Xi Jinping

China publishes gallery of alleged financial fugitives

FCA china-financial-fugitives

China’s Ministry of Public Security has released information about economic fugitives (pictured) who were believed to be at large in other countries, including Australia. China Ministry of Public Security

The Communist Part of China’s crackdown on corrupt officials has created a wave of economic fugitives, who are fleeing China to escape trial. The Ministry of Public issued the photos above of alleged economic fugitives from China, many of whom are thought to be in Australia.

The Chinese diaspora is widespread. Since President Xi Jinping began his campaign to root out corruption from the Chinese Communist Party, stories of alleged financial criminals fleeing China to live with relatives in other countries have cropped up in the media. Last year, the focus was the US, thought to be a safe haven from extradition. Now the focus is Australia, another country which has an extradition treaty with China, but which has yet to ratify it.

In March this year, China reportedly gave the US a list of allegedly corrupt officials, thought to be in the US and asked for help in tracking them down. The Chinese government launched Operation Foxhunt  in summer 2014, in a bid to track down suspects on-the-run beyond China’s borders.

Back in February 2014, Financial Crime Asia reported on the expected surge of fugitives to Australia. Canada had apparently been the migrant’s destination of choice, until it scrapped an investment immigration programme for Chinese citizens after noticing a marked increase in the number of applications by wealthy Chinese Mainlanders.

In 2013, China’s anti-corruption body, the Central Commission for Discipline Inspection, investigated 51,000 people for corruption, bribery, embezzlement and abuse of power. It claimed a total of 30,420 officials were punished for violating new party rules aimed at avoiding pomp and ceremony, according to a report in the Sydney Morning Herald.

How to spot an economic fugitive

Government officials are politically exposed persons and, thereby, subject to enhanced due diligence measures by banks and other regulated institutions in Australia, Canada and other jurisdictions. Whether the alleged criminals will be subject to extradition or not for the crimes they may or may not have committed, their inclusion on the ‘wanted list’ is enough to merit further enquiries by financial institutions.  The photo gallery above presumably gives the names of the officials in Pinyin. Any list monitoring software worth its salt will be able to translate the names into the Latin alphabet and should be able to identify whether any of the names above correspond to accounts held at a financial institution.



Russia inks oil deal with China; so those US sanctions are starting to pinch, eh?

Putin snubs Western sanctions in huge gas deal with China, reads the Reuters headline from Wednesday 21st May. Did anyone really expect Russia to stand around idle and allow the west to stem its growth? If this deal is anything to go by, we can expect Putin and the Russian government to sidestep trade restrictions deftly during the coming months. The US has voiced plans to impose trade or sectoral sanctions on Russia if it meddles with the Ukraine’s interim elections on May 25th. Russia has inked one significant long term deal with its ally on the UN Security Council, securing both nations’ energy and revenue for years to come.

Putin snubs Western sanctions in huge gas deal with China

SHANGHAI: China and Russia Wednesday signed a gas supply deal thought to be worth billions of dollars, securing a major source of cleaner fuel for the world’s top energy user and opening up a new market for Moscow as it risks losing European customers over the Ukraine crisis.

China's President Xi Jinping (2nd R) looks at Russia's President Vladimir Putin (2nd L) shaking hands with Gazprom CEO Alexei Miller (L) at an agreement signing ceremony in Shanghai on May 21, 2014. (AFP PHOTO / RIA-NOVOSTI / POOL ALEXEY DRUZHININ)

China’s President Xi Jinping (2nd R) looks at Russia’s President Vladimir Putin (2nd L) shaking hands with Gazprom CEO Alexei Miller (L) at an agreement signing ceremony in Shanghai on May 21, 2014. (AFP PHOTO / RIA-NOVOSTI / POOL ALEXEY DRUZHININ)

The long-awaited agreement is a political triumph for Russian President Vladimir Putin, who is courting partners in Asia as those in Europe and the United States seek to isolate him over Moscow’s annexation of the Crimean peninsula.

Commercially, much depends on the price and other terms of the contract, which has been more than a decade in the making. China had the upper hand as negotiations entered their final phase, aware of Putin’s faceoff with the West.

“This is the biggest contract in the history of the gas sector of the former USSR,” Putin said after the agreement was signed in Shanghai between state-controlled entities Gazprom and China National Petroleum Corp.

“Our Chinese friends are difficult, hard negotiators,” he said, noting that talks went on until 4 a.m.

“Through mutual compromise we managed to reach not only acceptable, but rather satisfactory, terms on this contract for both sides.”

Putin and his Chinese counterpart Xi Jinping applauded as they witnessed the deal being signed, just hours before the Russian leader was due to leave Shanghai at the end of a two-day visit.

