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In China, kin of Party officials build lucrative biz

world Updated: Apr 25, 2012 00:27 IST
Hong Kong

When Chinese authorities launched an investigation in 2006 into potential foreign currency violations by Beijing Henderson Properties, the real estate developer called in some curious outside help. It turned to a Chinese investment company with no evident expertise in currency regulations and to a murky Hong Kong foundation with no dis­cern­ible offices and no listed telephone number.

But the real estate company's helpers did have one significant asset: access to officials at the Chinese government agency handling the investigation, made possible by the door-opening powers of China's "red nobility," a potent network of Communist Party leaders, their families and their friends.

A confidential January 2007 Henderson memo obtained by The Washington Post lays bare the property developer's calculations, describing the two organizations as "a bridge for our company to link up with the State Administration of Foreign Exchange. They claim to have intimate connections with high levels at SAFE, and have certain influence."

The principal span of this "bridge" was Shenzhen Zhaotian Investments, a China-registered private company headed by Tian Chenggang, the son of a former member of the Communist Party's supreme decision-making body, the Politburo Standing Committee. A second connection was provided by the Strait Peaceful Reunification Foundation, a Hong Kong group with close ties to the brother of another former Standing Committee member.

What the two outfits did exactly is unclear, but Henderson ended up facing only a modest fine.

Expensive connections
For his lobbying on behalf of Henderson during the 2006 currency investigation, Tian demanded about $5.5 million, according to a summary of the saga presented last month by Judge David Yam Yee-kwan. Henderson told the court that it was ready to pay for Tian's help but judged his fees exorbitant and, challenging his assertions that there was a prior agreement on his fee, refused to pay that amount. The quarrel went to court in Hong Kong last year, and a verdict was issued last month. Tian's investment firm lost the case and is appealing.

Henderson Land Development, the Hong Kong parent of the Beijing real estate developer, refused, through its attorneys, to comment on its use of outside consultants, or to reply to written questions, citing the ongoing legal proceedings.

Testifying this past fall on the 27th floor of Hong Kong's High Court building, Tian displayed a demeanor that helps explain why many of China's princelings are so unpopular with many ordinary Chinese.

In an exclusive partnership with The Washington Post. Fort more log on to www.washingtonpost.com .