At least eight top Chinese officials are linked to offshore deals through associates, an investigation into 11 million leaked documents from one of the world’s largest offshore law firms shows. They include the brother-in-law of Chinese president Xi Jinping, whose offshore firms went dormant before Xi came into power, and the granddaughter of a former top leader who bought an offshore company for just $1.
Family members of at least eight current or former members of Communist Party’s Politburo Standing Committee, the country’s supreme governing body, hold offshore companies arranged through Panama-based law firm Mossack Fonseca, the International Consortium of Investigative Journalists (ICIJ) reported.
The China investigation is part of a leak called “the Panama Papers,” which reveal the hidden financial dealings of over 100 politicians and public officials around the world. Current or former heads of state in the leak include prime ministers of Iceland and Pakistan, the president of Ukraine, and the king of Saudi Arabia. A suspected $2 billion money laundering ring has links to Russia’s president Vladimir Putin, the Guardian reported as part of the leak.
Hundreds of journalists from 78 countries spent a year analyzing and verifying nearly 40 years of records, and published the first installment of their investigation on April 3. The records were given by an anonymous source to German newspaper Süddeutsche Zeitung, and were shared by ICIJ.
It is not illegal to own an offshore company, but these entities are often used for illegal activities, including money laundering and tax evasion.
So far ICIJ has revealed four names of Chinese officials. They include president Xi Jinping, former premier Li Peng, the former fourth-ranking Politburo Standing Committee member Jia Qinglin, who have links to offshore companies through their relatives. The fourth, imprisoned former Chongqing city Party chief Bo Xilai, is involved via a business partner of his wife.
- President Xi Jinping: Deng Jiagui, the brother-in-law of Xi Jinping, became the sole director and shareholder of two British Virgin Islands-based shell companies in September 2009, when Xi was serving as one member of the nine-man Politburo Standing Committee. By the time Xi was named the Party chief in 2012 and China’s president in 2013, Deng’s two companies were dormant, the leak shows. A 2012 Bloomberg report found Deng and his wife Qi Qiaoqiao, Xi’s older sister, owned hundreds of millions of dollars in real estate, shares, and other assets, although it did not mention off shore companies.
- Former premier Li Peng: Li Peng served as the Chinese premier from 1987 to 1998. During his tenure his second child and only daughter, Li Xiaolin, and her husband Liu Zhiyuan, were the beneficial owners of a Lichtenstein foundation that was the sole shareholder of a BVI company, the leak shows. The leak also shows Li Xiaolin is referred as “Xiaolin Liu-Li” in her Hong Kong passport and a cover letter, “which may have made linking her to Li Peng more difficult.” Dubbed China’s “Power Queen,” Li was the vice president of state-owned China Power Investment Corp., and served as a delegate to China’s top political advisory body.
- Former Politburo member Jia Qinglin: Jia Qinglin was China’s fourth-ranking official on the ruling Politburo Standing Committee between 2002 and 2012. In December 2010, his granddaughter Jasmine Li, then a teenager studying at Stanford University, became the sole shareholder of Harvest Sun Trading Ltd., a company that was incorporated in the British Virgin Islands in 2009. Harvest Sun was transferred for $1 to Li by Zhang Yuping, the founder of China’s leading luxury watch distributor Hengdeli. Through Harvest Sun and another BVI company, Li owned two Beijing-registered consulting firms, without disclosing her ownership.
- Former Chongqing Party chief Bo Xilai: French architect Patrick Henri Devillers was a business partner of Gu Kailai, wife of fallen high-flyer Bo Xilai, the Chongqing party chief from 2007 to 2012. Bo is now serving a life sentence for corruption charges. In September 2000, Devillers helped Bo’s wife Gu incorporate a property company in the British Virgin Islands, the leak shows. Devillers held shares in the BVI company on behalf of Gu, and court records show the company was used to secretly buy a $3.2 million villa in southern France, with money from a bribe. Devillers’ testimony was used in Bo’s 2013 corruption trial.
Xi initiated a sweeping anti-graft campaign since he took control in November 2012. The corruption crackdown has covered each province of the nation, with high-ranking officials being targeted including former president’s top aide Ling Jihua, and ex-security czar Zhou Yongkang. By going after Zhou, Xi broke an unwritten rule that a former member of the Politburo Standing Committee should not be investigated.
That obviously hasn’t stopped the country’s most powerful from moving money off shore though secretive companies.