原文： New York Times
BEIJING
— 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, including his
wife, have a knack for aggressive deal making — 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 well-known “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.
In
2007, the last year the stock holdings were disclosed in public documents,
those partnerships held as much as $2.2 billion worth of Ping An stock,
according to an accounting of the investments by The Times that was verified by
outside auditors. Ping An’s overall market value is now nearly $60 billion.
Ping
An said in a statement that the company did “not know the background of the
entities behind our shareholders.” The statement said, “Ping An has no means to
know the intentions behind shareholders when they buy and sell our shares.”
While
Communist Party regulations call for top officials to disclose their wealth and
that of their immediate family members, no law or regulation prohibits
relatives of even the most senior officials from becoming deal-makers or major
investors — a loophole that effectively allows them to trade on their family
name. Some Chinese argue that permitting the families of Communist Party
leaders to profit from the country’s long economic boom has been important to
ensuring elite support for market-oriented reforms.
Even
so, the business dealings of Mr. Wen’s relatives have sometimes been hidden in
ways that suggest the relatives are eager to avoid public scrutiny, the records
filed with Chinese regulatory authorities show. Their ownership stakes are
often veiled by an intricate web of holdings as many as five steps removed from
the operating companies, according to the review.
In
the case of Mr. Wen’s mother, The Times calculated her stake in Ping An —
valued at $120 million in 2007 — by examining public records and
government-issued identity cards, and by following the ownership trail to three
Chinese investment entities. The name recorded on his mother’s shares was
Taihong, a holding company registered in Tianjin, the prime minister’s
hometown.
The
apparent efforts to conceal the wealth reflect the highly charged politics
surrounding the country’s ruling elite, many of whom are also enormously
wealthy but reluctant to draw attention to their riches. When Bloomberg
News reported in June that the extended family of Vice President Xi
Jinping, set to become China’s next president, had amassed hundreds of millions
of dollars in assets, the Chinese government blocked access inside the country
to the Bloomberg Web site.
“In
the senior leadership, there’s no family that doesn’t have these problems,”
said a former government colleague of Wen Jiabao who has known him for more
than 20 years and who spoke on the condition of anonymity. “His enemies are
intentionally trying to smear him by letting this leak out.”
The
Times presented its findings to the Chinese government for comment. The Foreign
Ministry declined to respond to questions about the investments, the prime
minister or his relatives. Members of Mr. Wen’s family also declined to comment
or did not respond to requests for comment.
Duan
Weihong, a wealthy businesswoman whose company, Taihong, was the investment
vehicle for the Ping An shares held by the prime minister’s mother and other
relatives, said the investments were actually her own. Ms. Duan, who comes from
the prime minister’s hometown and is a close friend of his wife, said ownership
of the shares was listed in the names of Mr. Wen’s relatives in an effort to
conceal the size of Ms. Duan’s own holdings.
“When
I invested in Ping An I didn’t want to be written about,” Ms. Duan said, “so I
had my relatives find some other people to hold these shares for me.”
But
it was an “accident,” she said, that her company chose the relatives of the
prime minister as the listed shareholders — a process that required registering
their official ID numbers and obtaining their signatures. Until presented with
the names of the investors by The Times, she said, she had no idea that they
had selected the relatives of Wen Jiabao.
The
review of the corporate and regulatory records, which covers 1992 to 2012,
found no holdings in Mr. Wen’s name. And it was not possible to determine from
the documents whether he recused himself from any decisions that might have
affected his relatives’ holdings, or whether they received preferential
treatment on investments.
For
much of his tenure, Wen Jiabao has been at the center of rumors and conjecture
about efforts by his relatives to profit from his position. Yet until the
review by The Times, there has been no detailed accounting of the family’s
riches.
His
wife, Zhang Beili, is one of the country’s leading authorities on jewelry and
gemstones and is an accomplished businesswoman in her own right. By managing
state diamond companies that were later privatized, The Times found, she helped
her relatives parlay their minority stakes into a billion-dollar portfolio of
insurance, technology and real estate ventures.
The
couple’s only son sold a technology company he started to the family of Hong
Kong’s richest man, Li Ka-shing, for $10 million, and used another investment
vehicle to establish New Horizon Capital, now one of China’s biggest private
equity firms, with partners like the government of Singapore, according to
records and interviews with bankers.
