary of the Party committee in Fujian Province in 1985, and was promoted to the head of the Fujian Party committee in the end of 1993. In 1996, Jiang Zemin successfully defeated his political enemy Chen Xitong, and replaced Chen with Jia as the mayor of Beijing. Jia later took the position of head of the Beijing Party committee and member of the Politburo.
In 2003, the National Audit Office (NAO) under the State Council broke a major economic scandal during Jia Qinglin’s tenure in Fujian. An audit report submitted by the NAO in January 2003 revealed that, in 1993, the Fujian Provincial Party Committee had directed that two billion yuan (U.S. $340 million) be used to build Fuzhou Changle International Airport. By the beginning of 1997, the project had already overspent by 1.2 billion yuan (U.S. $140 million). Jia Qinglin was found to have misappropriated and embezzled funds for the airport construction during his term of governor of Fujian Province and Provincial Party Committee secretary, during his tenure of 1993-1996.
The report verified that the Fujian Provincial Party Committee and the provincial government pilfered 1.3 billion yuan (U.S. $150 million), most of which was used for the benefit of high government officials. From 1998, when the airport construction was completed, to 2002, the cumulative loss in five years of operation reached 1.55 billion yuan (U.S. $190 million). The reason is that the size of construction went far beyond of its capacity, with its current passenger and cargo traffic volume reaching only 30 percent of the designed capacity. The audit report also disclosed that during the construction, Jia Qinglin and He Guoqiang, Jia’s deputy at the time, misappropriated 1.2 billion yuan of special funds dedicated for land use to pay for the over-budget expenditures of the airport construction. The report also determined that part of the embezzled funds was used to build or purchase 570 luxury villas located in Fuzhou, Xiamen, Zhuhai, Dalian, Qingdao, Wuxi, Hangzhou, and Beijing, which 230 avaricious senior officials gobbled up for themselves.
When the audit report was submitted to Jiang Zemin, Jiang gave only a cursory instructions and said that the issues, such as with Changle Airport, were not unusual, and that the problem lay with the management. The report was then returned to the State Council. Jiang’s simple instructions concerning the Changle Airport were typical of how he handled other embezzlement situations: say the matter is a commonplace occurrence and simply a management issue, and return the findings back to the State Council.
In March 2003, approaching the Tenth National People’s Congress and Chinese People’s Political Consultative Conference, under pressure resulting from the Changle Airport scandal, Jia Qinglin intended to resign from the posts of member of Politburo and of the Politburo Standing Committee. However, Jiang wouldn’t allow it. Jiang told Jia, “If you step down, I will be finished.” Clearly Jiang used Jia and Jia protected Jiang.
Under Jiang, CPLAC Becomes Powerful Party Organ
The Central Political and Legal Affairs Commission (CPLAC) is an organization under the Chinese Communist Party’s Central Committee in charge of legal affairs. Before 1998, the Commission was not a prominent Party organ and did not have much real power. All legal-related functions were carried out by the police force, the procuratorate, and the courts. In 1997, Ren Jianxin, then China’s chief justice, held a concurrent post as the chair of the Commission.In September 1997, Luo Gan was promoted into the Politburo and Secretariat of the Central Committee. Next year, Luo succeeded Ren Jianxin to take the position of the chair of CPLAC. It began during Luo’s tenure that the power of CPLAC swelled. From 1997 to 2002, Luo’s first term, Jiang Zemin eliminated the positions of deputy chairs, so that the head of Supreme Court, Supreme Procuratorate, Ministry of Justice, and Ministry of State Security were all members of the CPLAC and subordinates of Luo. CPLAC oversaw all legal enforcement authorities, including the police force.
Because of Luo’s active role in the persecution of Falun Gong, Jiang Zemin, in 2002, promoted him into the Politburo Standing Committee. Ever since then, the whole CPLAC was elevated to a top-level Party organ, side by side with the Secretariat of the Central Committee.
In 2007, Zhou Yongkang, then Minister of Public Security, took over the position from Luo Gan and became the chair of CPLAC. Zhou was also the head of the People’s Armed Police. During Zhou’s tenure, the power of the CPLAC ascended to its peak.
As a matter of fact, it was because of Jiang Zemin that the CPLAC could become a prominent and powerful Party organ. Having a tight grip over the legal and judiciary organizations guaranteed that corruption of his family and followers could go on with minimum scrutiny.
