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Monday, November 11th, 2019

‘Panama Papers’ link kin of Xi, Mao, Li, other Chinese Communist elite to shell firms

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by April 6, 2016 General

The massive data leak from a Panama-based law firm dealing with offshore shell companies has implicated relatives of no fewer than eight current and former members of China’s Politburo Standing Committee, analysis of the data showed Wednesday.

The leaked internal documents from Mossack Fonseca & Co. showed that family members of three current members of the top body of the Communist Party of China, including President Xi Jinping, had been involved with shell companies dealt with by the firm, along with family members of five former members.

A grandson-in-law of China’s founding father, Mao Zedong, is also among those implicated.

The leaked files, containing information on 214,488 offshore entities connected to people in more than 200 countries and territories, were obtained by the German newspaper Sueddeutsche Zeitung and shared with the International Consortium of Investigative Journalists, with which Kyodo News and other media outlets are in partnership.

While offshore companies are not illegal, they are often associated with efforts to hide wealth and process money gained through illicit methods, such as drug smuggling and arms deals.

The current members of China’s seven-member Politburo Standing Committee who are implicated in the scandal through family members are Xi; Liu Yunshan, the party’s fifth-highest ranking official; and Zhang Gaoli, the seventh-highest ranking member of the party.

Xi’s name has already been hitting headlines in the wake of the revelation of the “Panama Papers” mentioning the activities of his brother-in-law, Deng Jiagui, who is shown to have been the director and sole shareholder of two offshore companies, although it is unclear as yet what the firms were used for.

As for Liu and Zhang, their connection to the papers came in the form of their daughter-in-law and son-in-law, respectively. Both are shown to have been shareholders of companies incorporated in the British Virgin Islands, an offshore tax haven where Mossack Fonseca allegedly helped set up many shell corporations.

The British Virgin Islands connection also involves relatives of former committee members. The grandson-in-law of Mao, Chen Dongsheng, became the sole director and shareholder of a company incorporated in the territory.

The daughter of former Chinese Premier Li Peng, Li Xiaolin, is shown to have co-owned a British Virgin Islands firm, which files show obscured its ownership by issuing bearer shares — shares in a company that allow for anonymous ownership. Such shares have been outlawed in a number of jurisdictions due to their potential application in money laundering and other illegal activity.

The ability to obscure the ownership of wealth is illustrated in the case of Jasmine Li, the granddaughter of former committee member Jia Qinglin. Li is shown to have had interests in two British Virgin Islands companies, which in turn acted as the owners for two companies set up in Beijing. As the shell companies were the registered owners, Li’s name was absent from documentation on the Beijing firms.

Also implicated by their family members are former Politburo Standing Committee members Hu Yaobang, the former general secretary of China’s Communist Party, and Zeng Qinghong, who was vice president of China.

It is not only Chinese politicians who have found their names caught up in the leak, however. Billionaires Shen Guojun and Kelly Zong have both been shareholders in British Virgin Islands companies, the former’s involving film star Jackie Chan.

The leak shows shell corporations have been set up with the help of Mossack Fonseca in a range of offshore jurisdictions, including the Bahamas, the Channel Islands, Hong Kong, Panama, the Seychelles and Singapore.

Mossack Fonseca is facing questions over its processes and background checking provisions, after files showed it had dealt with a number of world leaders, politicians and celebrities, as well as figures with links to sanctioned companies and illegal activities.

Media reports in the wake of the first release of information from the papers on Monday suggest that China has taken measures to censor social media discussion of the scandal.

The Constitution of the Communist Party of China discourages its members from benefiting from their positions or ties, advising that they “are at all times ordinary members of the working people,” who “must not seek any personal gain or privileges.”

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