The great escapes

PUBLISHED : Wednesday, 23 July, 2003, 12:00am
UPDATED : Wednesday, 23 July, 2003, 12:00am

As thousands of university graduates from the mainland flock to western countries such as the United States, Canada and Australia to pursue degrees or settle there, these countries have also become the havens of choice for former government officials who have fled China with millions in embezzled public money before or after being accused of corruption.

The recent high-profile case that has caught the attention of Chinese-language media in the US involves Yang Xiuzhu, the former deputy director of the Construction Department in Zhejiang province. Yang disappeared in April after being linked to a corruption scandal involving illegal land deals. In a recent article, Duowei News, the largest Chinese-language online news service in North America, says Yang secretly boarded a flight from Shanghai with her daughter, son-in-law and grandson. The four stopped in Singapore for a couple of days before continuing on to the US. She is now reportedly hiding in the New York City area under a different name. Two weeks ago, Duowei dispatched a team of investigative reporters to look into her case. The team discovered Yang had prepared for her escape to the west when she was the deputy mayor of Wenzhou, before her promotion. She had secretly purchased a building worth US$4 million-$5 million in the centre of Manhattan.

So far there has been no action taken to bring her back to China because there is no extradition treaty between the mainland and the US.

Yang's latest adventure is nothing new. According to statistics compiled in 2001 by the bi-monthly publication, Banyuetan (Bi-monthly Forum), published by Xinhua News Agency, more than 4,000 officials who have been investigated for corruption are now at large in foreign countries, having stolen more than US$5 billion from China.

'This is only the official tally,' says Pin Ho, editor-in-chief of Duowei, who has been monitoring the issue for the past two years. 'This figure only covers the high-profile cases. It doesn't include cases involving officials at the provincial or municipal levels, or those who escaped before they were even investigated,' says Ho. He estimates the actual number of mainland officials fleeing and the amount of embezzled public funds transferred to other countries could be 10 or 20 times higher.

Based on an internal study conducted by Peking University in 2001, the amount of money illegally transferred out of China was US$36.4 billion in 1997, US$38.6 billion in 1998 and US$28.3 billion in 1999. University economist Fan Gang tells Duowei that in 2000, about US$48 billion left the country, far exceeding the US$40.70 billion worth of investment that China had obtained and dwarfing the estimates given by Xinhua.

During the past two years, Ho and his news agency have put together a list that includes officials from all over the mainland.

Last year about 120 officials investigated by Beijing law enforcement agencies fled the country. Among those, 70 were chief executives or managers of state-run enterprises. Jiang Jifang, director of the Henan Tobacco Sales Bureau, escaped from China in April last year. There is no information on his whereabouts. In February 2002, Lu Wanli, former director of Guizhou Provincial Transportation Department, left China with US$500 million. His whereabouts are unknown.

In October 2001, the general manager and two other supervisors of the Kaiping Branch of Bank of China in Guangxi province stole US$500 million and fled to Canada. They reportedly live in luxury mansions in Vancouver and Los Angeles. In May 2001, Cheng Sanchang, former party secretary of Luohe city in China's central province of Henan and president of Henan Yugang Incorporated, fled the country after being charged with embezzling millions of dollars of public money. He now lives in New Zealand with his mistress.

In 2000, about 500 government officials were allegedly implicated in the notorious smuggling operations by Yuanhua Group in the southern city of Xiamen. When the investigation started, about 70 had escaped abroad. The list goes on. As China's export industry expands and foreign investment pours in, Ho says the mainland's hard-earned foreign currency is going out the back door. 'Many Chinese officials are worried about the current political uncertainties in China. They lack confidence in the sustainability of China's economic boom,' he says. As a result, many officials amass as much fortune as they can while they are in power. They then stash the money away and, with the help of triad gangs, secretly transfer it abroad.

As the government steps up its crackdown on corruption, Ho says, fleeing to foreign countries has become a means to escape punishment.

The favourable destinations for these corrupt officials are the US, Canada and Australia because they have relatively lax immigration policies and China does not have extradition treaties. According to Ho, before their escape the majority of these officials obtain multiple entry visas to these countries, or their children and spouses are already living there. 'It is easier to obtain a permanent resident card there if his or her children or spouse are already residents,' he says.

Those without the proper travel documents enlist help from triads who provide them with fake passports and visas. For those lower-level officials without the connections to sneak into the west, they manage to disappear in Thailand, Malaysia or Myanmar on tourist visas, which are easy to obtain in China. Many have also ended up in Africa, Latin America or some Eastern European countries, where they live anonymously.

Before the 1990s, in New York City, San Francisco or Toronto, Ho points out, the common images of newly arrived mainland Chinese was a penniless student or an illegal boat person. 'Most worked as waiters or workers in Chinese restaurants and factories. They worked long hours to pay for their tuition or to send money home to their relatives,' says Ho.

In recent years, Ho says that image is changing. A few months after arrival, some purchase million-dollar houses, get themselves new expensive cars and frequent casinos to gamble huge sums. 'Some of these rich mainlanders are private entrepreneurs who have made it big in China. However, a large number of them are former government officials or their children.'

After Duowei published the story of Yang Xiuzhu last month, many residents in the New York City and New Jersey area contacted the news agency with various anecdotes. A Chinese-American estate agent in New Jersey told Duowei that one of his clients was a high-level government official from northeastern China. Within a two-month period, he purchased three houses, every one of them paid for in cash. This client was said to visiting the US for 'health' reasons. Actually, he was under investigation for corruption. A stockbroker who works on Wall Street said a 30-year-old Chinese, whose parents hold high-level positions within the central government, recently sought advice from him on investing US$10 million in the stock market.

These former public servants are living luxuriously on the money they stole from China while the central government is helpless and fighting a losing battle against corruption and graft. Sam Chen, a legal expert and visiting Chinese scholar at Harvard, says the trend of former Chinese officials running to the west for protection will continue in the future.

'At the moment, China has no extradition treaties with countries such as the United States, Canada and Australia,' says Chen. 'Even if China establishes treaties with these countries, or teams up with law enforcement agencies there to track down these criminals, the differences in ideology and legal systems will make it extremely hard to implement these bilateral or multi-lateral operations.'

Chen cites the example of Lai Changxing, the accused master-mind and kingpin of a US$6.6 billion smuggling and bribery network in Xiamen (the Yuanhua Group). Lai fled to Canada in 1999. Since then, China has wanted him back to face charges. The case has been dragging on for four years and Chen says there is still no indication that the Canadian government will let go of Lai, on the grounds that he may face the death penalty back home. Moreover, with such widespread corruption, the Chinese government simply doesn't have the manpower and resources to tackle this large contingent of alleged criminals overseas.

At the end of the 1970s, as China awoke from Mao's Cultural Revolution, it found itself on the verge of collapse. Ho says the economic reforms initiated by former Chinese leader Deng Xiaoping rescued the country and prolonged the rule of the Chinese Communist Party.

'When the Chinese economy accelerated, people thought economic prosperity would lead to more democracy and a government that is more accountable to the people,' says Ho. 'But that wish has not materialised. Instead, economic reforms have brought rampant corruption.'

A popular saying in Beijing goes: If the government is serious about locking up corrupted officials, they can simply convert all the government buildings into jails - because no one inside is innocent. The problem with the saying, says Ho, is that corrupt officials are too often one step ahead of the authorities. They are gone by the time anyone catches on, he says. 'So is the money in the bursary.'