China’s Biggest Corruption Scandal: US$14.5 Billion Assets Seized from Ex-Security Chief

From Reuters -  March 30, 2014

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Chinese authorities have seized assets worth at least 90bn yuan ($US14.5bn) from family members and associates of retired domestic security chief Zhou Yongkang, who is at the centre of China’s biggest corruption scandal in more than six decades, two sources said.

More than 300 of Zhou’s relatives, political allies, proteges and staff have also been taken into custody or questioned in the past four months, the sources told Reuters.

Prosecutors and the party’s anti-corruption watchdog had frozen bank accounts with deposits totalling 37bn yuan and seized domestic and overseas bonds with a combined value of 51bn yuan after raiding homes in Beijing, Shanghai and five provinces.

Investigators had also confiscated about 300 apartments and villas, antiques and contemporary paintings and more than 60 vehicles, the sources added. Other items seized included expensive liquor, gold, silver and cash in local and foreign currencies.

According to the sources, the seized assets had a combined value of at least 90bn yuan

The sheer size of the asset seizures and the scale of the investigations into the people around Zhou – both unreported until now – make the corruption probe unprecedented in modern China and would appear to show that President Xi Jinping is tackling graft at the highest levels.

But it may also be driven partly by political payback after Zhou angered leaders such as Xi by opposing the deposing of former high-flying politician Bo Xilai, who was jailed for life in September for corruption and abuse of power.

Zhou, 71, has been under virtual house arrest since authorities began formally investigating him late last year. He is the most senior Chinese politician to be ensnared in a corruption investigation since the Communist Party swept to power in 1949.

“It’s the ugliest in the history of the New China,” said one of the sources, who has ties to the leadership and has been briefed on the investigation.

The government has yet to make any official statement about Zhou or the case against him and it has not been possible to contact Zhou, his family, associates or staff for comment. It is not clear if any of them have lawyers.

The party’s anti-corruption watchdog and the prosecutor’s office did not respond to requests for comment. In the secretive world of China’s Communist Party, targets of its investigations usually disappear, often for months or even years, until an official announcement is made.

Xi ordered a task force formed in late November or early December to look into accusations against Zhou, sources have previously told Reuters. They have not said what the allegations were except that they were related to violating party discipline, official jargon for corruption.

A third source with ties to the leadership said Zhou had refused to cooperate with investigators, insisting he was the victim of a power struggle.

“Zhou Yongkang is tough and claims it’s political persecution,” the source said.

Zhou rose through the ranks of China’s oil and gas sector before joining the elite politburo standing committee in 2007, where as domestic security chief his budget exceeded defence spending. He retired in 2012 and was last seen at an alumni event at the China University of Petroleum on 1 October.

The first two sources added that more than 10 of Zhou’s relatives had been detained. They included Zhou’s one-time television reporter wife Jia Xiaoye, his eldest son from a previous marriage Zhou Bin, Zhou Bin’s in-laws and Zhou Yongkang’s brother.

About 10 officials who held a rank equivalent to at least vice minister were also under investigation, the sources said.

Among them were Jiang Jiemin, former chairman of both state energy giant PetroChina and its parent China National Petroleum Corporation (CNPC), former vice minister of public security Li Dongsheng and Ji Wenlin, ex-vice governor of the southernmost island province of Hainan.

Chinese state media has announced that all three were being investigated for serious violations of discipline. They were either proteges or aides to Zhou.

More than 20 of Zhou’s bodyguards, secretaries and drivers had also been detained, the sources said. Many other family members and associates had been questioned.