Yiu found five lawyers associated with Gu’s firm, so he searched their names on Google and Baidu, the Chinese search engine (most Chinese websites are searchable only through Baidu). He found a number of publicly listed companies that were connected to those lawyers. So he combed through the companies’ websites and downloaded the companies’ annual reports from the Shenzhen and the Shanghai stock exchanges, where they were listed.
In all, Yiu found 20 firms, mostly based in Dalian, for which lawyers from Gu’s law firm acted as legal consultants or non-executive directors or provided legal advice for initial public offerings (IPOs) during the period that Bo ruled over Dalian and Chongqing and Gu was still actively involved in the law firm. Next published that story on February 16.
The following week, it followed up with another, bigger story on the business dealings of Gu’s sisters. To do that, Yiu first had to find the names of Gu’s various family members. Her late father, Gu Jingsheng, was a well-known revolutionary general in the People’s Liberation Army. Until it was recently taken down, a website set up in his honor was active, and it listed the names of his five daughters. Armed with those names, Yiu then went to ICRIS, Hong Kong’s online corporate registry, where searches by director name can be made.
He found that Gu’s sister, Gu Wangjiang (spelled Kuk Mong Kong in Hong Kong although the Chinese characters are the same), was listed a director in nine companies. One of them, Hong Kong Hitoro Holdings, owns 30 percent of a Shenzhen-listed company, Tung Kong Security Printing. That company’s annual report, downloaded from the Shenzhen exchange, showed that these shares are now worth more than 700 million RMB, about $114 million.
Next Magazine was also intrigued by a Xinhua story that said Bo’s brother, Bo Xiyong, is a director and vice chairman of the Hong Kong-listed China Everbright International. The state-owned company, which controls one of China’s major banks and a range of other businesses, is a “red-chip”—a term given to the stocks of mainland firms incorporated outside the country and listed in Hong Kong.
But when the magazine checked the China Everbright website, it found no one named Bo Xiyong there. So Next reporters then searched the Web for anything they could find on all the Everbright directors.
The eureka moment came when they found the photograph of a man named Li Xueming on the website of the National Committee of the Chinese People’s Political Consultative Congress. It matched the photo they had seen of Bo Xiyong—a picture taken at the funeral of his father, Bo Yibo. The senior Bo was one of the so-called Eight Immortals, described by The New York Times as “elderly but immensely influential party veterans who hovered above the country’s appointed leadership in the 1980s and ’90s.”
As Everbright director, Bo Xiyong (or Li Xueming) receives a $1.7 million annual salary and holds stock options worth nearly $25 million, according to a profile published by Bloomberg Businessweek.
Next’s explosive report was carried by its sister publication, Apply Daily, and was widely quoted overseas. The New York Times cited the story, which it said showed that, “despite their best efforts to obscure such arrangements, senior Communist Party officials often use their connections to help relatives secure well-paid jobs at state-owned companies.”
Beyond China and Hong Kong
In the following weeks, Bloomberg dug deeper into corporate filings and discovered that the paper trail led to offshore havens. Hitoro Holdings—the Hong Kong company in which Gu’s older sister, Gu Wangjiang, is a director—is 99.9 percent owned by Infomatic Resources Ltd., a company registered in the British Virgin Islands. (Hitoro’s full annual return, filed in Hong Kong, is here.) Gu Wangjiang is also a director of the Panama-registered Sitoro Shipping Enterprises Co., and of a venture with Malaysian billionaire Vincent Tan’s Berjaya Group Bhd, said Bloomberg, citing Hong Kong corporate records.