Dear poster,
Instead of LAO, read. my dear poster read. and study. Here is just one example. But there have been many more scandals where Chinese wealth has been hoarded by few.
Updated: Nov. 25, 2012
Wen Jiabao was appointed prime minister of China in 2003. He stepped down in November 2012 at the 18th Communist Party Congress held in Beijing. His successor, Li Keqiang, will take over in 2013.
Mr. Wen is well known for his populist approach and near constant presence in Chinese headlines. He often races to the scene of natural disasters to comfort survivors. On state-run television, he has been seen eating with the poor and disadvantaged in rural villages. Though often stage-managed by Chinese news media, his common touch has earned him the nickname Grandpa Wen.
Wens Family Gained Extraordinary Wealth
However, during Mr. Wens leadership, many of his relatives, including his son, daughter, younger brother and brother-in-law, have become extraordinarily wealthy, an investigation by The New York Times in October 2012 showed. A review of corporate and regulatory records indicated that the prime ministers relatives, some of whom have a knack for aggressive deal-making, including his wife, have controlled assets worth at least $2.7 billion.
Untangling their financial holdings provided an unusually detailed look at how politically connected people have profited from being at the intersection of government and business as state influence and private wealth converge in Chinas fast-growing economy.
Unlike most new businesses in China, the familys ventures sometimes received financial backing from state-owned companies, including China Mobile, one of the countrys biggest phone operators, the documents show. At other times, the ventures won support from some of Asias richest tycoons. The Times found that Mr. Wens relatives accumulated shares in banks, jewelers, tourist resorts, telecommunications companies and infrastructure projects, sometimes by using offshore entities.
But soon after the article appeared in The Times, two lawyers who said they represented the family of of Mr. Wen issued a statement disputing aspects of the story, a rare instance of a powerful Chinese political family responding directly to a foreign media report.
The statement, published in The South China Morning Post on Oct. 28, said, The so-called hidden riches of Wen Jiabaos family members in The New York Timess report did not exist.
Greatest Source of Riches Comes From Insurance
In November 2012, The Times reported that the greatest source of the familys wealth, by far, came from shares in Ping An Insurance, a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential.
In 1999, when Ping An was in financial trouble, the head of the company was pushing Chinese officials to relax rules that required breaking up the company in the aftermath of the Asian financial crisis. Direct appeals were made to the vice premier at the time, Mr. Wen, as well as the then-head of Chinas central bank two powerful officials with oversight of the industry.
Ping An was not broken up.
The successful outcome of the lobbying effort would prove monumental. Ping An went on to become one of Chinas largest financial services companies. And behind the scenes, shares in Ping An that would be worth billions of dollars once the company rebounded were acquired by relatives of Mr. Wen.
Long before most investors could buy Ping An stock, Taihong, a company that would soon be controlled by Mr. Wens relatives, acquired a large stake in Ping An from state-owned entities that held shares in the insurer, regulatory and corporate records show. And by all appearances, Taihong got a sweet deal. The shares were bought in December 2002 for one-quarter of the price that another big investor the British bank HSBC Holdings paid for its shares just two months earlier, according to interviews and public filings.
By June 2004, the shares held by the Wen relatives had already quadrupled in value, even before the company was listed on the Hong Kong Stock Exchange. And by 2007, the initial $65 million investment made by Taihong would be worth $3.7 billion.
Corporate records show that the relatives stake of that investment most likely peaked at $2.2 billion in late 2007, the last year in which Taihongs shareholder records were publicly available. Because the company is no longer listed in Ping Ans public filings, it is unclear if the relatives continue to hold shares.
It is also not known whether Mr. Wen or the central bank chief at the time, Dai Xianglong, personally intervened on behalf of Ping Ans request for a waiver, or if Mr. Wen was even aware of the stakes held by his relatives.
But internal Ping An documents, government filings and interviews with bankers and former senior executives at Ping An indicate that both the vice premiers office and the central bank were among the regulators involved in the Ping An waiver meetings and who had the authority to sign off on the waiver.
Background
Before becoming prime minister, Mr. Wen was a number-crunching chief of staff who self-effacingly served Chinas top leaders for two decades.
Like his superior, Hu Jintao, Mr. Wen scaled the one-party political hierarchy leaving few footprints and making no known enemies. People who worked with him early in his tenure described him as being conspicuous mainly for being fastidious. He lets policy documents sit on his desk for at least three days before signing off, they say, so he can slow-cook the contents in his mind and triple-check the grammar.
But after a series of high-profile visits to victims of the Sichuan earthquake of 2008, he began to be known for a populist touch rare among the Communist Partys leadership.
In 2011, Mr. Wen appeared to press for political reform, though analysts are uncertain about whether he was pushing on his own or with the support of a broader segment of the nations leadership.
In January 2011, the 68-year-old prime minister appeared at the nations top petition bureau in Beijing, where ordinary people go to file grievances, and encouraged citizens to criticize the government and press their cases for justice.
We are the peoples government and our power is vested upon us by the people, the prime minister said during the visit, according to state-run news media. We should use the power in our hands to serve the interest of the people, helping them to tackle difficulties in a responsible way.
The key factor was the setting. The national petition bureau is known as a lightning rod for anger about official corruption, illegal land seizures, labor disputes and complaints of all sort, the kind of problems that reveal Chinas continuing weakness on the rule of law. In a nation that fiercely snuffs out any sign of dissent or challenges to the ruling Communist Party, the government sometimes deems it appropriate to detain petitioners here or to forcibly send them back home.
But the state-run news media showed images of the prime minister meeting two days earlier with a small group of petitioners at the bureau, officially known as the State Bureau for Letters and Calls. The state-controlled media reports said he encouraged government workers to handle the petitioner cases properly.
Mr. Wen also instructed officials to make it easier for citizens to criticize and monitor the government. The reports said it was the first time a prime minister had appeared at the bureau to meet ordinary petitioners since the founding of the Communist state in 1949.
Wen Jiabao News - The New York Times
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