Wen Report May Influence Politics

The Chinese premier's lawyers dispute a New York Times report that his family has amassed vast wealth.
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Chinese Premier Wen Jiabao speaks at the opening session of the National People's Congress at the Great Hall of the People in Beijing on March 5, 2012.
Chinese Premier Wen Jiabao speaks at the opening session of the National People's Congress at the Great Hall of the People in Beijing on March 5, 2012.

Top Beijing lawyers acting on behalf of outgoing Chinese premier Wen Jiabao's family have rejected a news report alleging the family holds at least U.S.$2.7 billion in hidden assets, but some believe the report would have an impact on local politics.

The lawyers—from two separate Beijing-based law firms—jointly issued a statement to Hong Kong's South China Morning Post newspaper dismissing as “untrue” an Oct. 25 New York Times story that Wen's family has amassed "hidden riches" of billions of dollars.

"The so-called ‘hidden riches’ of the of Wen Jiabao’s family members in the New York Times’ report does not exist," Wang Weidong, Beijing managing partner of Grandall Law firm, and Bai Tao, a corporate and disputes resolution partner at Jun He Law Offices, said in the statement.

They said some family members had engaged in business activities but had not acted illegally in any way.

But the implications of the New York Times article go well beyond simply another story about the ability of another Chinese leader’s family to profit from political connections, said Elizabeth  Economy, director for Asia Studies at the New York-based Council on Foreign Relations.

She said that the piece has the potential to "influence significantly" the broader near-term Chinese political landscape, adding that political reformers have taken a serious hit as Wen has been the torchbearer for political reform within the current leadership.

"Unless Wen steps forward publicly to declare his family’s financial holdings, open their books to the public, and indicate the willingness of his family to face up to the legal consequences of any financial improprieties, his legacy will be tainted and the opportunity for him to shape future political events severely constrained," she said in a report.

Even more devastating, she said, the fall of Wen could harm the political prospects of up-and-coming reformers such as Li Yuanchao and Wang Yang.

Economy said that Wen's hiring of a law firm to fight back against the article’s claims may help preserve his public face, "but it won’t prevent the longer term political fallout within top political circles."

Allegation denied

Wang and Bai, both prominent corporate lawyers who frequently advise multinationals on doing business in China, specifically denied the allegation that Wen’s mother had an investment in her name worth at least $120 million five years ago.

"We will continue to make clarifications regarding untrue reports by the New York Times, and reserve the right to hold it legally responsible," the statement said.

Eileen Murphy, a spokeswoman for the Times, said the newspaper was confident that it had got the facts right, however. "We are standing by our story, which we are incredibly proud of and which is an example of the quality investigative journalism The Times is known for," Murphy said.

According to the testing site GreatFire.org, access to English and Chinese versions of the article "Family of Wen Jiabao Hold a Hidden Fortune in China" was blocked to computers in mainland China on Friday, while Chinese foreign ministry spokesman Hong Lei accused the paper of "smearing" China with the report.

Censors were also at work on China's hugely popular Twitter-like sites, blocking keyword searches for "Wen Jiabao," and "New York Times," in English and Chinese.

The article said that many of Wen's relatives, including his son, daughter, younger brother and brother-in-law, had become extraordinarily wealthy during his leadership.

After reviewing numerous corporate and regulatory records, the paper said records showed that the prime minister’s relatives, including his wife, had controlled assets worth at least U.S.$2.7 billion.

Many of them "have a knack for aggressive deal-making," it said, adding that their names had been hidden behind "layers of partnerships and investment vehicles involving friends, work colleagues and
business partners."

The article came after a lengthy investigation untangled the family's financial holdings.

"The Times found that Mr. Wen’s relatives accumulated shares in banks, jewelers, tourist resorts, telecommunications companies and infrastructure projects, sometimes by using offshore entities," the paper said.

Cautious politician

Jason Z. Yin, a professor of strategy management and international business at Seton Hall University, said Wen came across as a cautious politician.

"It's not just a question of caution, though; he still has his own ethics," he said.

Economist Zhuyuan Zheng, of Indiana's Ball State University, said he believed that it was inevitable that Wen's family would be in business.

"It's unavoidable that people connected to him would be involved in commercial activity," Zheng said. "But what we don't know is, did they use his power [for their own profit]?"

The business connections and personal wealth of Chinese officials has long been a sensitive topic for the ruling Chinese Communist Party.

But analysts say the Party is under additional pressure following the fall of former Chongqing Party chief Bo Xilai, and ahead of the 18th Party Congress on Nov. 8, when a new generation of Chinese leaders will be announced.

Earlier this month, authorities in the southwestern province of Yunnan destroyed hundreds of thousands of copies of a local newspaper after it reported on an official’s taste for luxury accessories.

The destroyed edition of Dushi Shibao, or Metropolitan Times, carried a story describing Li Dejin, the head of communications of southeastern China’s Fujian provincial office, as flaunting a 50,000
yuan (U.S.$8,000) diamond watch and a 13,000 yuan (U.S.$2,000) leather belt.

The move came after the Chinese government instituted a new “frugal working style” rule for civil servants in July that barred officials from spending public money on lavish banquets or fancy cars and from accepting expensive gifts.

Also in July, a newspaper in the northern Chinese province of Shaanxi suspended a journalist who wrote about local officials' use of luxury cigarettes, while the country's Internet censors blocked access to Bloomberg's website following the agency's expose of overseas wealth linked to the family of vice-president Xi Jinping.

Reported by Yang Jiadai for RFA's Mandarin service. Translated and written in English by Luisetta Mudie.





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