What do a nightclub bouncer from Liverpool, a wind farm investor from Sicily, a stockbroker and investment advisor from New York and an insurance salesman from Zhejiang Province have in common? Mention their names – Curtis Warren, Vito Nicastri, Bernard Madoff and Wu Xiaohui – and it becomes a little easier to join the dots, particularly when the last two identities are revealed.
For all four men hold the dubious distinction of ranking number one in their respective legal jurisdictions where confiscation, or forfeiture, orders are concerned. These are court orders that require defendants to repay the economic benefits of their crimes.
Their earliest recorded use dates all the way back to 1354 and the reign of England’s Edward III. At this point, they were known as ‘letters of marque’ (from the old English word ‘mearc’). These represented government licences to attack and capture enemy ships and their cargo on behalf of the sovereign.
Today, the UK’s largest confiscation order is relatively small by global standards. It belongs to English drug dealer Curtis Warren who formerly topped Interpol’s most wanted list and is currently residing at Her Majesty’s pleasure in a UK jail, having failed to pay the £198 million ($268 million) outstanding forfeiture order against him.
Europe’s largest confiscation order, for €1.3 billion ($1.54 billion), is unsurprisingly mafia-related. It is held by Vito Nicastri, the Sicilian businessman once known as the King of Wind because of his wind farm investments, which were really a front for the Cosa Nostra.
The world record belongs to a US citizen, which is again hardly surprising given the country’s status as the world’s biggest economic power. That man is Bernie Madoff and in November 2017, the US Department of Justice announced that it would begin disbursing over $4 billion in forfeited assets to his 35,000 victims.
And then there is Wu Xiaohui, the former chairman and chief executive of Anbang Insurance. Last week, Wu was sentenced to 18 years in prison and ordered to forfeit Rmb10.5 billion ($1.65 billion) in property and other assets after being found guilty of fundraising fraud and embezzlement.
He contested the case on the grounds that he did not realise he was breaking the law when he diverted income generated by wealth management products into a global M&A spree that included a raft of overseas property assets such as New York’s Waldorf Astoria Hotel. His case has attracted headlines across the world and prompted much discussion among Chinese social media commentators. Most echo the thoughts of one citizen who simply says, “We must beat these guys who steal from our country.”
The size of Wu’s fine tops the Chinese list, which grows longer by the day as President Xi Jinping’s six-year anti-corruption drive burrows deeper into the country’s private as well as its public sector. Local newspapers estimate that one to one-and-a-half million Communist Party officials have been ensnared to date.
Just in the past month alone, a quick perusal of newspaper headlines reveals the investigation or trial of almost a dozen names ranging from government officials like Wang Xiaoling, former deputy director of the National Energy Agency, to Zhang Shaochun, China’s longest serving finance vice minister.
On the very day that Wu was sentenced, for example, so too was former Chongqing Party boss, Sun Zhengcai. He has been convicted of receiving $26 million in bribes.
The irony of the situation has also not been lost on domestic newspapers since Sun had been sent to Chongqing in the first place to replace his disgraced predecessor, Bo Xilai. He will now join him in enduring life imprisonment.
Domestic media sources like Caixin have also highlighted the parody underlying the arrest of Pei Xiping, general manager of Yangquan Coal. He was taken away for investigation only two days after he was put in charge of his company’s anti-graft team.
And the man most likely to have caused the downfall of Anbang’s Wu has also been formally charged with corruption. In mid-April, the government announced that former China Insurance Regulatory Commission head, Xiang Junbo, is to be tried for furthering the illegal interests of others in return for huge bribes.
A number of listed companies have also lost their “key men” over the past few weeks. These include Li Guangrong, the controlling shareholder of Shanghai-listed Tongling Jingda Special Magnetic Wire. He was arrested on suspicion of bribery in mid-April.
This is not the first time that Li has been investigated. Back in 2003, he was suspected of counterfeiting tax invoices, but never charged.
Last week, Shenzhen-listed Tiansheng Pharmaceutical Group saw its general manager, Li Hong, taken away for investigation. Local newspapers speculate that his case relates to the arrest of Chongqing Renmin Hospital’s former president, Li Jianping, who was convicted of illegally accepting money from an unnamed pharmaceutical company last year.
Then there is Lai Xiaomin, chairman of Hong Kong-listed China Huarong Asset Management. The government said he was under investigation in mid-April. Some commentators believe his arrest may be connected to the disappearance of Ye Jianming, chairman and executive director of energy company, CEFC China.
As we wrote in WiC402, CEFC had been trying to buy Glencore’s stake in Russian oil company Rosneft for $9 billion. In December, Beijing News reported that a Huarong subsidiary had taken a stake in the particular CEFC entity that planned to purchase the 14.16% Rosneft stake.
And it is not just the listed companies which have been affected, but also the journalists who report on them. On May 6, TV stock market pundit Liao Yingqiang was fined Rmb86.7 million (double his ill gotten gains) for recommending stocks he had already invested in (a practice known as frontrunning).
Liao has subsequently issued a grovelling apology on his portal iGuxuan.com, saying he wanted to “thank the regulator for its decision, which has brought order back to the market”. However, this does not wash with many social media commentators including one who points out that on the very same day he wrote this he told friends that the fine had made him even more famous and attracted job offers from the likes of Wallstreetcn.com.
In an editorial, the South China Morning Post also concludes that the regulator’s efforts to “educate the country’s 100 million plus individual stock market investors to buy shares on valuation rather than rumours has not yet delivered the desired results”.
The government’s anti-graft campaign, on the other hand, has been delivering copious results. In March, the government took it one step further, setting up a National Supervision Commission, which will work alongside the Party’s Central Committee for Discipline Inspection. The new agency extends the anti-corruption net from Party cadres to all public servants including school and hospital officials.
The old Party detention system of shuanggui has been put on a more formal footing through a new official procedure called liuzhi. Officials who are taken away for investigation must now be given food and drink, plus access to medical facilities. Their families must also be informed within 24 hours. However, they can still be held without charge for six months and are not allowed access to legal counsel. The SCMP says the reforms are worthy, but worries they are open to abuse. It hopes they will “further the rule of law rather than the rule by law”.
Human rights activist Amnesty International goes a lot further saying the move “places tens of millions of people at the mercy of a secretive and virtually inaccessible system that is above the law”.
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