MCLC: Bo's fall put allies in peril

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: Bo's fall put allies in peril
***********************************************************

Source: NYT (5/20/12):
http://www.nytimes.com/2012/05/21/world/asia/leaders-fall-in-china-put-alli
es-in-peril.html

Leader’s Fall in China Put Allies in Peril
By EDWARD WONG and JONATHAN ANSFIELD

CHONGQING, China — Early this year, as a crisis unfolded in the chambers
of power here, three men flew into this fog-wreathed riverside metropolis
within a day or two of one another. They were members of the inner court
of Bo Xilai, the Communist Party aristocrat who ran the city, and they had
come to repair a rupture between the strong-willed Mr. Bo and his equally
driven police chief.

Just days earlier, on Jan. 28, the police chief, Wang Lijun, had pressed
Mr. Bo over evidence tying Mr. Bo’s wife to the death last fall of a
British businessman, prompting Mr. Bo to punch Mr. Wang in the face, Mr.
Wang later recounted to others. The three men — two of them powerful
businessmen and the other a former intelligence agent — had befriended Mr.
Bo and Mr. Wang years ago. They knew both to be controlling and impulsive,
and their goal was to broker a peace.

The most famous of the three, Xu Ming, 41, listed by Forbes as China’s
eighth-richest person in 2005, had flown in on his private jet. He and the
others held separate meetings with Mr. Bo and Mr. Wang. The damage was
irreparable. The former intelligence agent, Yu Junshi, rushed home and
stuffed a bag with 1.2 million renminbi, or nearly $200,000, to take to a
bank with Ma Biao, the other businessman, known for his girth. Then all
three fled to Australia within days, fearful of the fallout from a
possible investigation of Mr. Bo.

Those figures are now being detained as central suspects or witnesses in
the Chinese government’s broad investigation into Mr. Bo’s use of power.
His fall from the party’s top echelons has opened a window on how some of
his closest allies from his years as a rising official in northeast China
became entwined in the social and economic fabric of Chongqing, a
fast-growing western municipality of 31 million that Mr. Bo governed for
four years. The accounts about those allies, which raise questions about
Mr. Bo’s relations with tycoons, are based primarily on interviews with
six people associated with the circle, who spoke on the condition of
anonymity for fear of facing official scrutiny, and a review of financial
documents and company Web sites. Together, they reveal the workings of the
shadowy court of one of China’s leaders, and of the panic that set in when
these ambitious figures realized their world was about to collapse.

“These are powerful men with their own style,” said one person who has met
with Mr. Yu. “It was all very strange, very abnormal, the way they acted
at that time.”

On Feb. 6, Mr. Wang drove to the American Consulate in Chengdu and told
diplomats about what he said was the murder of the Briton, Neil Heywood,
which set in motion one of China’s biggest political scandals in decades:
Mr. Bo has been removed from his posts
<http://www.nytimes.com/2012/03/15/world/asia/upstart-leader-in-china-is-ou
sted-from-party-post.html>, his allies are under scrutiny and his wife is
a suspect in the killing.

The three men who fled to Australia have been held for two months. They
left after Mr. Wang’s consulate visit, but returned to China in about 10
days on Mr. Xu’s private jet, thinking that Mr. Bo had avoided serious
trouble. They were picked up by the police around the time that Mr. Bo was
removed as party chief of Chongqing on March 15, according to several
people who knew the men or their friends and families. One with security
contacts said almost 60 people had been detained.

All three had much to lose. Mr. Xu, the billionaire, and Mr. Ma, the
businessman, in particular had become involved in land deals here, and
feared being brought down if Mr. Bo was investigated for corruption, their
associates said.

The men could not be reached for comment, and employees at companies where
they serve as executives declined to answer questions.

The first to appear on the scene in Chongqing was Mr. Yu, a fixer for the
Bo family. He moved here before Mr. Bo arrived in December 2007 for his
posting as party chief. Mr. Bo had sent him to gather information and
build relations, according to people who have met Mr. Yu, a former
intelligence officer for the People’s Liberation Army. Mr. Yu had been
posted to Bangkok in the 1990s, but an agent in his network defected, and
the members of his group were recalled and punished.

After Mr. Yu left the intelligence service, he returned to his hometown,
Dalian, where Mr. Bo was mayor and Mr. Xu was building up his companies.
Mr. Yu was investigated by the police over his business activities, and he
enlisted the help of Gu Kailai, a lawyer married to Mr. Bo. He soon became
friends with Mr. Bo; Mr. Xu, the billionaire; Mr. Ma, the businessman; and
Mr. Wang, who was a police officer in the surrounding province of
Liaoning, said people familiar with this history.

“Bo Xilai is fascinated by spies, so he likes to make friends with
intelligence agents,” said Yang Haipeng, an investigative journalist in
Shanghai.

In a microblog post on April 24, Mr. Yang wrote that Mr. Yu was an ex-spy
turned “henchman” for the Bo family who had been detained in March.
Censors deleted Mr. Yang’s microblog account, and security officials asked
him for his source.

