China plans a concerted effort to stop its officials spiriting
state funds abroad through an expanding repertoire of illegal
activity, officials have said.
Zhu Rongji, the premier, was furious after learning of the growing
levels of capital flight from China via illegal transfers, money
laundering and underground banks, the sources added.
Like other corruption cases in China, most of the criminals behind
various forms of capital flight have turned out to be government
officials or senior executives of China's state-owned
enterprises.
According to the Chinese "Banyue" Magazine, an official
publication, more than 4,000 people suspected of stealing state
funds or using their position to solicit bribes have gone abroad,
having absconded with more than 5 billion yuan (US$600
million).
Typically, the officials transfer money into accounts abroad opened
either by branches of their company, business associates or
overseas relatives.
"The usual way for a corrupt official to escape is to send the wife
and children abroad first, transfer illegal assets out of China and
then flee when the time is ripe," the article said.
In
a bid to crack down on the abuses, last July the ,
the central bank, set up a department to monitor the transfer of
funds abroad and later another bureau to counter money laundering.
All China's commercial banks have been ordered to set up systems to
monitor suspected money laundering by January.
The capital flight problem coincides with a recent focus in Chinese
official circles on another vexed issue -- rampant tax evasion and
avoidance. Liu Xiaoqing, a prominent actress and also a business
women once liked by many of her age peers, was arrested last month
for dodging income tax.
Official figures on capital flight from China in recent years are
not available, but a study by Peking University put the amount of
money leaking through the country's supposedly closed - but
infinitely porous - capital account at US$36.4 billion in 1997,
US$38.6 billion in 1998 and US$23.8 billion in 1999.
One official said recent official estimates of capital flight in
2000 and 2001 showed an alarming increase over these numbers. Many
Chinese officials have sent their children to study abroad, the
United States especially, transferring money into accounts which
their children opened there.
Some have even bought luxurious houses in North America, Australia
and Europe, the magazine said. Given that their salaries are less
than US$1,000 a month, it is hard to see how they can legitimately
afford school and university fees.
But despite treaties with more than 40 countries around the world
on the transfer and repatriation of criminals, Beijing finds it
hard to ensure the return of suspected criminals to China.
For example, Xu Guojun, Yu Zhendong and Xu Chaofan - three men who
embezzled US$483 million from a branch of the Bank of China in the
southern province of Guangdong - are all still at large abroad.
(China
Daily August 21, 2002)