Investigations into high-profile business people show just how dangerous it is to be rich in China 'Let a hundred heads roll' may not have as poetic a ring as Mao's 1956 'let a hundred flowers bloom' movement, which lured out free-thinkers only long enough to mow them down in a subsequent 'anti-rightist' campaign. But it is a reasonable enough moniker for the ongoing series of investigations into Shanghai businessman Chau Ching-ngai, former BOC Hong Kong (Holdings) chief executive Liu Jinbao and a host of other prominent figures. The investigations also illustrate just how dangerous it is to be rich in China, and how convoluted cross-border corporate investigations can get as the commercial ties binding Hong Kong to the mainland grow ever tighter. What began as a supposedly routine transfer of Mr Liu back to headquarters in Beijing - news of which was first reported by the South China Morning Post on May 26 - has escalated into a multi-dimensional investigation encompassing the Bank of China and its Hong Kong-listed subsidiary BOCHK, a private Shanghai property conglomerate listed in Hong Kong, and regulatory bodies on both sides of the border. Within a week of Mr Liu's transfer, shares in Chau's Hong Kong-listed flagship, Shanghai Land Holdings, were plummeting on rumours that its boss had been detained by investigators in Shanghai - speculation that was eventually confirmed by a Shanghai government spokeswoman on June 3. Just one day earlier, officers from the Independent Commission Against Corruption (ICAC) had arrested 19 people in Hong Kong in connection with an investigation into Chau's privately held New Nongkai Global Investments and Shanghai Land. Those snared included Chau's wife and business partner, Mo Yuk-ping, and a former BOCHK officer whose identity has not been officially confirmed. Finally, on June 10, Bank of China admitted that Mr Liu was at the centre of an investigation into loans extended by its Shanghai branch, where he once worked. Despite the bank's insistence that the investigation did not extend to Mr Liu's time in Hong Kong, where he also served a term as chairman of the Hong Kong Association of Banks (HKAB), the confirmation sparked widespread concern about corporate governance standards at BOCHK - supposedly the best part of China's best bank. There were even whispers among Hong Kong bankers at the speed with which Mr Liu's replacement had been approved by the Hong Kong Monetary Authority (HKMA), and concerns expressed by the HKMA itself at the general lack of transparency with which mainland authorities were handling the affair. 'We believe that all these issues need to be explained to the public and ourselves,' HKMA deputy chief executive David Carse said on June 7. 'The situation of Mr Liu is unclear. We're waiting for clarification to be issued by [BOCHK].' Officially, the twin investigations into Mr Liu and Chau have not intersected, even with Mr Liu's case now traced back to Shanghai and the former BOCHK official netted in the ICAC swoop. That line, however, is stretching credulity with each new development. BOCHK, for example, confirmed on June 6 that it had extended a $1.77 billion loan - of which $741 million was still outstanding - to New Nongkai to fund Chau's takeover of imGo, which was later re-christened Shanghai Land. The bank, which had been pledged New Nongkai's 75 per cent stake in Shanghai Land as collateral, also said it had applied to put New Nongkai into receivership. Meanwhile, Shanghai Land, which is also in receivership, reported it was chasing two 'unorthodox loan transactions' worth 650 million yuan (HK$609.24 million) in Shanghai. Two of the firm's Shanghai subsidiaries - Shanghai Yihe Longbai Hotel and Shanghai Wang Xin Property - borrowed the money from 'Shanghai financial institutions' and on-lent it to two unidentified 'mainland entities'. 'One country, two systems' has never been so complicated: a prominent Hong Kong-based Beijing banker and Shanghai businessman are detained on the mainland to facilitate investigations there; the businessman's wife is arrested in Hong Kong; and receivers of the businessman's Hong Kong firm are chasing its Shanghai subsidiaries for millions of yuan in missing loan proceeds. What makes this fascinating but inscrutable mess all the more unfathomable is the manner in which such investigations are conducted on the mainland, and the larger political context surrounding the snowballing scandal. State bankers and government officials disappear all the time on the mainland to 'assist' authorities with investigations into what are usually described initially as 'economic irregularities'. Mr Liu's case is exceptional only because of his uniquely high-profile position and his parallel status as a pillar of the Hong Kong banking establishment. The netting of Chau and other members of China's new breed of phenomenally successful private businessmen and women is a relatively recent phenomenon, foreshadowed by last year's arrest of former film actress Liu Xiaoqing and businessman Yang Bin for tax evasion and various other economic crimes. But it contrasts starkly with the fortunes of China's capitalist class, which are supposedly on the rise after the ranks of the Chinese Communist Party were officially opened to private businessmen last year. Constitutional revisions are also being planned that would afford private property the same protection now only afforded to so-called 'socialist public property'. Bankers, officials and businessmen who disappear into the mainland's investigation vortex are not necessarily doomed. Indeed, such investigations - handled in sensitive situations by the Chinese Communist Party's Central Commission for Discipline Inspection - are the closest thing to a real trial suspects will receive. If a case cannot be built up against them, they may escape unscathed. But usually one can, in which case the ensuing trial is largely for show and little more than a prelude to sentencing. Given the rough-and-tumble nature of China's commercial climate, the odds are stacked in favour of the investigators. Mainland firms routinely play games with their money that are technically irregular but not necessarily corrupt - such as exaggerating the value of imports in order to move funds to Hong Kong or other offshore locations, or diverting funds earmarked for one project to another more speculative one that promises a greater return. So long as the money is not lost or stolen during its diversion and returned in due course, no one is likely to ever be the wiser. The same applies to bank loans, to the point that many state bankers are reluctant to lend to private companies at all in the current paranoid environment. 'It's easy for bankers to lend money to the government,' said one executive involved in a state-funded development project on the mainland. 'If the government defaults, the banker is not to blame. But if a company defaults, his head can roll.'