Money flying out of China -- Ascending Light

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Date Posted: 11:45:45 09/10/04 Fri
Author: Weird_Enigma
Author Host/IP: 172.174.102.60
Subject: Money flying out of China
In reply to: Weird_Enigma 's message, "Three Gorges dam forces water to fill with sewage, junk, chemicals" on 12:36:11 05/03/04 Mon

Money flying out of China

Questioning officials before trips is newest effort to curb corruption

TIM JOHNSON
Knight Ridder

KAIPING, China - In this city and many others in China, senior officials are embezzling tens of millions of dollars and fleeing overseas with their families.

They're seldom caught. The stolen loot is rarely recovered.

According to the latest official count, some 4,000 senior Chinese officials and managers of state-owned businesses have fled abroad over the past two decades with as much as $50 billion they embezzled.

China's government-controlled media call the corruption staggering, and China's rulers repeatedly announce campaigns against graft. With some regularity, corrupt officials are given lengthy jail terms or even executed. But much of the citizenry doubts that the ruling Communist Party is making any headway.

"People become kind of numb to these campaigns because they bring few results," said Yang Fan, an economist at China University of Politics and Law in Beijing.

In the latest pilot program, special teams are now interviewing some senior officials as they prepare to travel overseas, quizzing them about their motives for trips and the whereabouts of family members, according to the official Xinhua News Agency.

"Many of them are thought to have sent their family members to study or live overseas before skipping the country themselves," the Xinhua report said.

If there's any good news in the outflow of stolen money, experts say, it's that some of the embezzled assets make a U-turn and return to China, the fastest-growing major economy in the world. That's one reason for an explosion of Chinese-controlled offshore companies in the Bahamas, the Cayman Islands, the British Virgin Islands, Samoa and other offshore banking havens.

The tiny British Virgin Islands, a territory of 22,000 people under United Kingdom control, is now the second-largest source of foreign direct investment in China, after Hong Kong. Last year, the British Virgin Islands pumped $5.78 billion into China.

Reasons for using offshore corporations, Chinese experts say, include tax avoidance, concealing ownership and hiding assets stripped from state companies.

Such financial trickery means little to the residents of Kaiping, a city on the banks of the Tan River about 100 miles west of Hong Kong, in one of the most industrialized regions in southern China.

But the gleaming 21-story Bank of China building along the river is a symbol of local corruption. The bank's former president, Yu Zhendong, and several other managers pillaged $483 million, the government charges.

Local residents boil at the massive rip-off.

"There is no cure for corruption in China. There is no hope," said Zhou Chung, owner of the Flowers and Grass florist shop.

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Replies:

China's factories stealing workers pay -- Weird_Enigma, 11:47:49 09/10/04 Fri