The five million yuan (HK$6.3 million) that Bo Xilai is accused of embezzling was money from the Communist Party headquarters to pay for a villa for then president Jiang Zemin , sources with knowledge of the deal revealed yesterday.
Bo's handling of the payment while serving as Liaoning governor in 2002 was the sole allegation of embezzlement detailed at his trial last month.
Publicly released court transcripts said only that the amount came from a higher authority to pay for a classified public project in Dalian , where Bo was previously mayor and party boss.
But two separate sources with close ties to elite Dalian politics told the South China Morning Post that the General Office of the party's Central Committee sent the money to the seaport city upon its completion of a holiday home for Jiang, who was then nearing retirement as president and party chief.
The money was later allegedly funnelled to Bo's wife, Gu Kailai , via a law firm with Bo's approval, court papers said. Jiang visited Dalian in 1999 to mark the 100th anniversary of the modern commercial port. He stayed for about 10 days - an unusually long period for a presidential visit.
"Jiang expressed his love of the port city during his visit," one of the sources said.
"Bo wanted to butter him up to get promoted by taking the opportunity to build the villa."
Aside from embezzlement, Bo is awaiting judgment on charges of bribery and abuse of power.
The former Politburo member's five-day trial last month was the culmination of the party's biggest scandal in decades.
The second source confirmed the story and said the money was allocated to Dalian with the consent of General You Xigui , Jiang's chief bodyguard and the former director of the Central Security Bureau.
Local governments often cover the expenses of visits by top leaders and claim reimbursement from the central government. It is an open secret that some also build or renovate facilities for retired state leaders.
Sources who either attended or were briefed on the proceedings at Bo's trial said the prosecutors provided no additional details about the project, other than those included in the publicly released transcript.
In court, Gu said her husband told her to meet Dalian's urban and rural planning director Wang Zhenggang to exchange a "large sum of money".
Wang, for his own part, described handing over the money for the project in 2002 during a meeting in a Dalian coffee shop with lawyer Zhao Dongping , who handled financial affairs for Gu. Wang said the project was started in mid-2000.
"It's very likely that the Dalian government had claimed the payment as some kind of public expenditure, and there was no need to pay it back to the local accounts after receiving the money from the central government," the second source said.
Zhao refused to comment when reached by phone.
A 2008 article written by a former spokesman for the Dalian Shide soccer team said Jiang took his only grandson to Dalian in 1999 and that the younger Jiang was a big soccer fan.