The deal came ahead of a major economic summit in the northern Russian city of St. Petersburg, starting Thursday. Around a dozen chief executives and chairmen of major U.S. and European corporations have withdrawn from the forum over the Ukraine crisis.

Putin loyalist and senior parliamentarian Alexey Pushkov, who was included on a U.S. list of individuals sanctioned in the wake of the crisis in Ukraine, said the gas deal showed Russia could not be isolated.

“B. Obama should abandon the policy of isolating Russia: It will not work,” he tweeted, referring to U.S. President Barack Obama, who has pushed for greater Western punishment of Russia.

Gazprom CEO Alexey Miller declined to disclose the price at which the deal was struck, but sources at the companies involved said Gazprom refused to go below $350 per thousand cubic meters.

That compares to a price range of $350-$380 that most European utilities pay under discounted long-term contracts signed in the last two years. Putin said the formula was similar to the European price tied to the market value of oil and oil products.

Crucially for China, the implied price is below the Asian cost of importing liquefied natural gas, an alternative energy source that it is currently developing.

Another potential sticking point in talks was whether China would pay a lump sum up front to fund considerable infrastructure costs.

According to Putin, China will provide $20 billion for gas development and infrastructure, but Miller said the two sides were still in talks over any advance.

The gas will be transported along a new pipeline linking Siberian gas fields to China’s main consumption centers near its coast. Russia will begin delivering from 2018, building up gradually to 38 billion cubic meters a year, officials said.

Russia plans to invest $55 billion in exploration and pipeline construction up to China, and CNPC said it would build the Chinese section of the pipeline.

The contract does not necessarily mean that Russia is giving up on Europe. Last year, Gazprom supplied Western Europe and Turkey with over 160 bcm of gas, dwarfing intended deliveries to China. Meanwhile, European consumers could not easily switch from Russian gas, even if they wanted to.

Beyond supplying China with gas via a pipeline, the deal opens up an opportunity for Gazprom to become a bigger player in the booming Asian LNG market, a sector it has so far not been involved in on a major scale.

Gazprom is planning to build a new LNG plant on the Russian Pacific coast near Vladivostok, but has so far lacked the infrastructure to supply the facility with the amount of gas necessary to meet regional demand.

The new pipeline would change this, ideally positioning Gazprom’s Vladivostok terminal close to the leading LNG buyers of Japan and South Korea as well as the rising market on China’s eastern coast.

Gordon Kwan, head of Asian oil research at Nomura, said that although details of the agreement were sketchy, they were likely to have been favorable to China.

“Given the EU sanctions that could potentially hit Russia, I don’t think Gazprom is in a position to strike a very high price,” he said.

He added that CNPC would be driving a hard bargain in the wake of a corruption investigation that rocked the company last year, as Xi seeks to stamp out broader graft.

Shares in Gazprom rose by nearly 2 percent after the deal was announced, and were up 1.3 percent at 13:20 GMT.

 A version of this article appeared in the print edition of The Daily Star on May 22, 2014, on page 1.

Source: The Daily Star Lebanon


GSK and the woeful impact of corruption in big-pharma

News that the British former head of GSK in China is suspected of encouraging employees to offer incentives to clients in return for business has set the cogs whirring globally in terms of the implications for non-Chinese businesses and financial institutions.

Corruption harms the masses by placing personal or corporate interests ahead of the public good. In some countries this means that vital road networks take years to complete instead of months, that communities are uprooted and left homeless and sometimes stateless in favour of profiteering. When it comes to pharmaceuticals, it means that people suffer and die because they are not getting the right medicine. This report from NPR explains how corruption in the Ukraine has prevented HIV patients from receiving the correct drugs.

The GSK case

Mark Reilly, GSK China executive charged with corruption

Mark Reilly, GSK China executive charged with corruption

Mark Reilly stepped down as the Senior Vice President and General Manager of GSK China/HK Pharmaceuticals and Vaccines in July 2013 when news of the corruption probe first emerged . He joined the firm in 1989, holding ‘commercial and financial positions of increasing responsibility’, through a finance director’s role to end up at top management level, according to his LinkedIn profile. Some sources report he has been arrested, others are unclear on his status.

The Independent mentions the following points:

Reilly is charged with ordering employees to form a “massive bribery network” that forced up drug prices and created more than $150 million (£89 million) of illegal sales, according to police.

Investigators claim that secret payments were made to doctors, hospital staff and government officials.

Two Chinese executives, Zhang Guowei and Zhao Hongyan, were also accused of bribing officials in the industry and commerce departments of Beijing and Shanghai, the official Xinhua news agency reported, quoting police in Hunan province.

British Prime Minister, David Cameron, lobbied on behalf of GSK during a visit to China in 2013. GSK is co-operating with the authorities in China, the pharma giant reported in a press release.

