The scandal surrounding the recently purged Chinese Communist Party official Bo Xilai has all the elements of Shakespearean drama: the precipitous fall of a powerful man, a mysterious murder that involves the man’s glamorous wife, and dark secrets that come to light as the plot unfolds.
The scandal is the most serious to hit China in years, and it threatens to cause a fissure within the Communist Party. It has also cast the public glare on the wealth of Party officials. In the past, it would have been nearly impossible to document allegations that Bo Xilai and his wife, Gu Kailai, a high-powered lawyer, used their political connections to enrich themselves.
But this is the new era of investigative reporting. Governments and companies are publishing increasing amounts of information online—yes, even in China. And the ability to find and mine that information gives journalists a competitive edge over their rivals.
In two weeks of intense reporting in February, the feisty, Hong Kong-based, Chinese-language Next Magazine uncovered previously unknown business dealings by Bo, his wife, and their other family members.
In subsequent weeks, reporters at The Wall Street Journal, The New York Times, and Bloomberg would be on that trail, too, trolling databases around the world to piece together information about the couple, information that in the pre-digital days would have been difficult to find.
The trail was obscured by the fact that the Bo family members used multiple names and aliases. But like many members of the Communist Party elite, they did business in Hong Kong and the West, making it easier for journalists to trace their wealth.
In the past six weeks, reporters have dug into corporate registries, stock exchange filings, and property records databases in jurisdictions around the world. Their digging has confirmed that in the Communist Party, wealth and political power are not only intertwined; both are kept well within the party members’ families.
Bo and his wife had impeccable pedigrees: Their fathers were heroes of the 1949 revolution and were high up in the communist hierarchy, which meant that their offspring were considered Red Nobility or princelings. Despite allegations of corruption and abuse of power, they seemed untouchable.
But on February 6, Bo’s lieutenant, Wang Lijun, fled to the US consulate in Chengdu, supposedly with evidence of corruption and murder involving Bo and his wife, who has since been implicated in the murder of Neil Heywood, a UK businessman. The incident created an international furor and, on March 15, Bo was dismissed from office, his downfall exposing the rifts within the party.
“After the US government confirmed the Wang Lijun incident on February 8, we smelled that something was going to happen to Bo Xilai,” says Vivian Kwok, deputy editor in chief of Next Magazine, “and so we started research on his family’s business connections.” Next is owned by Jimmy Lai, a maverick Hong Kong businessman who is persona non grata in China, and the magazine didn’t have deep sources in the mainland. So it had to rely on what was in the public record.
The wealth trail
Where to start? It helped that a Chinese journalist, Jiang Weiping, had previously published a biography of Bo, which said that that Gu Kailai’s law firm and Gu herself made money by cutting deals for mainland Chinese companies that were doing business in Dalian, a major city and seaport in the northeastern province of Liaoning. Bo was once mayor of Dalian and governor of Liaoning. Jiang himself was a Dalian reporter and was sent to prison for his exposés, including stories on how Bo had covered up evidence of political corruption.
Now living in exile in Toronto, Jiang told Simon Yiu, a 24-year-old reporter for Next, that Gu’s firm acted as a broker for some 200 mainland Chinese companies. But he didn’t have documentary proof. Gu’s law firm—called Ang Dao—has offices in Beijing, Zhengzhou, and Dalian. To confirm Jiang’s lead, Simon Yiu searched the websites of the courts and lawyers’ associations in those cities. These showed when law firms operating in these jurisdictions were established and also listed their lawyers.
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.
Bloomberg also found that through Hitoro, Gu made millions selling a luxury apartment that Hong Kong property records show was purchased last year for HK$88 million (roughly $11.4 million US dollars). Hitoro had bought the property for just $1.2 million in 1992. (Hong Kong property records can be searched on IRIS, a database maintained by the Land Registry.)
Earlier, The Wall Street Journal had found that Gu Kailai herself had also registered a company in the UK—but under a different name.
Unlike in the US, where information on private companies is scant, the UK’s Companies House makes it relatively easy to find information on both public and private companies. One can type in a company name in the Companies House website and download PDFs of the company’s filings for ₤1 each.
Companies House only allows searches by company name or registration number, but the website duedil.com enables searches by director name. There was, however, no director listing for Gu Kailai. That’s because, according to the Journal, she registered a company under an assumed name, Horus Kai, which she also used when she was lawyering for Chinese companies in the US in the 1990s.
A search of Horus Kai yielded a company named Adad Ltd. The Companies House online database contains a PDF of Adad’s Form 363, the annual return UK companies are required to file. That form lists not just director’s names but also dates of birth and occupation—Horus Kai’s information, including her signature, matched that of Gu Kailai’s.
While corporate records clinched these stories, they would not have gotten off the ground without human sources, who provided the names that made document searches possible. The Wall Street Journal’s vigilant reporting on Bo Xilai since last year put them ahead of the game. The paper’s reporters—Jeremy Page, Brian Spegele, and Steve Eder—found a Denver lawyer with whom Gu Kailai had worked when she was hired to represent Chinese companies involved in lawsuits in the US 15 years ago.
It was this lawyer who revealed that Gu used a different name then; he also provided colorful details on Gu, who, he said seemed like “the Jackie Kennedy of China.” On April 7, the Journal came out with an excellent profile of Gu based on public records and interviews that offered revealing and previously unpublished information.
But despite all these revelations, one thing’s for sure: what’s come to light since February is likely just the tip of the iceberg. In the coming weeks, as reporters dig deeper, there’s bound to be more.
Editor’s Note: The article above contains several links useful for international, in-depth journalism, and here are some more:
Corporate Registers Worldwide
The Investigative Dashboard’s Worldwide Company Data is probably the most comprehensive listing of websites and databases where information on companies in more than 150 jurisdictions can be found. The Dashboard is a project of the nonprofit Overseas Crime and Corruption Reporting Project, based in Sarajevo, the International Center for Journalists, in the US, and the Forum for African Investigative Reporters.
Open Corporates calls itself “The Open Database of the Corporate World.” It contains information scraped from online corporate registers in more than 50 jurisdictions, including offshore havens like Panama and Bermuda. The site allows searches by company name, country, director name, and other keywords. So far it has records of more than 400 million companies worldwide.
The UK Companies House has a useful links page. At the bottom of that page is a list of links to selected registers worldwide.
The Corporate Intelligence Project has links to corporate registries in 50 states of the US and 65 countries around the world. It also enables searches for US government watch lists and regulatory agencies.
Hong Kong
Integrated Companies Registry Information System (ICRIS): this for-pay database kept by the Hong Kong Internal Revenue Department allows searches by company or director name. Annual returns list board members, their addresses and passport or ID numbers. Searches can be done in English or Chinese.
Hong Kong Exchange posts interim and annual reports of listed companies as well as required disclosures (e.g. acquisition of more than 15 percent of shares of a company, change of senior executives).
Hong Kong Land Registry‘s searches can be done online for a fee; registry documents list present and past owners, transaction details (sale of property and price); mortgage details (bank name, amount).
China
State Administration for Industry and Commerce lists registered companies (Chinese website only). The registry is incomplete, but contains links to other branches of SAIC around the country.
Stock exchanges in Shanghai and Shenzhen provide information on listed companies, annual reports, and other filings available on the Chinese-language version of the exchanges’ sites.
Websites of local courts and lawyers’ associations
