Over 10,000 Cases of Rampant Chinese Corruption to the Tune of $120 Billion

Apparently, winning first prize for financial research in the China Society for Finance and Banking annual awards was reason enough to accidentally release an internal-only document from the People’s Bank of China.

What the report revealed — over 10,000 corrupt Chinese officials laundering and transporting roughly $120 billion out of China during a 15-year span — probably wasn’t exactly the kind of publicity the central bank had in mind for its award-winning research.

According to The Australian:

“A handful of prominent cases, including one that involved the Ministry of Railways, have rattled China since the beginning of the year – but just as destabilising is the constant, low-level corruption that blights the lives of ordinary Chinese…

“…The research, whose revelations of corruption are breathtaking even by Chinese standards, estimates that between 16,000 and 18,000 officials may have fled the country with monumental hoards of ill-gotten money between the mid-1990s and 2008. In one paragraph, the report, which had the words ‘internal data, store carefully’ on the front page, cautioned that unchecked corruption was putting communist rule at risk.

“‘It is a direct threat to the cleanpolitics structure of the Communist Party and harms the foundations of its power,’ it said. Large amounts of the money, along with the officials who amassed it, headed for Australia or the US. […] Less ambitious escapees, usually lower-ranking malfeasants, made for South-East Asian countries such as Burma and Thailand, while the more senior bribe-takers would make for tax havens in the Cayman Islands and Bermuda…

“…Some, revealed the People’s Bank of China’s 67-page report, smuggled money to the former Portuguese colony of Macau where it emerged, laundered through an accommodating casino, ready to fund a defector’s life of opulence in Russia or Mongolia. The trail of officials bearing bags of banknotes and crossing from Shenzhen was described in the report as ‘like ants moving houses’.”

The report was originally written in 2008, but has only made its way out to face public scrutiny this past week, which happens to also be during the lead up to July 1st, the Communist Party’s 90th anniversary. China, for all its current and growing economic might, still has plenty of dirty laundry to air.

You can read more details in The Australian’s coverage of how a mistakenly-released report reveals the embarrassing extent of Chinese corruption.


Rocky Vega,
The Daily Reckoning

The Daily Reckoning