Follow the family: On the trail of Bo Xilai 1Posted: April 21, 2012
No recent political scandal has been more riveting than the one that has been swirling around Bo Xilai, the recently purged Chinese Communist Party official now in the international spotlight.
As most of the media focused on Bo’s precipitous fall from grace and its implications on the Party leadership, a feisty Hong Kong magazine began sniffing the corruption trail. In two weeks of intense reporting, the Hong Kong-based, Chinese-language Next Magazine uncovered previously unknown business dealings by Bo and his glamorous wife.
In subsequent weeks, reporters at the Wall Street Journal, the New York Times and Bloomberg, would be on that trail, too, trolling public records databases around the world to piece together information about the couple, information that in the pre-digital days would have been difficult to find.
This is the new era of investigative reporting. Governments and companies are publishing increasing amounts of information online – yes, even in China. And the ability to find and mine that information is now an essential part of any journalist’s toolkit.
As anyone who’s ever dug up the dirt on politicians and criminals knows, it always helps to map out their family members, friends and associates. Even in the Communist Party, politics is all in the family. This was particularly true of Bo and his wife, who had impeccable pedigrees: Their fathers were heroes of the 1949 revolution and were high up in the communist hierarchy, which meant that their offspring were considered Red Nobility or princelings.
On February 6, Bo’s lieutenant, Wang Lijun, fled to the U.S. consulate in Chengdu, supposedly with evidence of corruption and murder involving Bo and his wife, who has since been implicated in the murder of UK businessman Neil Heywood. The incident created an international furor and precipitated the biggest political scandal in China in years. On March 15, Bo was dismissed from office, his downfall exposing the rifts within the party.
“After the U.S. government confirmed the Wang Lijun incident on February 8, we smelled that something was going to happen to Bo Xilai,” says Vivian Kwok, Next Magazine’s deputy editor-in-chief, “and so we started research on his family’s business connections.” Next is owned by the maverick Hong Kong businessman Jimmy Lai, who is persona non grata in China, and the magazine didn’t have deep sources in the mainland. So it had to rely on what was in the public record.
It helped that a Chinese journalist, Jiang Weiping, had previously published a biography of Bo, which said that the official and his wife Gu Kailai, a well-known lawyer, had used family members to hide their wealth. Jiang also alleged that Gu’s law firm and Gu herself made money by cutting deals for mainland Chinese companies that were doing business in Dalian, a major city and seaport in the northeastern province of Liaoning. Bo was once mayor of Dalian and governor of Liaoning. Jiang himself was a Dalian reporter and was sent to prison for his exposés, including stories on how Bo had covered up evidence of political corruption.
Jiang, currently in exile in Toronto, didn’t provide details in his book, so Simon Yiu, a 24-year old reporter for Next, pressed him for more. Jiang said that Gu Kailai’s law firm acted as a broker for some 200 mainland Chinese companies, but he didn’t have documentary proof. The law firm, called Ang Dao, has offices in Beijing, Zhengzhou and Dalian. To confirm Jiang’s lead, Simon Yiu’s first stop were the websites of the courts and lawyers’ associations in those cities, which showed when law firms operating in those jurisdictions were established and listed their lawyers. The Beijing courts website, for example, allows searches by law firm and lawyer name; so does the website of the Dalian lawyers’ association.
Yiu listed five lawyers associated with Gu’s firm; he then searched their names on Google and Baidu, the Chinese search engine (most Chinese websites are searchable only through Baidu). From news archives and other material, he found a number of publicly listed companies that were connected to those lawyers. He then searched the websites of each of the companies as well as checked their annual reports. Most of them were listed on the Shenzhen or the Shanghai stock exchanges, which post those reports online. Yiu found 20 firms, mostly based in Dalian, for which lawyers from Gu’s law firm acted as legal consultants or non-executive directors or provided legal advice for initial public offerings (IPOs) during the period that Bo ruled over Dalian and Chongqing and Gu was still actively involved in the law firm. Next published that story on February 16.
The following week, it followed up with another, bigger story on the business dealings of Gu’s sisters. To do that, Simon Yiu first had to find the names of Gu’s various family members. Her late father, Gu Jingsheng, was a well-known revolutionary general in the People’s Liberation Army. Until it was recently taken down, there was a website that had been set up in his honor, and it listed the names of his five daughters – Gu Kailai was the youngest. Armed with the names, Yiu then searched ICRIS, Hong Kong’s corporate registry. (For a fee, one can check ICRIS, type in a name and get a list of companies in which that name is listed as a director. The cost is HK$22, or about US$3, per search.)
The search showed that Gu’s sister, Gu Wangjiang (spelled Kuk Mong Kong in Hong Kong although the Chinese characters are the same) was listed as being a director in nine companies. One of them, Hong Kong Hitoro Holdings (see its annual return on ICRIS here), owns 30 percent of a Shenzhen-listed company, Tung Kong Security Printing. That company’s annual report, downloaded from the Shenzhen exchange, showed that these shares are now worth more than 700 million RMB, about $114 million.
Next Magazine was also intrigued by a Xinhua story that said Bo’s brother, Bo Xiyong, is a director and vice-chairman of the Hong Kong-listed China Everbright International. The state-owned company, which controls one of China’s major banks and a range of other businesses, is a “red-chip” – a term given to the stocks of mainland firms incorporated outside the country and listed in Hong Kong.
But when the magazine checked the China Everbright website, it found no one named Bo Xiyong there. Still, it was unlikely that Xinhua was wrong about something like this, so Next reporters then searched the Web for anything they could find on all the Everbright directors. The eureka moment came when they found the photograph of a man named Li Xueming on the website of the National Committee of the Chinese People’s Political Consultative Congress. It matched the photo they had seen of Bo Xiyong – a picture taken at the funeral of his father, Bo Yibo. The senior Bo was one of the so-called Eight Immortals, described by the New York Times as “elderly but immensely influential party veterans who hovered above the country’s appointed leadership in the 1980s and 90s.”
As Everbright director, Bo Xiyong (or Li Xueming) receives a $1.7 million annual salary and holds stock options worth nearly $25 million, according to a profile published by Bloomberg Businessweek. These profiles, searchable on the Businessweek website, are a great resource for journalists as they list the names of members of the boards of listed companies in the world’s major financial capitals. The profiles typically include the education, previous employment and estimated compensation of company officials.
Next’s explosive report was carried by its sister publication, Apply Daily, and was widely quoted overseas. A New York Times report cited the story, which it said showed that, “despite their best efforts to obscure such arrangements, senior Communist Party officials often use their connections to help relatives secure well-paid jobs at state-owned companies.”
In the two months, since Next’s report, there have been more media revelations about the Bos’ business dealings around the world (more of that in the next post). But what’s come to light since February is likely just the tip of the iceberg.