Sunday, April 10, 2016

China names Canada a high roller's haven

China names Canada a high roller's haven

He gave extravagant tips to hotel staff who brought pots of Chinese tea to the luxury suite where he played cards and mahjong with his cronies. He travelled to Macau on gambling junkets. He invited large groups of friends to the hotel spa. He was well-mannered and discreet, but everyone knew he was rich and powerful.
Then, one day, he disappeared -- allegedly fleeing to Canada with massive sums of stolen money.
Chinese authorities say he is one of a growing number of economic criminals and corrupt officials who have found safe haven in Canada and other Western countries. Some sources say there could be dozens in Canada alone.
Very few have been arrested and returned to China, partly because the Canadian police cannot seem to unearth them, and partly because Ottawa does not have an extradition treaty with Beijing.
Chinese authorities allege Mr. Xu and two other bankers flew to Vancouver on fake travel documents last October and vanished into the underground, taking with them an astonishing haul of up to $725-million (U.S.) in embezzled money from the Kaiping branch of the state-owned Bank of China, where they were senior managers.
Believed to be the biggest bank theft in Chinese history, it caused a run on banks in southern China. Authorities sent truckloads of cash under armed escort to prevent a collapse of the Kaiping bank branch.
Ten months later, the RCMP are still searching in vain for the three men.
In Kaiping, meanwhile, there is admiration for the men who carried off such a brazen scheme and made what seems to be a clean getaway.
"I could tell they were rich, but it was only later that I realized how rich they were," said a health-club worker at the 32-storey luxury hotel adjoining the bank.
"Everyone always talked about their nice foreign cars. But by the time the inspectors were asking questions about them, they were long gone."
The ringleader, Mr. Xu, has become a local hero.
"He is a great man," said a hotel cocktail waitress. "He is very smart, and he had lots of ability. To do something like that, you can't be an ordinary man. It's very sad that he is gone."
In the view of people here, Mr. Xu was stealing from the rich and giving to the poor. No one has much sympathy for the Bank of China, and most are impressed by Mr. Xu's financial talents and his generosity to the low-paid hotel staff.
"He probably can never come back to China now -- too many people are looking for him," the waitress said. "It's a pity. It's a waste. He was very good to us."
Since 1994, China has issued nearly 400 international arrest warrants, often for more than one person each, and only 210 suspects have been returned. Chinese news media have reported that every year 20 to 30 corrupt officials are fleeing abroad with embezzled funds, while only about five are extradited to China.
One Chinese newspaper reported that $52-billion was sent out of China from 1997 to 1999 alone; much of this was public money stolen by corrupt officials and transferred abroad.
It also reported that criminals could obtain a fake Canadian passport from forgers in China for 15,000 yuan (about $1,800 U.S.), and many believe Canada has become a favourite destination for Chinese criminals.
"When Chinese want to escape, they go to Canada," said Hu Shuli, editor of Caijing, a popular business magazine in Beijing that has earned a reputation for investigating financial scandals.
Canadian authorities do not seem to be working hard enough to find Mr. Xu and the other fugitives, Ms. Hu said. "Since they escaped, nobody knows anything about them."
(The most notorious Chinese fugitive in Canada is Lai Changxing, the alleged mastermind of a multi-billion-dollar smuggling and corruption ring. He is China's most-wanted man, but he fled to Canada in August 1999 and sought refugee status eight months later. He remains in Vancouver while his refugee claim proceeds through the court system.)
The banking scandal still weighs heavily on the city of Kaiping. People remember how they lined up for hours to withdraw their money from the bank when the embezzlement scandal broke.
Kaiping's luxury hotel is the Ever Joint, the name used by the alleged embezzlers for their vast real-estate holdings, controlled by Ever Joint Properties Ltd., which they set up in Hong Kong in the early 1990s.
The Chinese government says the hotel and an adjoining office tower were built with embezzled money. The government seized the twin towers and froze more than $100-million of the fugitives' assets after their disappearance.
Perhaps someone should have suspected something earlier about the towers, which are out of place in Kaiping, looming massively over dilapidated fishing boats in the river. The Ever Joint is the most expensive hotel in the western half of Guangdong province, with executive suites priced at almost $1,000 a night. Yet nobody seemed to wonder how it came to exist in a relatively small city.
The three bank managers, along with several accomplices, allegedly worked the embezzlement scheme for most of the 1990s. It began in 1992 when Mr. Xu became the general manager of the Kaiping branch; later he was promoted to the bank's provincial headquarters and his successors in Kaiping allegedly joined the scheme.
At some point, Mr. Xu allegedly sent his sister and mother to Canada. According to Chinese officials, the two women set up bank accounts in Vancouver, which he used as a conduit for his stolen money.
Even though his official monthly salary was less than $1,000, he managed to transfer millions of dollars to the Vancouver bank accounts, authorities say.
Mr. Xu had been planning his escape for years. When investigators moved in, he vanished easily.
The Bank of China revealed details of the fraud in March, alleging the fugitives had stolen $483-million and laundered much of the loot through accounts at gambling casinos in Las Vegas and Macau over a seven-year period. The suspects had dozens of fake travel documents to help them escape to Canada and the United States, the bank says. The latest reports say the total amount of embezzled money was as high as $725-million.
The Bank of China, meanwhile, admits that it has suffered from lax standards for years.
Fraud and corruption are believed to be widespread at China's major banks, and bad debts have left them technically insolvent.