China's elite linked to secret offshore entities

By Gerard Ryle

January 21, 2014, http://www.icij.org/blog/2014/01/chinas-elite-linked-secret-offshore-entities

Relatives of Chinese leaders such as president Xi Jinping have held secretive offshore companies. Photo: Shutterstock.
East meets West on Treasure Islands: China has become a leading market for offshore havens that peddle secrecy, tax shelters, and streamlined international deal making.
ICIJ has today published the latest part of the largest investigative reporting project in its 15-year history – revealing that close relatives of China’s top leaders have held secretive entities in offshore tax havens usually associated with hidden wealth.
Our work draws on confidential records obtained by ICIJ as part of its "Offshore Leaks” investigation.

Among the investigation’s key findings:

• Relatives of at least five current or former members of China's Politburo Standing Committee – President Xi Jinping, former premiers Wen Jiabao and Li Peng, former President Hu Jintao and former leader Deng Xiaoping – have held companies in the Cook Islands or British Virgin Islands, the records obtained by ICIJ show.

• PricewaterhouseCoopers, UBS, Credit Suisse and other Western banks and accounting firms played a key role as middlemen in helping Chinese clients set up trusts and companies in tax havens.

• China’s oil industry, which has been shaken by a series of corruption scandals, has extensive links to offshore centers. The country’s three big state-owned oil companies – CNPC, Sinopec and CNOOC – are linked to dozens of BVI companies that show up in the ICIJ files.

• As the country has moved from an insular communist system to a socialist/capitalist hybrid, China has become a leading market for offshore havens that peddle secrecy, tax shelters and streamlined international deal making.
   

Nearly 22,000 offshore clients with addresses in mainland China and Hong Kong appear in the files, including at least 15 of China’s richest citizens, members of the National People’s Congress, and executives from state-owned companies entangled in corruption scandals. The records also include details of roughly 16,000 clients from Taiwan.
The documents are part of a cache of 2.5 million leaked files that ICIJ has sifted through with help from more than 50 reporting partners in Europe, North America, Asia and other regions. Since last April, ICIJ’s stories have triggered official inquiries, high-profile resignations and policy changes around the world.
Until now, the details on China and Hong Kong had not been disclosed.

Working in China 

This part of our reporting project has proved particularly challenging. It is difficult at the best of times to get people to respond to questions, however working on China brings its own unique set of difficulties.

In November, a mainland Chinese news organization that was working with ICIJ to analyze the data we obtained withdrew from the reporting partnership, explaining that authorities had warned it not to publish anything about the material.

Investigation Continues

On January 23, ICIJ (a project of the Center for Public Integrity) will name more than 37,000 offshore clients from China Hong Kong and Taiwan in its Offshore Leaks Database, adding to about 70,000 names from the rest of the world published in June 2013.
The names are part of a body of information that totaled more than 260 gigabytes of data—about the same amount of information as would be found in half a million books. It is one of the biggest collections of leaked data ever gathered and analyzed by journalists.

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