Asia Economy
Up to 18,000 corrupt officials fled China over a 15-year period with loot of $124bn
By Finfacts Team
Jun 17, 2011 - 3:59 AM

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The Mandarin on the top right-hand corner reads: 'Internal materials; Store carefully'

The People's Bank of China, China's central bank, says in a report published this week that an estimated 16,000 to 18,000 officials  - - Communist Party officers, state company executives, civil servants, police and members of the judiciary - - fled the country or went into hiding, in the 15-year period from the 1990s to 2008, with loot of Rmb800bn (US$124bn).

Local reports said the 67-page study was posted on the website of China’s central bank. However, while the document (in Mandarin) remains available in Chinese cyberspace, the report no longer appears on the People’s Bank of China website.

Chinese capital controls limit individuals to annual remittances of just $50,000 in or out of the country.

The 'China Daily' newspaper says the eight main channels for moving funds are: smuggling cash, underground banking services, trade under current accounts, overseas investment, credit cards, offshore financial centres, direct overseas payments and payments to family members or lovers living overseas.

However, the exact amount of assets transferred overseas, since Chinese officials began to flee the country at the end of the 1980s, remains a mystery, said the report.

The cross-border transfer of such assets causes huge losses to the country as the majority cannot be recovered and their whereabouts are hard to find, the report added.

The total was equivalent to 2% of 2010 GDP (gross domestic product).

The report also provided details about the destinations for corrupt officials and businesspeople.

People with a higher rank or larger assets tended to flee to Western countries such as the United States, Canada, Australia and the Netherlands.

Those who cannot reach Western countries directly, use Hong Kong or some small countries in Africa, East Europe and Latin America as a stopover.

Those with lower rankings or smaller assets often find safe havens in China's neighbouring countries such as Thailand, Myanmar, Malaysia, Mongolia and Russia.

The central bank said that authorities in "sensitive industries" such as finance, state-owned monopolies, transport, land and construction sectors and tax, trade and investment departments should increase inspections and strengthen cooperation between banking regulators and other government bodies to fight money laundering.

In China, banks, brokers, futures companies and insurers are required to report transactions involving huge sums of cash to regulators as the country beefs up its efforts to curb money laundering.

Cross-border transfers of more than US$10,000 involving an individual have to be reported to the central bank.


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