Sunday, January 15, 2012

What should we be doing?

We have Chinese New Year almost upon us and no doubt there will be a good crowd of buyers coming from the Mainland with suitcases of money to buy their piece of our city- for an investment, for diversification, to get money somewhere safe.....for future use in emergencies. Who knows what the motivation is.

The article below is what is going round the net at the moment. Some of the folks have made their money by looting or accepting bribes and the amounts are eye-popping.

Should we be asking these new investors how they got their money? Is it fair to the Chinese people to just allow huge sums to be brought out from their country without asking if it was stolen?

Or should we just be grateful that these high end buyers are coming here buying multi-million houses, paying transfer taxes, generating economic activity and jobs and not ask too many questions?

That seems to be what our Premier wants.

China's Great Swindle: How Public Officials Stole $120 Billion and Fled the Country

Just how many corrupt Chinese government officials have fled overseas? How much money have they stashed away? And how did they manage to transfer abroad such colossal sums?

Last week, the People's Bank of China published a report that looked at corruption monitoring and how corrupt officials transfer assets overseas. The report quotes statistics based on research by the Chinese Academy of Social Sciences: 18,000 Communist Party and government officials, public-security members, judicial cadres, agents of state institutions and senior-management individuals of state-owned enterprises have fled China since 1990. Also missing is about $120 billion.

The People's Bank of China report stresses that until now, nobody has been able to provide an authoritative figure of the exact sum pilfered, and the figure of $120 billion is still only an estimate. It is nonetheless an astronomical sum. It is equivalent to China's total financial allocation for education from 1978 to '98. Each escaped official stole, on average, $7 million. But the real numbers might be even higher. Some media have reported that the wife of the deputy chief engineer of the Ministry of Railways, Zhang Shuguang, who was recently caught for corruption, owns three luxury mansions in Los Angeles and has bank savings of as much as $2.8 billion in the U.S. and Switzerland.

This example gives a glimpse into the broader picture.

The number of corrupt officials fleeing China reflects the government's serious attitude about the crackdown on corruption. But if corruption, dereliction of duty and abuse of power are the norm, then the system itself is corrupt. The number also highlights multiple failings in China's embarrassingly ineffective anticorruption campaign.

It takes considerable time for an official to gain a large sum of money by corrupt means and then organize to smuggle it out of the country. Not being able to catch someone during this long time period is the government's first failing.

Next, when a corrupt official prepares his flight, he usually first sends his wife and children overseas while staying behind in China as a so-called naked official. To have such "naked" yet unexposed officials makes for a second failing.

In a country where capital outflow is strictly controlled, how on earth do these people manage to transfer their money overseas successfully? This is the third failing.

And the fourth failing: how they manage to change their identity. These crooks usually hold multiple passports and use many identities. For instance, the former governor of Yunnan province, Li Jiating, had five passports, all real.

The way they escape punishment is the fifth failing. Extradition involves the political and judicial systems of two countries, each with its own concept of law enforcement. The judicial procedure is often complicated and tedious. Extradition is very often obstructed by the fact that a person condemned to death in absentia cannot be extradited for human-rights reasons. In addition, China has not signed extradition treaties with the U.S. or Canada, the two most used destinations, so once the official has run away, the chance of catching him and putting him on trial is close to zero.

Even if they do get caught, the stolen funds are rarely recovered. This is the sixth failing. The U.N. Convention Against Corruption sets out the principle of returning illegal assets, but the procedure is difficult in practice. Not only does China have to show that it owns the assets, but it also has to share some of the money with the countries participating in the joint action. After deductions here and there, there isn't much left.

And, finally, the seventh failing: the government officials who have managed to escape set an example for those still hiding at home. Some of them once held high positions with access to important state secrets and were likely bribed by hostile parties. This poses is a threat to China's political, military and economic stability.

It is for these reasons that it is more important to stop corruption at the source than to catch the culprits after it has happened.

Policies combating money laundering or obliging top government employees to report their personal wealth will not solve this problem. Nor will the close monitoring of naked officials. The effective solution would be to establish a clean system where nobody dares to be corrupt. Certain media have suggested the implementation of a property declaration system. This would be like using antiaircraft guns to fight mosquitoes. But at least it would be a weapon that knows its target.

Also from Worldcrunch:

Read more:,8599,2079756,00.html#ixzz1jaXknWUl


  1. Fish

    they have millions and millions and millions

    most of it stolen

    and they are going to keep coming, with larger and larger suitcases

    prices will rise for years and the gov't doesn't give a flying fuck about you and me

    don't you agree?

  2. Well Anon i think the Government wants their Millions and Millions!

    There are hundreds of Boomers retiring a day! From now for the next 15 years. Think pensions, healthcare etc we gotta pay for it somehow. Hot money, cold money, makes no difference. We either cut services or we sell what we have.

  3. Fish, are you planning on renting for the next fifteen years?

    Come on man, we missed the boat. Let's admit it and move forward. We should just buy and ride this Asian Wave.

    Check out Larry's, he is predicting an absolute surge in foreign buying in the coming months, and open houses on the westside are packed full of mandarin speaking buyers.

    think about it.

  4. The Chinese are only allowed to take $50K a year out of the country so how do they buy a $4 Million house?

  5. To ask if it's "fair" is the intersection of political correctness and insanity. Why don't we just head down to Mexico and offer some money laundering to drug lords just to extend that fairness... and then we can help resettle all the dictators from the Middle East?

    Canada has lost touch with its values and anyone who questions it is called a racist (especially by realtors who stand to enrich themselves more than anyone else). If the money laundering was done by Americans, we'd be up in arms. If stocks were used to launder money, we'd be up in arms.

    How we ever got here is beyond me. I met a couple from Calgary and the same thing is happening there. Lots of mothers and children from China sitting in mansions with the father back at home churning out the bucks and moving it illegally out of the country, NO TAXES being paid on worldwide income, just property transfer tax. Big deal. It won't pay for the healthcare or education of mother and children.

  6. West Van SFH 27 listings. 2 reduced and 1 sale.

  7. Fish,

    Watch for the coming weeks, you will see hundreds of SFH buys each week on the west side and west van.

    this market is going to be smoking HOT, or so says Larry Y.

    why do you doubt him?