Chinese law is notoriously riddled with loopholes. Laws are often drafted broadly to allow the court and prosecutors to interpret them on a case by case basis. In 2011, the People’s Republic of China’s (PRC) Criminal Law reportedly amended to prohibit bribes made to foreign officials and to officials of international public organisations. Furthermore, in 2013 the PRC introduced a few thresholds and sentencing guidelines for courts. Bribery committed by an individual will be prosecuted if the bribe is worth more than CNY10,000 (USD1,603) and more than CNY200,000 (USD32,000) if committed by a unit of a company. As an aside, USD1600 is reportedly the salary paid to the Chinese Premier Xi Jingping and to high ranking state officials. A UK law firm has produced this useful guide for financial institutions on how to prepare for requests for information and dawn raids connected to  corruption probes in China.

GSK is  British company and Reilly is a British citizen and under the UK Bribery Act, both could be investigated. In July 2013, GSK’s lawyers briefed the UK Serious Fraud Office on the case.

US companies and US citizens are subject to the FCPA; the act’s extra-territorial provisions. Doctors at government-owned or managed hospitals are also considered to be foreign officials under the FCPA. THe US Department of Justice reportedly began looking into whether it could prosecute GSK under the FCPA back in 2013.

Still, for every dark cloud there are silver linings. The GSK case has reportedly spurred compliance spending by around 40 per cent in China.

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Mining magnate’s bribery trial reveals graft techniques

A visibly upset Liu Han on trial, courtesy of SCMP

A visibly upset Liu Han on trial, courtesy of SCMP

A Chinese businessman with high level political connections could be sentenced to death if found guilty of murder and running an organised criminal gang in Hubei province, central China. Liu Han, 48, is suspected of building a vast network of political and official connections which have helped him to do business in the past.

Sources report that the ” long list of senior cadres who may have received money from Liu included high-ranking current or former officials from Hainan, Yunnan and Chengdu, capital of Sichuan.” Although ties between politicians and the business world are not unusual, Liu’s trial has shed light on the extent of his networks.

While this may not be a blue-print for every wealthy-politico network the details do expose the depth of these connections.

Connections Sources reported in the South China Morning Post revealed several of Liu’s connections including: Zhou Bin, the eldest son of Zhou Yongkang retired former member of the Politburo Standing Committee. According to the New York Times, the Zhou family is the subject of an investigation into their ties to the China National Petroleum Corporation, the state run entity formerly run by Zhou Yongkang.

Allegations around their relationship involved the over-priced sale of companies and making gifts or cash and rare artefacts to politicians to secure their favour, and using friendly mah-jong games with officials to lose money and hand over more cash. Investigators are also claimnig more gifts were made to senior officials in Inner Mongolia, state-owned China Development Bank and the Political and Law Commission. Some of those involved in the far reaching tentacles of the web are still in office, others are on trial.

Although they remain unpunished so far, polticial advisers in China believe their days are numbered. and the top leadership – read President Xi Jinping – needs more time to settle disputes among the Communist Party top echelons. Under China’s criminal code, officials who “abuse their authority by enabling profit for others” or taking bribes worth more than 100,000 yuan can be sentenced to death.

Zhang Ming, a political scientist with Beijing’s Renmin University, said the decision not to punish certain officials showed that Liu’s case was entirely political, not judicial. “The worlds of business and official power are so entwined, and every single official in the country could be punished if the top leaders ordered complete scrutiny,” said Zhang. “To choose which officials should be punished depends on political requirements.”

A member of Liu Han’s family spoke to the post to profess his innocence: “You could charge him with anything, including economic crimes. But he is not a gangster,” he told the Post earlier.


Source: SCMP

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Anti-corruption activist on trial in China

Zhao Changqing is the third campaigner to appear in court this week as part of government FCA - Zao Chankingcrackdown on activists.
A Chinese anti-corruption campaigner has gone on trial in Beijing, according to his lawyer, joining two others who appeared in court this week as China’s government cracks down on activists.

Zhao Changqing, 45, faces a possible five-year prison sentence for supporting activists who unveiled banners in Beijing calling for government officials to disclose their assets – despite not being present, Zhang Peihong, his lawyer, said on Thursday.

Zhao is associated with the New Citizens Movement, a loose-knit network of campaigners against corruption, among other issues. China jailed a founder of the movement in January, and more than 10 other members have been tried.

Zhao pleaded not guilty to a charge of “gathering a crowd to disrupt public order” for his alleged involvement in three small-scale protests in Beijing, which saw activists unfurl banners, Zhang said.

“[Zhao] didn’t disturb public order in any way, he didn’t even appear on the scene of the protests, because he was worried about his family,” he said, adding that the hearing lasted around three hours.