The
prime minister’s younger brother, Wen Jiahong, controls $200 million in assets,
including wastewater treatment plants and recycling businesses, the records
show.
As
prime minister, Mr. Wen has staked out a position as a populist and a reformer,
someone whom the state-run media has nicknamed “the People’s Premier” and
“Grandpa Wen” because of his frequent outings to meet ordinary people,
especially in moments of crisis like natural disasters.
While
it is unclear how much the prime minister knows about his family’s wealth,
State Department documents released by the WikiLeaks organization in 2010
included a cable that suggested Mr. Wen was aware of his relatives’ business
dealings and unhappy about them.
“Wen
is disgusted with his family’s activities, but is either unable or unwilling to
curtail them,” a Chinese-born executive working at an American company in
Shanghai told American diplomats, according to the 2007 cable.
China’s
‘Diamond Queen’
It
is no secret in China’s elite circles that the prime minister’s wife, Zhang
Beili, is rich, and that she has helped control the nation’s jewelry and gem
trade. But her lucrative diamond businesses became an off-the-charts success
only as her husband moved into the country’s top leadership ranks, the review
of corporate and regulatory records by The Times found.
A
geologist with an expertise in gemstones, Ms. Zhang is largely unknown among
ordinary Chinese. She rarely travels with the prime minister or appears with
him, and there are few official photographs of the couple together. And while
people who have worked with her say she has a taste for jade and fine diamonds,
they say she usually dresses modestly, does not exude glamour and prefers to
wield influence behind the scenes, much like the relatives of other senior
leaders.
The
State Department documents released by WikiLeaks included a suggestion that Mr.
Wen had once considered divorcing Ms. Zhang because she had exploited their
relationship in her diamond trades. Taiwanese television reported in 2007 that
Ms. Zhang had bought a pair of jade earrings worth about $275,000 at a Beijing trade
show, though the source — a Taiwanese trader — later backed off the claim and
Chinese government censors moved swiftly to block coverage of the subject in
China, according to news reports at the time.
“Her
business activities are known to everyone in the leadership,” said one banker
who worked with relatives of Wen Jiabao. The banker said it was not unusual for
her office to call upon businesspeople. “And if you get that call, how can you
say no?”
Zhang
Beili first gained influence in the 1990s, while working as a regulator at the
Ministry of Geology. At the time, China’s jewelry market was still in its
infancy.
While
her husband was serving in China’s main leadership compound, known as
Zhongnanhai, Ms. Zhang was setting industry standards in the jewelry and gem
trade. She helped create the National Gemstone Testing Center in Beijing, and
the Shanghai Diamond Exchange, two of the industry’s most powerful
institutions.
In a
country where the state has long dominated the marketplace, jewelry regulators
often decided which companies could set up diamond-processing factories, and
which would gain entry to the retail jewelry market. State regulators even
formulated rules that required diamond sellers to buy certificates of
authenticity for any diamond sold in China, from the government-run testing
center in Beijing, which Ms. Zhang managed.
As a
result, when executives from Cartier or De Beers visited China with hopes of
selling diamonds and jewelry here, they often went to visit Ms. Zhang, who
became known as China’s “diamond queen.”
“She’s
the most important person there,” said Gaetano Cavalieri, president of the World
Jewelry Confederation in Switzerland. “She was bridging relations between
partners — Chinese and foreign partners.”
As
early as 1992, people who worked with Ms. Zhang said, she had begun to blur the
line between government official and businesswoman. As head of the state-owned
China Mineral and Gem Corporation, she began investing the state company’s
money in start-ups. And by the time her husband was named vice premier, in
1998, she was busy setting up business ventures with friends and relatives.
The
state company she ran invested in a group of affiliated diamond companies,
according to public records. Many of them were run by Ms. Zhang’s relatives —
or colleagues who had worked with her at the National Gemstone Testing Center.
In
1993, for instance, the state company Ms. Zhang ran helped found Beijing
Diamond, a big jewelry retailer. A year later, one of her younger brothers,
Zhang Jianming, and two of her government colleagues personally acquired 80
percent of the company, according to shareholder registers. Beijing Diamond
invested in Shenzhen Diamond, which was controlled by her brother-in-law, Wen
Jiahong, the prime minister’s younger brother.
