China Murder Suspect’s Sisters Ran $126 Million Empire
The sisters of Gu Kailai, who is suspected of murdering a U.K. citizen and is the wife of disgraced Chinese official Bo Xilai, controlled a web of businesses from Beijing to Hong Kong to the Caribbean worth at least $126 million, regulatory and corporate filings show.
Gu Kailai, 53, was the youngest of five daughters of a People’s Liberation Army general, according to a Chinese- language website affiliated with the Communist Youth League. She rose from a butcher’s assistant during the 1966-1976 Cultural Revolution to become a lawyer who argued cases in the U.S.
Now China says she is suspected of murdering businessman Neil Heywood in November, and her husband this week was suspended from the Communist Party’s elite Politburo.
Her sisters focused on business rather than politics. Gu Wangjiang, 64, the oldest, is a Hong Kong national who owns $114 million in shares of an eastern China printing company, according to a Shenzhen exchange filing tracked by Bloomberg.
Wangjiang and her sister, Gu Wangning, serve as directors of several other companies, including some that Hong Kong company registry records trace to the British Virgin Islands. They also have made millions selling Hong Kong real estate. Another sister, Gu Zhengxie, 62, was a top official at one of the country’s biggest state-owned companies.
Their wealth -- and the fact they put some assets offshore where ownership is harder to trace -- illustrate how the politically connected thrive in China, a country where Bo himself last month warned of the dangers of a rising wealth gap. While many of the country’s top leaders, including President Hu Jintao and Premier Wen Jiabao, have children who are top executives, the Gu sisters have left a paper trail that details some of their activities.
“Networks have always been of prime importance in China dating back to imperial times,” said Jonathan Fenby, author of the forthcoming book “Tiger Head, Snake Tails: China Today.”
“Economic growth has spawned a web of people connected to the centers of power who have profited, and who often choose to move their wealth to places where they feel it is safer given the risk of political reversals of fortune, as seen in the defenestration of Bo Xilai,” he said in an e-mail.
Gu Wangjiang is chairman of publicly traded Tungkong Security Printing Co. (002117), a Jinan, Shandong-based company, according to data compiled by Bloomberg. It in turn controls a chain of other companies across China linked to her Hong Kong holding company, Hongkong Hitoro Holdings Ltd., according to a September 2010 share prospectus that also says Wangjiang is a Hong Kong national. Hitoro’s Chinese characters mean “lots of happiness coming.”
Hitoro’s 37,827,385 shares in Tungkong, which also counts government bureaus and state-owned companies as customers, were worth 720.2 million yuan ($114.3 million) as of the close of trading in Shenzhen yesterday.
Efforts to reach Wangjiang and Wangning were unsuccessful. A man answering the phone at Tungkong’s Jinan headquarters said Gu Wangjiang wasn’t there. During a visit yesterday to the 37th floor offices of the sisters’ companies in the Hong Kong offices of Hitoro and Hangang Worldwide, a man who declined to be identified said the sisters were not there.
Boris Chan, listed on Hitoro’s corporate filings as an official of the company, declined to comment when reached by telephone. A faxed request for an interview went unanswered.
In 1992, Hitoro purchased a luxury 16th-floor apartment in Parkview Crescent, a Hong Kong complex, for HK$13.3 million ($1.7 million). Gu Wangjiang sold it for HK$88 million early last year, land registry documents show.
Island Postal Boxes
The buyer was Topwell Rich Ltd., a Hong Kong company owned by British Virgin Islands-based Ampere Management Ltd., the land registry records show. Hitoro’s controlling shareholder, Infomatic Resources Ltd., shares the same post office box address in the offshore jurisdiction, according to a Nov. 21 filing with the company registry.
So does the owner of Hangang Worldwide Ltd., a Hong Kong- based company affiliated with a Chinese steelmaker for which Gu Wangning also acts as a director, a Feb. 8 filing shows.
That’s not unusual: P.O. boxes in jurisdictions such as the Cayman Islands and British Virgin Islands can serve as the address for thousands of companies. While the majority of tax haven-based companies are set up for legitimate reasons, offshore jurisdictions have been linked to multiple frauds and corruption cases, including the $1.7 billion scam at Japan’s Olympus Corp. (7733) that was unearthed last year.
Gu Wangjiang, known as Kuk Mong Kong in Hong Kong, has held directorships of at least nine companies in the former British territory over the course of more than two decades, also including Panama-registered Sitoro Shipping Enterprises Co. and a venture with Malaysian billionaire Vincent Tan’s Berjaya Group Bhd., Hong Kong registry and bond documents show.
Hitoro also invested in an $85-million industrial park in the eastern China coastal city of Rizhao in a joint venture with Isocab N.V., a subsidiary of German steelmaker ThyssenKrupp AG (TKA). Tungkong’s 2010 prospectus puts the value of its investment at $47.6 million. That investment is part of the underlying assets of Tungkong, the printing company.
Through Hitoro, Wangjiang and Wangning, who retained her Chinese citizenship, owned Beijing Jiahua Investment Consulting Co. An Internet search shows the address in room 1430 of a building southwest of Tiananmen Square. The room numbers on the fourth floor of the budget hotel stop at 1423, a visit shows.
While the extent of the wealth of China’s political elite is unknown, “the few figures available suggest the amounts are often staggering,” said Kenneth Lieberthal, director of the John L. Thornton China Center at the Brookings Institution in Washington. “It comes from the state being involved pervasively in the economy.”
Generated by Families
“The wealth is generally not money they themselves have,” he said of Chinese government leaders. “It is money their families generate. The families of various members of the Politburo have very large assets.”
Gu Zhengxie, the second-oldest sister, became a Communist Party member and rose to become the deputy party secretary of Beijing-based China National Machinery Industry Corp (CNMICZ)., a centrally administered state-owned company with assets of 139.2 billion yuan as of March, 2011, according to its latest bond prospectus. The conglomerate makes everything from power grids to tractors.
The final sister, Gu Dan, is married to Li Xiaoxue, until last year the top discipline official at the China Securities Regulatory Commission, according to a report on the official website of Zuoquan county in Shanxi, the home province of both the Gu and Li families.
Bo Guagua, the son of Gu Kailai and Bo Xilai, was escorted from his home by law enforcement officers in Cambridge, Massachusetts late in the night on April 12, the Telegraph reported, citing a source it didn’t name. Bo Guagua is a student at Harvard University’s John F. Kennedy School of Government.
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