With Investigation of Chinese Investment Company, Former Party Leader’s Family Comes Under Pressure

By Larry Ong, Epoch Times
November 22, 2015 7:19 pm Last Updated: November 24, 2015 8:34 pm

The internal investigatory branch of the Chinese Communist Party in Shanghai announced on Nov. 20 that it would be embarking on an audit and investigation of an investment company that has extensive ties to the son of the former Party leader Jiang Zemin, signalling the first time that a member of the immediate family of Jiang has been implicated in the anti-corruption campaign being led by Party leader Xi Jinping.

The investigation of Shanghai Alliance Investment Ltd. (SAIL)—part of a series of deepening investigations into major, officially linked businesses and government departments in Shanghai announced at the same time—is set against a backdrop of multifaceted pressure from Party authorities on the extended factional network associated with Jiang Zemin.

The full implications of the investigation are not yet clear, but the announcement is significant because Jiang Zemin, Party leader from 1989 to 2002, has been the ultimate political rival of current Party chief, Xi Jinping, and many of the top official unseated in the ongoing purge shared extensive ties to Jiang.

The investigation of SAIL is the latest step in a series of moves made by anti-corruption investigators into Jiang Mianheng’s, and by extension his father’s, political power.

When he stepped down from power over a decade ago, he installed key cronies throughout the Party and government apparatus—many of the officials that Xi is now weeding out.

An investigation of SAIL could indicate that Xi is moving closer to actually targeting Jiang himself, if the script that has become familiar is followed. On almost every occasion that a major figure has been removed from power, their family members and former businesses and associates are first investigated and punished.

In purging Zhou Yongkang, the former security czar, from office, for example, anti-corruption investigators first went after his son, Zhou Bin, exposing the latter’s business misdeeds in the press. Peripheral figures to the Zhou network were also exposed and punished, including the wealthy gangster-entrepreneur Liu Han, who was executed on Feb. 5 this year. A similar procedure was adhered to in the purge of military “tigers,” notably General Xu Caihou.

Smooth SAILing

Founded in September 1994, SAIL was quickly flush with cash—it seemed through Jiang Mianheng‘s close connections with the cream of the Party elite, given that his father was the most powerful man in China.

The company initially made investments into Shanghai’s telecommunications infrastructure and tech firms, and has engaged in other high profile projects over the years—massive state construction projects, entertainment companies, and ventures with Hollywood studio Dreamworks, Microsoft, and Nokia.

But SAIL remained a shady operation since its inception—it held no opening ceremony and never released business reports. It does not even appear to have a website. While it was ostensibly the investment arm of Shanghai city government, it was widely understood in China at the time to function as something like Jiang Mianheng’s personal piggy bank.

In 2014, this freewheeling period came to an end, with the firm integrated into the central government’s State-Owned Assets Supervision and Administration Commission (SASAC).

Beijing-based commentator Hua Po told the Epoch Times in September 2014 that the move—taking oversight of SAIL from the Shanghai city government to SASAC based in Beijing—was “possibly an attempt to whitewash Jiang Mianheng’s involvement.”

SAIL and Jiang Mianheng have an unmistakable connection, though it is unclear what his current involvement in the investment company is. A profile of the firm by Bloomberg, current of this year, still lists Jiang as chairman and chief executive officer.

Inching Closer

The investigation of SAIL is just the latest step in a series of moves made by anti-corruption investigators into Jiang Mianheng’s, and by extension his father’s, political power.

There have been extensive investigations, arrests, and purges of all three state-run telecommunication oligopolies, at least one of which (China Unicom) Jiang had extensive ties with. Telecommunications in general is also a sector that Jiang Mianheng is thought to have significant sway over. China Unicom, China Mobile, and China Telecom came under one or another form of pressure by Party disciplinary officers over the last year, with some men linked to Jiang being removed.

Party investigators also closed in on one of Jiang Mianheng’s close associates: Shi Er’wei, the deputy director of the prestigious Chinese Academy of Sciences. On Oct. 27 it was announced that Shi had been removed from his position.

Jiang Mianheng himself had quietly left his own position as president of the Shanghai branch of the Chinese Academy of Sciences in January, a gesture likely forced by the political pressure building on the Jiang family, given that he was several years away from the customary retirement age for officials in such posts.

Daddy’s Boy

Meanwhile, anti-corruption officers are doggedly rounding up the family members and associates of close Jiang allies. The latest cadre to be taken away is Cheng Danfeng, the deputy mayor of Zhangjiajie City in the southern China province of Hunan. Cheng is the son-in-law of Su Rong, the highest-ranking official to be purged while still serving office, and a close Jiang Zemin loyalist.

Two other indications this year suggested that Jiang Zemin was coming under pressure. On Aug. 10, the Party mouthpiece People’s Daily criticized retired Party leaders who were reluctant to “give up exerting their influence on major issues,” a move China watchers concluded to be an open challenge to Jiang.

Later, a large stone stele inscribed with Jiang’s calligraphy was removed from the entrance to the Central Party School, a place of higher education used to train and indoctrinate the Party’s cadres. Though the removal was seemingly a small gesture, it was one that, in China, is pregnant with meaning.

Juliet Song contributed to this report.