Among
the successful undertakings was Sino-Diamond, a venture financed by the
state-owned China Mineral and Gem Corporation, which she headed. The company
had business ties with a state-owned company managed by another brother, Zhang
Jiankun, who worked as an official in Jiaxing, Ms. Zhang’s hometown, in
Zhejiang Province.
In
the summer of 1999, after securing agreements to import diamonds from Russia
and South Africa, Sino-Diamond went public, raising $50 million on the Shanghai
Stock Exchange. The offering netted Ms. Zhang’s family about $8 million,
according to corporate filings.
Although
she was never listed as a shareholder, former colleagues and business partners
say Ms. Zhang’s early diamond partnerships were the nucleus of a larger
portfolio of companies she would later help her family and colleagues gain a
stake in.
The
Times found no indication that Wen Jiabao used his political clout to influence
the diamond companies his relatives invested in. But former business partners
said that the family’s success in diamonds, and beyond, was often bolstered
with financial backing from wealthy businessmen who sought to curry favor with
the prime minister’s family.
“After
Wen became prime minister, his wife sold off some of her diamond investments
and moved into new things,” said a Chinese executive who did business with the
family. He asked not to be named because of fear of government retaliation.
Corporate records show that beginning in the late 1990s, a series of rich
businessmen took turns buying up large stakes in the diamond companies, often from
relatives of Mr. Wen, and then helped them reinvest in other lucrative
ventures, like real estate and finance.
According
to corporate records and interviews, the businessmen often supplied accountants
and office space to investment partnerships partly controlled by the relatives.
“When
they formed companies,” said one businessman who set up a company with members
of the Wen family, “Ms. Zhang stayed in the background. That’s how it worked.”
The
Only Son
Late
one evening early this year, the prime minister’s only son, Wen Yunsong, was in
the cigar lounge at Xiu, an upscale bar and lounge at the Park Hyatt in
Beijing. He was having cocktails as Beijing’s nouveau riche gathered around,
clutching designer bags and wearing expensive business suits, according to two
guests who were present.
In
China, the children of senior leaders are widely believed to be in a class of
their own. Known as “princelings,” they often hold Ivy League degrees, get
V.I.P. treatment, and are even offered preferred pricing on shares in hot stock
offerings.
They
are also known as people who can get things done in China’s heavily regulated
marketplace, where the state controls access. And in recent years, few
princelings have been as bold as the younger Mr. Wen, who goes by the English
name Winston and is about 40 years old.
A
Times review of Winston Wen’s investments, and interviews with people who have
known him for years, show that his deal-making has been extensive and
lucrative, even by the standards of his princeling peers.
State-run
giants like China Mobile have formed start-ups with him. In recent years,
Winston Wen has been in talks with Hollywood studios about a financing deal.
Concerned
that China does not have an elite boarding school for Chinese students, he
recently hired the headmasters of Choate and Hotchkiss in Connecticut to
oversee the creation of a $150 million private school now being built in the
Beijing suburbs.
Winston
Wen and his wife, moreover, have stakes in the technology industry and an
electric company, as well as an indirect stake in Union Mobile Pay, the
government-backed online payment platform — all while living in the prime
minister’s residence, in central Beijing, according to corporate records and
people familiar with the family’s investments.
“He’s
not shy about using his influence to get things done,” said one venture
capitalist who regularly meets with Winston Wen.
The
younger Mr. Wen declined to comment. But in a telephone interview, his wife,
Yang Xiaomeng, said her husband had been unfairly criticized for his business
dealings.
“Everything
that has been written about him has been wrong,” she said. “He’s really not
doing that much business anymore.”
Winston
Wen was educated in Beijing and then earned an engineering degree from the
Beijing Institute of Technology. He went abroad and earned a master’s degree in
engineering materials from the University of Windsor, in Canada, and an M.B.A.
from the Kellogg School of Business at Northwestern University in Evanston, Ill.,
just outside Chicago.
When
he returned to China in 2000, he helped set up three successful technology companies
in five years, according to people familiar with those deals. Two of them were
sold to Hong Kong businessmen, one to the family of Li Ka-shing, one of the
wealthiest men in Asia.