Mr. Yu, well read and well mannered, moved in rarefied circles in
Chongqing and kept a low profile. He was thrust into the spotlight only
once, when two dogs he kept at a home in Olympic Garden Villas, a German
shepherd and a pit bull terrier, bit a man to death last July, said one
person who has visited Mr. Yu at the home. Mr. Wang, the police chief,
persuaded Mr. Yu to put the dogs to sleep. “A dog that has caused so much
trouble for you will make trouble again; it will jinx your future,” Mr. Yu
recalled Mr. Wang saying, according to the person. The episode was
reported in The Chongqing Evening News. Mr. Yu told the reporter he worked
in the financial industry.

Business executives seeking to curry favor with Mr. Bo and Mr. Wang
sometimes approached Mr. Yu. In 2009, Mr. Bo and Mr. Wang started a
crackdown on criminal gangs that was also an offensive against private
entrepreneurs and Mr. Bo’s enemies. Fearful of being unfairly ensnared in
the crackdown, Yin Mingshan, the founder of Lifan Group, a motorcycle
company, arranged a banquet with Mr. Yu, said two friends of the banquet’s
organizer. “All the bosses needed protection,” one of them said.
Representatives of the company did not answer calls seeking comment.

Right after the campaign began, Mr. Xu and Mr. Ma started real estate
projects in Chongqing through a complex web of companies. “Bo Xilai would
always give Xu Ming advantages in doing business,” said one person.

In the 1990s, Mr. Xu built up his main conglomerate, Dalian Shide, whose
holdings range from home appliances to finance to building materials, by
winning contracts from local officials, including a lucrative deal to
provide window frames while Mr. Bo was mayor of Dalian. Mr. Xu also
received generous loans from state banks, including from China Guangfa
Bank, where Mr. Ma was a branch chief.

Mr. Ma left the bank years ago and started an insurance company. After Mr.
Bo arrived in Chongqing, Mr. Ma and Mr. Xu set up several companies to
develop Chongqing real estate, according to financial records and
information from government and company Web sites. Mr. Xu and Mr. Ma have
roles in at least three companies founded in 2009: Chongqing Heshengyu
Real Estate Development, Chongqing Shenghe Construction and Guanghua
Huihuang.

Mr. Xu found ways to keep himself veiled. He sometimes used a Hong Kong
company, Golden International Investment, to invest in local companies.
Records in Hong Kong list Mr. Xu and three other Dalian Shide executives
as the directors of Golden in 2003.

The companies bought at least 123 acres of land in Chongqing, according to
Chinese news media reports. Mr. Xu and Mr. Ma often met their allies
discreetly in hotels. One sweltering night last summer, Mr. Ma walked with
Mr. Yu, the former spy, into the lobby of the Nanshan Lijing Resort, set
in misty hills on the city’s outskirts. Mr. Wang, the police chief,
greeted them there in a respectful manner, and they dined with Mr. Xu,
said one witness.

The resort was known as a rendezvous point for people close to Mr. Bo, and
Mr. Heywood’s body was found in a villa there on Nov. 15. Police
investigators determined that Mr. Heywood had been poisoned, and suspected
Mr. Bo’s wife, Gu Kailai, was involved.

Tensions built between Mr. Bo and Mr. Wang, the police chief, and things
fell apart after they had their explosive meeting on Jan. 28. Mr. Xu
beseeched Mr. Yu to fly to Chongqing from Beijing. On Jan. 31, Mr. Yu met
with Mr. Wang for an entire night in Mr. Wang’s suite at police
headquarters. The next day, his driver switched cars; picked up Mr. Ma,
the businessman, at the airport; and drove him and Mr. Yu to the Foggy
City Hotel, where Mr. Bo sometimes dined and held meetings. Mr. Ma met
with Mr. Bo while Mr. Yu waited in the lobby. “When Ma Biao came out, his
face looked ashen,” said a friend of Mr. Yu’s.

On Feb. 2, the two made their run to the bank. Mr. Yu told Mr. Ma to take
the bag of cash inside by himself so the two would avoid being recorded
together on security cameras. Then they flew out of Chongqing. That day,
the local government announced that Mr. Wang had been removed from his
police chief job.

Mr. Xu flew in on Feb. 3 and met with Mr. Bo. Within a week, he and the
other two left for Hong Kong from northern China, and proceeded to
Australia. “We thought they weren’t coming back,” one person familiar with
them said.

But they returned. Then on March 14, as word quietly spread of Mr. Bo’s
purge, Mr. Yu realized that he and his cohorts would be detained. He told
his wife and son to go for a stroll that evening outside their Beijing
home, so they would not witness the arrival of the police, his wife told a
friend. But the police did not arrive until later that night, and the
family watched as Mr. Yu was led away.

Edward Wong reported from Chongqing, and Jonathan Ansfield from Beijing.
Ian Johnson contributed reporting from Beijing. Shi Da and Mia Li
contributed research from Beijing, and Hilda Wang contributed research
from Hong Kong.