MCLC: Bo family wealth

[Denton, Kirk]

MCLC LIST
From: kirk (denton.2 at osu.edu)
Subject: Bo family wealth
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There's an accompanying family tree for you to sort out the various actors
in this incredible soap opera.

http://www.nytimes.com/interactive/2012/04/24/world/asia/all-in-the-family.
html

Kirk

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Source: NYT (4/23/12):
http://www.nytimes.com/2012/04/24/world/asia/bo-xilais-relatives-wealth-is-
under-scrutiny.html

As China Official Rose, His Family¹s Wealth Grew
By DAVID BARBOZA 

DALIAN, China ‹ Just a few weeks before his dramatic fall from power, Bo
Xilai wrote an inscription in calligraphy, praising the Chongqing Water
Assets Management Company, and urging support for its operations.

What he did not say was that a foundation controlled by his younger
brother, Bo Xicheng, had acquired a stake in a subsidiary of the water
company.

Mr. Bo had done something similar in 2003, while serving as governor here
in Liaoning Province. He said his province would make supporting the
Dalian Daxian company, a conglomerate engaged primarily in electronics
manufacturing, one of the most important tasks of the next five years. A
few years earlier, another company controlled by the same younger brother
was listed as the owner of nearly a million shares in Dalian Daxian, worth
about $1.2 million.

It is not clear whether Mr. Bo knew of the indirect stakes in the
companies, or whether his brother profited from his pronouncements. But
now, in the aftermath of Mr. Bo¹s dismissal, on suspicions of corruption
and accusations that his wife arranged the killing of a British business
associate, there are mounting questions about whether Mr. Bo, who was most
recently the party chief in the city of Chongqing and a member of the
Politburo, used his enormous political clout to enrich himself and his
closest relatives.

For much of the last decade, while Bo Xilai was busy moving up the ranks
of the Communist Party, and even striking populist themes aimed at
improving the lot of the poor, his relatives were quietly amassing a
fortune estimated at more than $160 million. His elder brother accumulated
millions of dollars¹ worth of shares in one of the country¹s biggest
state-owned conglomerates. His sister-in-law owns a significant stake in a
printing company she started that was recently valued at $400 million. And
even Mr. Bo¹s 24-year-old son, now studying at Harvard, got into business
in 2010, registering a technology company with $320,000 in start-up
capital.

Bo Xilai¹s downfall this spring has also cast a sharper spotlight on the
hidden wealth and power accumulated by the Communist Party¹s revolutionary
families, and by the sons, daughters, wives and close relatives of the
nation¹s high-ranking leaders.

³This could really open a can of worms,² says Bo Zhiyue, a senior fellow
at the National University of Singapore¹s East Asian Institute. ³The
relatives of other party leaders are also doing lots of business deals,
and people will begin to ask: What about them? Was the Bo family the only
one doing this kind of thing?²

Mr. Bo was suspended from his Politburo position and his leadership of
Chongqing, a large metropolis with province status, in recent weeks amid
accusations that, among other things, he interfered with an investigation
into the death of a Neil Heywood, a British businessman whose body was
found in a Chongqing hotel room on Nov. 15. His death was initially
attributed to alcohol poisoning. Mr. Bo¹s wife, Gu Kailai, and Zhang
Xiaojun, the family¹s 32-year-old ³orderly,² were named as the main
suspects, with officials saying Ms. Gu and her son, Bo Guagua, had had a
dispute with Mr. Heywood over ³economic interests.²

The case has also raised questions about how the Bo family was able to
afford to send their only son to study in England at Harrow and Oxford
University, as well as now at Harvard, for graduate school.

State-run media reports have hinted at the possibility that the Bo family
had been transferring illicit assets overseas. And soon after Mr. Bo was
dismissed from his posts, Xu Ming, one of China¹s wealthiest businessmen,
with close ties to Mr. Bo and his family, was detained, possibly here in
the city of Dalian, where Mr. Bo had once served as mayor.

None of the extended family members have been accused of illegality. But
the circumstances surrounding Mr. Bo¹s actions in support of companies
where family members had an interest suggest that he may have used his
influence to help increase their wealth.