Winston
Wen’s earliest venture, an Internet data services provider called Unihub
Global, was founded in 2000 with $2 million in start-up capital, according to
Hong Kong and Beijing corporate filings. Financing came from a tight-knit group
of relatives and his mother’s former colleagues from government and the diamond
trade, as well as an associate of Cheng Yu-tung, patriarch of Hong Kong’s
second-wealthiest family. The firm’s earliest customers were state-owned
brokerage houses and Ping An, in which the Wen family has held a large
financial stake.
He
made an even bolder move in 2005, by pushing into private equity when he formed
New Horizon Capital with a group of Chinese-born classmates from Northwestern.
The firm quickly raised $100 million from investors, including SBI Holdings, a
division of the Japanese group SoftBank, and Temasek, the Singapore government
investment fund.
Under
Mr. Wen, New Horizon established itself as a leading private equity firm,
investing in biotech, solar, wind and construction equipment makers. Since it
began operations, the firm has returned about $430 million to investors, a
fourfold profit, according to SBI Holdings.
“Their
first fund was dynamite,” said Kathleen Ng, editor of Asia Private Equity
Review, an industry publication in Hong Kong. “And that allowed them to raise a
lot more money.”
Today,
New Horizon has more than $2.5 billion under management.
Some
of Winston Wen’s deal-making, though, has attracted unwanted attention for the
prime minister.
In
2010, when New Horizon acquired a 9 percent stake in a company called Sihuan
Pharmaceuticals just two months before its public offering, the Hong Kong Stock
Exchange said the late-stage investment violated its rules and forced the firm
to return the stake. Still, New Horizon made a $46.5 million profit on the
sale.
Soon
after, New Horizon announced that Winston Wen had handed over day-to-day
operations and taken up a position at the China Satellite Communications
Corporation, a state-owned company that has ties to the Chinese space program.
He has since been named chairman.
The
Tycoons
In
the late 1990s, Duan Weihong was managing an office building and several other
properties in Tianjin, the prime minister’s hometown in northern China, through
her property company, Taihong. She was in her 20s and had studied at the
Nanjing University of Science and Technology.
Around
2002, Ms. Duan went into business with several relatives of Wen Jiabao,
transforming her property company into an investment vehicle of the same name.
The company helped make Ms. Duan very wealthy.
It
is not known whether Ms. Duan, now 43, is related to the prime minister. In a
series of interviews, she first said she did not know any members of the Wen
family, but later described herself as a friend of the family and particularly
close to Zhang Beili, the prime minister’s wife. As happened to a handful of
other Chinese entrepreneurs, Ms. Duan’s fortunes soared as she teamed up with
the relatives and their network of friends and colleagues, though she described
her relationship with them involving the shares in Ping An as existing on paper
only and having no financial component.
Ms.
Duan and other wealthy businesspeople — among them, six billionaires from
across China — have been instrumental in getting multimillion-dollar ventures
off the ground and, at crucial times, helping members of the Wen family set up
investment vehicles to profit from them, according to investment bankers who
have worked with all parties.
Established
in Tianjin, Taihong had spectacular returns. In 2002, the company paid about
$65 million to acquire a 3 percent stake in Ping An before its initial public
offering, according to corporate records and Ms. Duan’s graduate school thesis.
Five years later, those shares were worth $3.7 billion.
The
company’s Hong Kong affiliate, Great Ocean, also run by Ms. Duan, later formed
a joint venture with the Beijing government and acquired a huge tract of land
adjacent to Capital International Airport. Today, the site is home to a
sprawling cargo and logistics center. Last year, Great Ocean sold its 53
percent stake in the project to a Singapore company for nearly $400 million.
That
deal and several other investments, in luxury hotels, Beijing villa
developments and the Hong Kong-listed BBMG, one of China’s largest building
materials companies, have been instrumental to Ms. Duan’s accumulation of
riches, according to The Times’s review of corporate records.
The
review also showed that over the past decade there have been nearly three dozen
individual shareholders of Taihong, many of whom are either relatives of Wen
Jiabao or former colleagues of his wife.
The
other wealthy entrepreneurs who have worked with the prime minister’s relatives
declined to comment for this article. Ms. Duan strongly denied having financial
ties to the prime minister or his relatives and said she was only trying to
avoid publicity by listing others as owning Ping An shares. “The money I
invested in Ping An was completely my own,” said Ms. Duan, who has served as a
member of the Ping An board of supervisors. “Everything I did was legal.”
