More than a dozen family members of China\’s top political and military leaders are making use of offshore companies based in the British Virgin Islands, leaked financial documents reveal.
The brother-in-law of China\’s current president, Xi Jinping, as well as the son and son-in-law of former premier Wen Jiabao are among the political relations making use of the offshore havens, financial records show.
Fu Liang is the son of Peng Zhen, former mayor of Beijing and one of China\’s \”eight elders\”. After a career in the rail industry, he shifted to a role in the leisure sector, as an investor in yacht clubs and golf courses.
The documents also disclose the central role of major Western banks and accountancy firms, including PricewaterhouseCoopers, Credit Suisse and UBS in the offshore world, acting as middlemen in the establishing of companies.
The Hong Kong office of Credit Suisse, for example, established the BVI company Trend Gold Consultants for Wen Yunsong, the son of Wen Jiabao, during his father\’s premiership — while PwC and UBS performed similar services for hundreds of other wealthy Chinese individuals.
The disclosure of China\’s use of secretive financial structures is the latest revelation from \”Offshore Secrets\”, a two-year reporting effort led by the International Consortium of Investigative Journalists (ICIJ), which obtained more than 200 gigabytes of leaked financial data from two companies in the British Virgin Islands, and shared the information with the Guardian and other international news outlets.
In all, the ICIJ data reveals more than 21,000 clients from mainland China and Hong Kong have made use of offshore havens in the Caribbean, adding to mounting scrutiny of the wealth and power amassed by family members of the country\’s inner circle.
As neither Chinese officials nor their families are required to issue public financial disclosures, citizens in the country and abroad have been left largely in the dark about the elite\’s use of offshore structures which can facilitate the avoidance of tax, or moving of money overseas. Between $1tn and $4tn in untraced assets have left China since 2000, according to estimates.
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China\’s inequality problem
Income inequality is a mounting issue in China, a consequence of the country\’s rapid growth. A Beijing university study suggests that income at the richest 5th percentile are 34 times higher than those of the bottom 5th percentile.
percentile
5% ¥1,000$170
10 ¥2,000$340
25 ¥4,500 $765
50 ¥9,000$1,530
75 ¥15,900$2,703
90 ¥25,800$4,386
95 ¥34,300$5,831
Source: Beijing university study, 2012 incomes
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China\’s rapid economic growth is leading to a degree of internal tension within the nation, as the proceeds of the country\’s newfound prosperity are not evenly divided: the country\’s 100 richest men are collectively worth over $300bn, while an estimated 300m people in the country still live on less than $2 a day. The Chinese government has made efforts to crack down citizens\’ movements aimed at promoting transparency or accountability among the country\’s elite.
The confidential records obtained by the ICIJ relate to the incorporation and ownership of offshore companies, which is legal, and give little if any information as to what activities the businesses were used for once established. Offshore companies can be an important tool for legitimate Chinese businesses, especially when operating overseas, due to restrictions and legislation in the country.
via China’s princelings storing riches in Caribbean offshore haven | World news | The Guardian.
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