Gu Kailai and Bo Xilai. She is accused of killing the Briton Neil Heywood and is alleged to have tried to shift money overseas. Photograph: Reuters
Some spirit billions out of the country, buying up luxury villas abroad; one reportedly lavished wealth on 18 mistresses; another blew a quarter of a million dollars in a two-day gambling spree.
Chinese bureaucrats may have a grey image but their ability to amass – and spend – ill-gotten gains is eye-opening.
The extraordinary political scandal unfolding at the top of the party – the suspected murder of the Briton Neil Heywood by the wife of the top leader Bo Xilai – is unprecedented.
But the allegations of "serious disciplinary violations" by Bo himself, and of attempts by his spouse, Gu Kailai, to shift money overseas, have put an instantly recognisable and very powerful face on an endemic problem.
Corrupt officials smuggled 800bn yuan (£80bn) out of the country and around 17,000 people fled abroad between the mid-1990s and 2008, according to a report that China's central bank released last year, apparently unintentionally.
"[Bo's arrest] isn't a typical case of graft. Nevertheless, it illustrates the irrefutable truth that unchecked power leads to corruption," warned the gutsy business magazine Caixin.
Columbia University's Xiaobo Lu, an expert on official abuses of power, said the affair was a "huge challenge" for the regime. "Bo's case has revealed how closely power and money are married. In China, the corruption problem has been clearly recognised as a legitimacy-threatening problem."
The party is spinning the case as proof of its determination to keep cadres clean, with state media saying it shows that no one is above the rules and treating it as an isolated case. How many believe that is another matter. Corruption has long been a major public concern.
The party has repeatedly pledged to crack down and there is certainly no shortage of cases. Disciplinary inspection agencies handled almost 140,000 in 2010 and more than 145,000 people were punished.
Some say the massive sums now involved largely reflect the growth of the Chinese economy, while others think the problems are spreading and becoming more entrenched as political and economic power grow ever closer.
"Once people get into office they are part of the system and that makes it difficult to be clean. People who are not [clean] put pressure on you and see you as an undesirable element," said Sidney Rittenberg, who spent 35 years working alongside Chinese leaders as an ardent communist. Back in the 60s, he said, one official at his work unit was fired for merely accepting gifts of food.
Deng Xiaogang, an expert on corruption at the University of Massachusetts Boston, said: "When you are in power you don't need to do anything. People come and beg to give you favours."
No one can be sure precisely what allegations Bo may face – and given that he and his wife have vanished into custody, they have no way of challenging them.
In most cases involving very senior figures – such as the former Shanghai party secretary Chen Liangyu, now serving 18 years for corruption – there has been no suggestion they funnelled money overseas.
But last week a pointed article in the official party newspaper, the People's Daily, said corrupt officials had been secretly using children, wives, friends and even mistresses to move and hide illicitly obtained wealth overseas. Investigators are also said to believe that Gu killed Heywood because he threatened to expose her overseas investments.
Corruption concerns have increasingly focused on "naked officials" who send their spouses and children overseas – usually followed, say critics, by sizable fortunes.
Strict capital controls of $50,000 (£30,000) a year per person have done little to prevent the flow of cash.
The railway ministry's former chief engineer Zhang Shuguang, who is still under investigation, stashed $2.8bn of assets in the US and Switzerland, according to the state broadcaster. Other reports said the assets included a spacious Los Angeles property bought for $825,000 at a time when Zhang, then a much lower ranking figure, was earning just 2,200 yuan ($350) a month.
The central bank report identified eight ways that officials moved money overseas. Some simply carried suitcases of money across the border themselves or used human "mules"; others used credit cards to buy large amounts of luxury goods overseas, repaying the fees with embezzled money or bribes. In some cases, people accepted money overseas and bought property cash down, or had money put directly into overseas accounts. In more complicated schemes they set up offshore companies in places such as the British Virgin Islands, buying materials from them at an above-market rate and selling them goods at a below-market rate. The domestic company would go bankrupt and the offshore one would take it over.
Another popular avenue for money-laundering has been Macau's casinos. Because of currency controls, junket operators allow mainlanders to put down renminbi on the mainland and then advance them credit in Macau – often a figure many times the original deposit.
Winnings can be paid out in Hong Kong dollars and funnelled to another location, though sometimes officials get carried away: Ma Xiangdong, deputy mayor of Shenyang, reportedly gambled away $4.8m of embezzled funds in Macau before he was brought down. Ma was executed but such tough penalties have done little to deter cadres. "People with vested interests have no fear," said Ma's former secretary Wang Xiaofang, now a novelist who writes about official intrigues.
He Jiahong, an expert on corruption investigations at Renmin University, said greater accountability was needed. "[Anti-corruption] policies rely on severe punishment – we say we executed one and deterred 100. But this policy has not worked well. Effective investigation is better than punishment, and prevention is better than investigation."
The party has repeatedly pledged to make senior officials publicly declare their own assets and those of their relatives – but has yet to do so.
And the higher up the tree officials climb, the harder it is to challenge them. "These guys get so drunk on power they think they can get away with anything," said Rittenberg. "When the big guys are caught, usually it has something to do with their political stand. It is a political weapon and they saw Bo as a political menace."
http://www.guardian.co.uk/world/2012/apr/19/bo-xilai-light-corruption-china
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