Another
wealthy partner of the Wen relatives has been Cheng Yu-tung, who controls the
Hong Kong conglomerate New World Development and is one of the richest men in
Asia, worth about $15 billion, according to Forbes.
In
the 1990s, New World was seeking a foothold in mainland China for a sister
company that specializes in high-end retail jewelry. The retail chain, Chow Tai
Fook, opened its first store in China in 1998.
Mr.
Cheng and his associates invested in a diamond venture backed by the relatives
of Mr. Wen and co-invested with them in an array of corporate entities,
including Sino-Life, National Trust and Ping An, according to records and
interviews with some of those involved. Those investments by Mr. Cheng are now
worth at least $5 billion, according to the corporate filings. Chow Tai Fook,
the jewelry chain, has also flourished. Today, China accounts for 60 percent of
the chain’s $4.2 billion in annual revenue.
Mr.
Cheng, 87, could not be reached for comment. Calls to New World Development
were not returned.
Fallout
for Premier
In
the winter of 2007, just before he began his second term as prime minister, Wen
Jiabao called for new measures to fight corruption, particularly among
high-ranking officials.
“Leaders
at all levels of government should take the lead in the antigraft drive,” he
told a gathering of high-level party members in Beijing. “They should strictly
ensure that their family members, friends and close subordinates do not abuse
government influence.”
The
speech was consistent with the prime minister’s earlier drive to toughen
disclosure rules for public servants, and to require senior officials to reveal
their family assets.
Whether
Mr. Wen has made such disclosures for his own family is unclear, since the
Communist Party does not release such information. Even so, many of the
holdings found by The Times would not need to be disclosed under the rules
since they are not held in the name of the prime minister’s immediate family —
his wife, son and daughter.
Eighty
percent of the $2.7 billion in assets identified in The Times’s investigation
and verified by the outside auditors were held by, among others, the prime
minister’s mother, his younger brother, two brothers-in-law, a sister-in-law,
daughter-in-law and the parents of his son’s wife, none of whom is subject to
party disclosure rules. The total value of the relatives’ stake in Ping An is
based on calculations by The Times that were confirmed by the auditors. The
total includes shares held by the relatives that were sold between 2004 and
2006, and the value of the remaining shares in late 2007, the last time the
holdings were publicly disclosed.
Legal
experts said that determining the precise value of holdings in China could be
difficult because there might be undisclosed side agreements about the true
beneficiaries.
“Complex
corporate structures are not necessarily insidious,” said Curtis J. Milhaupt, a
Columbia University Law School professor who has studied China’s corporate
group structures. “But in a system like China’s, where corporate ownership and
political power are closely intertwined, shell companies magnify questions
about who owns what and where the money came from.”
Among
the investors in the Wen family ventures are longtime business associates,
former colleagues and college classmates, including Yu Jianming, who attended
Northwestern with Winston Wen, and Zhang Yuhong, a longtime colleague of Wen
Jiahong, the prime minister’s younger brother. The associates did not return
telephone calls seeking comment.
Revelations
about the Wen family’s wealth could weaken him politically.
Next
month, at the 18th Party Congress in Beijing, the Communist Party is expected
to announce a new generation of leaders. But the selection process has already
been marred by one of the worst political scandals in decades, the downfall of
Bo Xilai, the Chongqing party boss, who was vying for a top position.
In
Beijing, Wen Jiabao is expected to step down as prime minister in March at the
end of his second term. Political analysts say that even after leaving office
he could remain a strong backstage political force. But documents showing that
his relatives amassed a fortune during his tenure could diminish his standing,
the analysts said.
“This
will affect whatever residual power Wen has,” said Minxin Pei, an expert on
Chinese leadership and a professor of government at Claremont McKenna College
in California.
The
prime minister’s supporters say he has not personally benefited from his
extended family’s business dealings, and may not even be knowledgeable about
the extent of them.
Last
March, the prime minister hinted that he was at least aware of the persistent
rumors about his relatives. During a nationally televised news conference in
Beijing, he insisted that he had “never pursued personal gain” in public
office.
“I
have the courage to face the people and to face history,” he said in an
emotional session. “There are people who will appreciate what I have done, but
there are also people who will criticize me. Ultimately, history will have the
final say.”
-- By DAVID BARBOZA
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