Panama Papers: Relatives of eight of China's Communist party elite implicated

From left: China's President Xi Jinping, Vice Premier Zhang Gaoli and propaganda chief Liu Yunshan, who are part of the seven people in the Chinese Communist Party with relatives linked to the Panama Papers leaks.
From left: China's President Xi Jinping, Vice Premier Zhang Gaoli and propaganda chief Liu Yunshan, who are part of the seven people in the Chinese Communist Party with relatives linked to the Panama Papers leaks.PHOTOS: AFP, EPA

BEIJING  – Eight of China’s Communist party elite whose family members used offshore companies have been identified in   a trove of leaked documents on  hidden wealth,  known as  Panama Papers.

The disclosures by the International Consortium of Investigative Journalists (ICIJ) risked new embarrassment for the Chinese authorities, already  infuriated by the organisation's leaks of the documents - from Panama law firm Mossack Fonseca -  which have also implicated the powerful and wealthy in other countries.

A  latest ICIJ report  has identified links to  eight former  or current  members of the Chinese Communist Party’s powerful Politburo Standing Committee (PSC):  the late founding leader Mao Zedong, the late party chief Hu Yaobang, former  vice-president Zeng Qinghong, former political adviser Jia Qinglin, former premier Li Peng,   President Xi Jinping, Vice-Premier Zhang Gaoli and propaganda czar Liu Yunshan.  

The ICIJ said a  prominent client identified in the Panama papers  is the daughter of Mr  Li,  who was  China’s premier from 1987 to 1998.  Ms Li Xiaolin and her husband own Cofic Investments, a British Virgin Islands company incorporated in 1994.  In internal emails, Ms Li’s lawyers said  the firm’s funds came from helping to facilitate the export of industrial equipment from Europe to China.  

 
 
 

President Xi Jinping is another top Chinese leader cited in the report as having a relative who controlled offshore companies. The ties of his brother-in-law Deng Jiagui to offshore companies have been known since 2012, when a Bloomberg news article about Mr Xi's family wealth detailed the business empire of Mr Deng and his wife Qi Qiaoqiao, the president’s  sister.

The consortium also reported that the new generation of so-called red nobility - whose influence extends well beyond politics - seems to have learnt  about the offshore world at a young age. The granddaughter of Mr  Jia, who served as the No. 4 member of the PSC  until 2012, has offshore assets, said the report.

Ms Jasmine Li Zidan became the owner of an offshore company called Harvest Sun Trading Ltd. in 2010  when she was a freshman at Stanford University, it claimed.

Since then, Ms  Li has built a  large business for someone still in her 20s: her two British Virgin Islands (BVI) shell entities were used to set up two companies in Beijing with total registered capital of US$300,000 (S$406,695), said the ICIJ. 

The five other current and former Standing Committee members whose relatives are connected to offshore dealings are:

Vice-premier Zhang, whose son-in-law  Lee Shing Put  was a shareholder of three companies incorporated in the British Virgin Islands: Zennon Capital Management, Sino Reliance Networks Corporation and Glory Top Investments Ltd;

Propaganda chief Liu, whose  daughter-in-law Jia Liqing  was the director and shareholder of Ultra Time Investments Ltd., a company incorporated in the British Virgin Islands in 2009;

Mr Zeng, who was vice-president of China from 2002 to 2007, has a brother named Mr Zeng Qinghuai, who was the director of  China Cultural Exchange Association Ltd that was incorporated first in Niue and then re-domiciled in 2006 in Samoa;

The late Mr Hu, who served as head of the Chinese Communist Party from 1982 to 1987, has a son named Mr Hu Dehua,  who was shareholder, director and beneficial owner of Fortalent International Holdings, a company incorporated in the British Virgin Islands in 2003. Mr Hu Dehua registered the company using his home address — the traditional courtyard home where his father lived while he was party chief;

Mr Mao, who led Communist China from 1949 to his death in 1976, has a grandson-in-law who incorporated Keen Best International Limited in the British Virgin Islands in 2011. Mr Chen Dongsheng is the head of a life insurance company and an art auction house and was the sole director and shareholder of Keen Best.

The ICIJ also reported links to jailed  Chongqing party chief  Bo Xilai through his wife Gu Kailai and her  business associates,  China's retail tycoon Shen Guojun and soft drink magnate Zong Qinghou.

Chinese government censors have moved aggressively since the first release of leaked documents on Sunday to purge any media mention of them in China, New York Times reported, going so far as to block Internet searches and online discussions that involve the words "Panama Papers".

The disclosures are considered especially sensitive in China, where the Communist Party, under Mr Xi, has pledged to eradicate corruption within its ranks and seeks to portray itself as a champion of equality, despite some of the world's most glaring income disparities.

A number of countries have started probes into the leaked  documents,    including  Britain, Iceland, France, Australia, New Zealand, Austria, Russia, Ukraine,   Pakistan, Malaysia and Singapore.

While the Panama Papers detail complex financial arrangements benefiting the world's elite, they do not necessarily mean the schemes were all illegal.

According to ICIJ, most of the services the offshore industry provides can be used for legal purpose and are by law-abiding customers. But the documents show that banks, law firms and other offshore players often fail to follow legal requirements to make sure clients are not involved in criminal enterprises, tax dodging or political corruption.

More stories on the Panama Papers here.