As Panama Papers scandal deepens, China targets offshore accounts in renewed Skynet crackdown on fugitive corrupt officials
Joint effort to focus on transfers of illicit financial assets abroad through overseas companies and underground banks
China has launched the second round of its international manhunt Operation Skynet, with the multiagency effort continuing to target offshore companies, underground banks and fugitive corrupt officials.
“Skynet 2016” is an extension of the Skynet operation launched in March last year, and which brought together various government departments in an international quest to recover fleeing fugitives and their assets.
According to a statement by the Communist Party’s top anti-graft agency, the Central Commission for Discipline Inspection, the Skynet umbrella covers a joint crackdown led by the People’s Bank of China and the Ministry of Public Security on transfers of illicit financial assets abroad through offshore companies and underground banks. It also covers a campaign headed by the Supreme People’s Procuratorate to hunt for fugitives who committed work-related crimes, as well as Operation Foxhunt headed by the Ministry of Public Security.
As part of Skynet, 26 of the country’s 100 most-wanted fugitives listed with Interpol have been brought back to China.
Beijing was expected to issue a new list of wanted fugitives, Cai Wei, deputy director of the CCDI’s International Cooperation Bureau, said last month.
The announcement of Skynet 2016 comes amid revelations from the leaked Panama Papers that nearly a third of the business of Mossack Fonseca, the law firm at the centre of the scandal, came from its offices in Hong Kong and the mainland, according to the International Consortium of Investigative Journalists.
Zhuang Deshui, an anti-graft expert at Peking University, said the crackdown on illegal money transfers via offshore companies and underground banks was crucial to stopping fugitives.
“When the corrupt officials fled abroad, they did not take their cash with them. They had already transferred their money overseas through offshore companies and underground banks,” Zhuang said.
“Clamping down on these channels for money laundering cuts their capital chain, their source of income, their lifeblood.”
He said Hong Kong was a hotbed for corrupt mainland officials to launder money through shell companies.
CCDI chief Wang Qishan said in January that last year’s Operation Skynet recovered 1,023 fugitives and 3 billion yuan (HK$3.6 billion). It was the first time the number of repatriated fugitives had exceeded the number of those who had newly fled.
Zhuang said Skynet made significant achievements last year, recovering an unprecedented number of fugitives and money.
But he stressed it was still the tip of the iceberg, given the vast number of officials who had fled abroad over the decades.
The CCDI requested in late 2014 that all provincial and municipal governments and semi-official agencies report all cases of fugitives in the past two decades in detail, but the total figure was never made public.
“It is maybe because the numbers were too shocking. It is enough that the central [leadership] knows it in its heart,” Zhuang said.
Ren Jianming, a professor of clean governance at Beihang University, said bilateral extradition was still a weakness in China’s international anti-corruption cooperation efforts.