Hidden Riches for Family of a Chinese Leader
Bo Bor/Reuters
SHANGHAI — The mother of China’s
prime minister was a schoolteacher in northern China. His father was
ordered to tend pigs in one of Mao’s political campaigns. And during
childhood, “my family was extremely poor,” the prime minister, Wen Jiabao, said in a speech last year.
But now 90, the prime minister’s mother, Yang Zhiyun, not only left
poverty behind — she became outright rich, at least on paper, according
to corporate and regulatory records. Just one investment in her name, in
a large Chinese financial services company, had a value of $120 million
five years ago, the records show.
The details of how Ms. Yang, a widow, accumulated such wealth are not
known, or even if she was aware of the holdings in her name. But it
happened after her son was elevated to China’s ruling elite, first in
1998 as vice prime minister and then five years later as prime minister.
Many relatives of Wen Jiabao, including his son, daughter, younger
brother and brother-in-law, have become extraordinarily wealthy during
his leadership, an investigation by The New York Times shows. A review
of corporate and regulatory records indicates that the prime minister’s
relatives, some of whom have a knack for aggressive deal-making,
including his wife, have controlled assets worth at least $2.7 billion.
In many cases, the names of the relatives have been hidden behind layers
of partnerships and investment vehicles involving friends, work
colleagues and business partners. Untangling their financial holdings
provides an unusually detailed look at how politically connected people
have profited from being at the intersection of government and business
as state influence and private wealth converge in China’s fast-growing
economy.
Unlike most new businesses in China, the family’s ventures sometimes
received financial backing from state-owned companies, including China
Mobile, one of the country’s biggest phone operators, the documents
show. At other times, the ventures won support from some of Asia’s
richest tycoons. 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 holdings include a villa development project in Beijing; a tire
factory in northern China; a company that helped build some of Beijing’s
Olympic stadiums, including the iconic “Bird’s Nest”; and Ping An
Insurance, one of the world’s biggest financial services companies.
As prime minister in an economy that remains heavily state-driven, Mr.
Wen, who is best known for his simple ways and common touch, more
importantly has broad authority over the major industries where his
relatives have made their fortunes. Chinese companies cannot list their
shares on a stock exchange without approval from agencies overseen by
Mr. Wen, for example. He also has the power to influence investments in
strategic sectors like energy and telecommunications.
Because the Chinese government rarely makes its deliberations public, it
is not known what role — if any — Mr. Wen, who is 70, has played in
most policy or regulatory decisions. But in some cases, his relatives
have sought to profit from opportunities made possible by those
decisions.
The prime minister’s younger brother, for example, has a company that
was awarded more than $30 million in government contracts and subsidies
to handle wastewater treatment and medical waste disposal for some of
China’s biggest cities, according to estimates based on government
records. The contracts were announced after Mr. Wen ordered tougher
regulations on medical waste disposal in 2003 after the SARS outbreak.
In 2004, after the State Council, a government body Mr. Wen presides
over, exempted Ping An Insurance and other companies from rules that
limited their scope, Ping An went on to raise $1.8 billion in an initial
public offering of stock. Partnerships controlled by Mr. Wen’s
relatives — along with their friends and colleagues — made a fortune by
investing in the company before the public offering.
Hidden Riches for Family of a Chinese Leader
Bo Bor/Reuters
Petar Kujundzic/Reuters
