Thursday, 16 June 2011

Fact of the Day: 800 Billion Yuan Gone

In a report, the People's Bank of China believes some 18,000 corrupt mainland officials fled the country with as much as 800 billion RMB ($124 billion) in less than two decades.

The money was taken out between the mid-1990s to 2008, according to the bank's anti-money laundering monitoring and analysis centre.

The 67-page report believes officials and executives from state-owned enterprises embezzled the money, which many have speculated for a while.

What's interesting is that the report also details how these corrupt characters managed to funnel the money out of China -- with Hong Kong usually the first port of call.

"A relatively large number of defectors passed through Hong Kong and made use of the SAR's status as an international aviation hub, as well as the privilege for Hong Kong people to apply for visas in Commonwealth countries upon arrival, to flee to other countries," the report said.

Lower-ranking officials who took smaller amounts of money fled to nearby countries such as Thailand, Myanmar, Malaysia, Mongolia and Russia, while higher-ranking ones with more money went to the United States, Canada, Australia and the Netherlands.

Those who had problems going to Western countries directly waited things out in smaller countries in Africa, Latin America or Eastern Europe before moving on.

Many officials simply carried suitcases of cash out of China, or hired people to move the money out like "ants moving houses".

The report also notes other more complex money laundering operations, such as transferring money through intermediaries at home and abroad, forging false contracts and hiding the ill-gotten money through the guise of legitimate deals. And then there's the transaction of buying up luxury goods in Hong Kong using credit cards and then paying for it on the mainland.

And then of course there are casinos in Macau, Russia and Southeast Asia where corrupt officials laundered their money too.

Another interesting thing to note is that originally this report was not for public viewing as it was stamped "internal data, store carefully" on the title page and marked as a "discussion document" that was compiled in June 2008.

It was only uploaded on the bank's website Monday after it won joint first prize in the China Society for Finance and Banking's ninth annual awards for outstanding financial research reports.

The report warned rampant corruption jeopardized communist rule. "It is a direct threat to the clean-politics structure of the [Communist] Party and harms the foundations of the party's power," it said.

So this just about confirms our suspicions of mainlanders going overseas and snapping up luxury homes, cars and clothes with cash or gambling up a storm in the casinos.

Eight hundred billion RMB is a lot of money. In fact it's disgusting to hear that much has disappeared into the wrong hands. That money could have been used to educate millions of children and young people so that they can have better lives, to subsidize health care costs to ensure a healthy society and pensions so the elderly don't have to poke around garbage cans for empty bottles.

Instead that money has been used to ingratiate greedy people.

Until there is freedom of the press and rule of law in China, the corruption will continue. And who's to blame for that?

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