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China says corrupt officials flee with $120 bn

17 June 2011 19:47 (UTC +04:00)

Baku â€“ APA. Corrupt Chinese officials siphoned more than $120 billion out of the country in less than two decades, the central bank has said in a study highlighting the widespread scourge of government graft, APA reports quoting AFP.
Between 16,000 and 18,000 government officials and executives of state-owned firms have fled China or simply vanished with up to 800 billion yuan ($123.7 billion) in illegal gains, according to the study.
Higher-ranking officials carrying larger sums of money mostly fled to developed nations such as the United States, Canada and Australia, while others tended to choose nations closer to home such as Russia and Thailand, it said.
A number of defectors used Hong Kong as a springboard to Commonwealth states while others hid out in small nations in Africa, Latin America and eastern Europe before they could get the documents needed to go to the West, it said.
Official graft remains pervasive in China and is a major source of public resentment towards the government despite numerous clean-up campaigns.
President Hu Jintao and other top leaders have repeatedly called endemic corruption in China a threat to the Communist Party’s legitimacy and have pledged to stamp it out.
The rampant transfer of graft money out of China could "undermine the foundation of the Party’s rule" and has harmed the world’s second-largest economy, warned the study, which was based on data compiled in June 2008.
It will also "severely tarnish China’s international image" because such practices "undoubtedly exposed problems such as political corruption, loopholes in the legal system, and incomplete financial supervision" in China, it said.
"Firmly punishing and effectively preventing corruption are critical to the winning or losing of public support and the life or death of the Party and therefore is a key political task the Party must handle well," it said.
The report, which was prepared by the central bank’s anti-money laundering supervision and analysis centre, was initially stamped "for internal use only" but was posted on the People’s Bank of China website this week.
It was reported in some Chinese media but was no longer showing on the website Friday. AFP accessed it via a cached link.
Some offenders highlighted in the central bank report simply carried cash in their suitcases when they crossed the border out of China or transferred money via illegal, private channels, the report said.
More sophisticated transactions included forging fake contracts, stealing from state-owned companies by siphoning overseas assets or setting up front companies in offshore markets, it said.
In more recent times, many officials have sent their relatives or lovers abroad first to buy properties and other assets, or set up companies to receive their illegal gains, it added.
Some notable cases include three managers at a Bank of China branch who fled to the United States and Canada in 2001 with $483 million and Cheng Kejie, a former vice chairman of the country’s parliament, who parked tens of millions of yuan in ill-gotten gains in overseas bank accounts.
Luxury car dealers in New Zealand had listed Chinese students as their most prized clients, and property costs in areas of New York and Los Angeles soared due to an influx of Chinese families with dubious backgrounds, the study said.
The bank said authorities would boost oversight over "sensitive" industries such as the financial, land, transport and construction sectors and step up supervision of officials, managers at state-owned firms and their relatives to prevent graft.
According to an annual report by Chinese prosecutors published in March, 1,282 graft suspects who went on the run were apprehended last year, in cases involving 7.4 billion yuan in ill-gotten gains.