Corporate records in Hong Kong and China show that the siblings of both
Mr. Bo, who also served as commerce minister in the national government,
and his wife have been exceptionally active for years in forming
investment companies and setting up offshore entities. Moreover, sometimes
Mr. Bo¹s family members have held their stakes using an alias.

Two of Ms. Gu¹s sisters ‹ Gu Wangjiang and Gu Wangning ‹ have earned
millions of dollars in publishing, real estate and other ventures.
Together they own about $120 million worth of shares in the TungKong
Security Printing Company in eastern China. The TungKong Web site says the
company has contracts with some of China¹s biggest state-owned enterprises
and government agencies, including the tax authorities and the Central
Bank.

Gu Wangning also helped Bo Guagua establish a technology company in
Beijing in 2010. The Guagua Technology Company¹s supervisor is listed as
Mr. Zhang, the Bo family aide accused along with Ms. Gu of being involved
in Mr. Heywood¹s death.

Two of Bo Xilai¹s three brothers are well-established businessmen with
close ties to state companies. His elder brother, Bo Xiyong, 64, has
invested over the years, according to Hong Kong records, in a series of
offshore investment vehicles like Advanced Technology and Economic
Development, partly owned by a British Virgin Islands entity, and Far
Eastern Industries. But little about the companies is publicly available.

Bo Xiyong is also vice chairman of China Everbright International, a
division of the Everbright Group, a giant state-owned company. His annual
salary is about $200,000 and his stake in the company during the past
decade is about $10 million, based on shares he has sold and the value of
his current stock options, according to public filings.

In addition, Bo Xiyong is a deputy of the Chinese People¹s Political
Consultative Conference, a government advisory body, and until recently he
served as deputy chairman of HKC Holdings, a Hong Kong company controlled
by the family of an Indonesian billionaire. In 2010, the big American
private equity firm TPG invested about $25 million in HKC, which
specializes in infrastructure and alternative energy projects in China and
has won numerous state contracts.

Bo Xicheng, the younger brother with the foundation, has ties to several
companies that operated in Dalian and Chongqing, the two cities where Bo
Xilai served as a high-ranking official. His charitable foundation, the
Beijing Xingda Educational Foundation, has on its board of directors the
heads of two real estate developers, the Dalian Huanan Group and Chongqing
Tianyou, as well as Weng Zhenjie, the chief executive of the Chongqing
International Trust Company. Earlier this year, a Chongqing business
tycoon, Zhang Mingyu, accused Bo Xilai¹s police force of threatening him
and protecting Mr. Weng, who Mr. Zhang said was a former business partner
who had quarreled with him in Chongqing.

Among the advisers to the foundation, which has already raised more than
$20 million, are two academics from the Chinese Academy of Social Sciences
who publicly supported Bo Xilai¹s ³Chongqing model² of development.

The foundation owns a $2 million stake in Chongqing Water Group, a company
now valued at about $5 billion.

Bo Xicheng has served as a director of several big state-owned companies,
including Citic Securities, one of China¹s largest investment houses. He
is also the founder of a small company that makes fire extinguishers and
other equipment, called Beijing Liuhean Firefighting Science and
Technology, whose products are used in government agencies, luxury hotels,
power plants and in Tiananmen Square in Beijing.

Less is known about Bo Xilai¹s wife, Gu Kailai, except that she opened her
own law firm, with offices in various countries, and also set up several
consulting firms with foreign businessmen.

There is also a great deal of mystery about Mr. Bo¹s son by his first
marriage, Li Wangzhi. Like the children of so many high-ranking Chinese
leaders, Mr. Li, 34, has worked in private equity and held a job at
Citigroup. He invested in companies in Dalian, on his father¹s turf,
according to corporate filings.

He has been known alternatively as Brendan Li and Li Xiaobai.

Whether Bo Xilai was aware of all this family deal-making is unclear.

But it has become increasingly clear that the relatives of high-ranking
leaders are in demand.

³They are sought after because they are considered conduits of power,²
says Laurence Brahm, a former lawyer who has written books on China¹s
economy and political scene. ³By virtue of the fact that they are a son or
daughter of someone, when they visit the provinces they¹ll get red carpet
treatment from the leaders there. The businesspeople can tag along.²

Keith Bradsher contributed reporting from Hong Kong. Xu Yan contributed
research from Shanghai.