How to track looted wealth

I am off to the annual conference of the Investigative Reporters and Editors, which will be held in Boston this year. I will be on a panel on international corruption together with Claudia Mendez Arriaza of the Guatemalan newspaper El Periodico and  the New York Times’ David Barstow, who shook Walmart with his blockbuster story on payments totaling $24 million that the company made to Mexican officials.

I will be talking about tracking looted wealth. Here’s a preview of my presentation,  published in The Global Muckraker, a blog put out by the International Consortium of Investigative Journalists:

It’s estimated that every year, over a trillion dollars flow illicitly out of the world’s economies. These are the proceeds of corruption, crime and tax evasion. A lot of that money ends up in bank accounts, companies and various assets overseas. The Global Financial Integrity Task Force says that a good portion of  it – about $2 trillion of the $10 trillion in deposits held by non-residents in offshore centers – has found its way to the United States.

It’s hard to document these illicit financial flows: banking secrecy and the opacity of corporate information in offshore jurisdictions, including the U.S., cover up the money trail. But it’s not impossible. Read the rest of this entry »

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On the trail of Bo Xilai 2: Beyond China and Hong Kong

Page from a Hong Kong corporate filing shows that Hitoro Holdings, in which Gu Kailai’s sister is a director, is mostly owned by a British Virgin Islands company called Informatic Resources Limited.

Like many members of the Communist Party elite, recently purged Politburo member Bo Xilai and his family members did business in Hong Kong and the West, making it easier for journalists to find a document trail. Bo’s wife Gu Kailai, a high-powered lawyer, practiced in the U.S. and lived in the U.K. for some time. The couple also sent their son to a posh boarding school in England then on to Oxford and later Harvard, where he is currently in graduate school.

Last November, the son, Bo Guagua, provided Exhibit A for a Wall Street Journal essay on China’s princelings. The article opened with a bright red Ferrari the young Bo was supposedly driving around while in Beijing. As the piece said cheekily, he “was driving a car worth hundreds of thousands of dollars and as red as the Chinese flag, in a country where the average household income last year was about $3,300.”

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Follow the family: On the trail of Bo Xilai 1

Hong Kong-based Next magazine followed the trail of corruption left by the recently disgraced Chinese Communist party official Bo Xilai and his glamorous wife, who has been implicated in the alleged murder of the U.K. businessman Neil Heywood.

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. Read the rest of this entry »