Fellow anti-corruption activists Ding Jiaxi and Li Wei were also put on trial this week over the protests.

China’s ruling Communist Party is in the midst of a highly-publicised anti-corruption campaign, which President Xi Jinping has pledged will target both high-ranking “tigers” and low-level “flies” in the face of public anger over the issue.

But the party has cracked down harshly on independent activists who have the same goals, viewing independently organised anti-corruption protests as a challenge to its rule.

Zhao was previously jailed for his role as a leader during the 1989 pro-democracy protests at Tiananmen Square, and has served more than eight years in jail for his continued political campaigning.

A court in Beijing sentenced Xu Zhiyong, a legal campaigner and a founder of the New Citizens Movement, to four years in prison in January for his role in the protests.

The verdict was condemned by the US and the European Union. Xu’s lawyers said the trial was subject to political interference, and appealed, with a court set to announce its decision on Friday.

Source: AlJazeera



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U.N. Panel Said to Conclude North Korean Vessel Violated Sanctions

The U.N. Security Council on Thursday reportedly determined that a Cuban-North Korea arms deal, discovered in 2012, violated sanctions on Pyongyang.FCA - north korea satellite nasa lights OLD

Unidentified U.N. insiders told KBS World the 15-member U.N. body reached agreement on the weapons transgression after reading a report produced by a U.N panel with oversight on North Korean sanctions.

The Chong Chon Gang was interdicted last summer by authorities as it attempted to pass through the Panama Canal. A search of the North Korean cargo freighter’s hold turned up a large cache of Soviet-era weaponry. Cuba quickly claimed ownership of the arms, which included two MiG jets, anti-aircraft missile systems and other assorted conventional weaponry.

Havana asserted the weapons were being shipped to the North for refurbishment, after which they were to be sent back to Cuba. However, independent analysts concluded that much of the weaponry was in functioning condition and not in need of repair.

It is not yet known what, if any, punishment the Security Council could impose on Pyongyang and Havana .

Meanwhile, Chinese President Xi Jinping on Friday pledged his government would work to achieve the elimination of atomic arms in North Korea, the Yonhap News Agency reported.

“The denuclearization of the Korean Peninsula is the basic stance of China towards the Korean Peninsula,” Xi said during a meeting with visiting South Korean lawmakers. “We will make efforts to realize it.”

China in recent days has shown renewed vigor for restarting the moribund regional talks aimed at achieving a permanent shutdown of Pyongyang’s nuclear-weapons work.

U.S. Secretary of State John Kerry in a visit last week to Beijing exchanged “specific” ideas for re-launching the six-party talks that encompass China, Japan, the two Koreas, Russia and the United States. Directly following Kerry’s visit, Chinese Vice Foreign Minister Liu Zhenmin traveled to Pyongyang for meetings with North Korea officials. Immediately afterwards, he flew to South Korea for more meetings on the North Korea nuclear impasse.

A South Korean Foreign Ministry official said the Friday meeting between Liu and Deputy Foreign Minister Lee Kyung-soo produced an understanding to deepen bilateral coordination on achieving North Korean denuclearization, Yonhap separately reported.

This article was published in Global Security Newswire, which is produced independently by National Journal Group under contract with the Nuclear Threat Initiative. NTI is a nonprofit, nonpartisan group working to reduce global threats from nuclear, biological, and chemical weapons.

Source: Global Security Newswire

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China: Hainan vice governor in corruption investigation

BEIJING — China’s ruling Communist Party said Tuesday a vice governor of the southern island province of Hainan is underFCA - JI Wenlininvestigation for serious violations, an apparent reference to corruption.

Ji Wenlin is the latest high-ranking official to be investigated since party leader and President Xi Jinping launched an anti-corruption campaign after taking over as head of the ruling Communist Party last spring.

As with several others who have fallen in the campaign, Ji has personal and professional connections to the powerful former Chinese security czar Zhou Yongkang, currently the subject of a rumored investigation.

The party’s disciplinary body said in a one-line statement that Ji is suspected of serious violations of regulations and the law. That’s almost always a reference to accepting bribes and kickbacks, providing unauthorized favors, and other forms of personal malfeasance.

The statement gave no details.

Xi has made fighting widespread graft a key campaign of his leadership so far, with promises to target both junior and high-level officials.

Investigations have so far targeted businesspeople, senior executives in the state oil sector — Zhou’s former power base — and most recently, a vice minister of public security. Ji was a key aide to Zhou in a last three of his central government positions, before taking up a series of positions in Hainan’s local government.

Although rumors are rife, no official word has been released about any investigation into Zhou, until 2012 a member of the party’s all-powerful Politburo Standing Committee.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Source: AP/The Washington Post

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