China acts to stem the tide of officials fleeing with cash

When Yang Xianghong, a middle-ranking Chinese Communist Party official, slipped away from a government delegation trip to Paris three weeks ago, he said he was visiting his daughter.

When he didn't come back, though, his disappearance sparked much speculation on state-run media that Mr. Yang was the latest escapee in a growing exodus of officials fleeing corruption probes.

If true, he joins as many as 10,000 corrupt Chinese officials who have fled the country over the past decade, taking as much as $100 billion of public funds with them, according to an estimate by Li Chengyan, head of Peking University's Anticorruption Research Institute.

More unexpected, however, was the heavy press coverage that Yang's walkabout attracted in a country where the government is generally reluctant to wash its dirty linens in public.

That suggests that "the government is sending a signal" that it regards "the number of officials fleeing as a very important problem which needs to be solved," says Mao Zhaohui, director of anticorruption studies at Beijing's Renmin University.

Corruption is pervasive at almost every level of the government, and it is a major factor eroding faith in the ruling Communist Party. Earlier this year, after thousands of schoolchildren died in the Sichuan earthquake, the Internet was ablaze with accusations that local officials had taken bribes to approve substandard materials for school construction.

Chinese President Hu Jintao has repeatedly declared that the fight against fraud is a top government priority and courts have handed down heavy sentences against prominent offenders.

Last year, the former head of the Chinese Food and Drug Administration, Zheng Xiaoyu, was executed after being found guilty of taking bribes to approve thousands of new drugs.

Stiff punishments, however, do not appear to have curbed the phenomenon. Just this week, the deputy president of the Supreme Court and the head of parliament's budget committee were fired for corruption in an indication of how far the rot has spread even among the highest levels of government.

The exact nature of the accusations leveled against Yang, party secretary of a district in Wenzhou, a boomtown on China's east coast, remains unclear. State media reported that he was questioned by a team from the region's party disciplinary committee three days before his trip.

The Wenzhou municipal government sent two officials to Paris to persuade Yang to return, local newspapers reported, along with a doctor to treat a bad back that he said prevented him from traveling home. But they had no success.

The Wenzhou authorities subsequently confiscated all local officials' passports, according to Oriental Outlook, a magazine owned by the government's news agency, Xinhua, in a bid to stop others from following Yang's example.

"Passport management is the way to handle this ... but that is very complicated," says Dr. Li, since many government employees have both official and personal passports.

The problem is compounded by the fact that China has signed extradition treaties with only 31 countries. They do not include the US, Canada, or Australia – three popular destinations for Chinese officials on the lam. Only four western European nations have such agreements with Beijing.

Those who escape China with money tend to seek refuge in North America or Europe, say corruption experts here. Smaller fish head for Southeast Asia or South America.

"The top destinations are the countries with independent judicial systems," says Liao Ran, senior program coordinator of the Asia and Pacific department at Transparency International, a Berlin-based international corruption watchdog.

"If you get help from a lawyer ... your appeals process can last for 10 years" in most Western countries, says Mr. Liao.

Lai Changxing, for example, is alleged to have headed a major smuggling ring and is often called China's most wanted man. He arrived in Canada in 1999 and has been fighting a legal battle to avoid deportation ever since.

"The more money the criminals have, the harder it is to repatriate them," says Li. "The economic costs are very high for China."

Mr. Lai has also benefited from a Canadian judge's ruling that he might be subjected to torture if he were returned to China. Other Chinese officials elsewhere have argued they should not be sent home for fear of political persecution.

China's paltry number of bilateral extradition treaties, says Liao, is also explained by the fact that Beijing still imposes the death penalty on people found guilty of serious corruption. "The law in many Western countries [where the death penalty has been abolished] says a person cannot be deported if he risks the death penalty," he says.

The Chinese government is moving towards abolishing capital punishment for economic crimes, says Liao, "which might make extradition easier in the future."

China has not been totally unsuccessful apprehending corruption suspects. In 2004, the US deported Yu Zhendong, accused of defrauding the Bank of China of $485 million. He was sentenced to 12 years in jail.

Chinese officials also convinced the Canadian authorities last August to return Deng Xinzhi, alleged to be a swindler, who had sought refuge in Toronto. His case has not yet come to trial here.

In the absence of extradition treaties with most countries where Chinese officials seek safe havens, Beijing can generally only await the outcome of immigration cases brought against the suspects. Beijing is hoping to forge closer international ties with some of these key nations following its accession to the United Nations convention against corruption, which has more than 150 signatories.

"This widens the basis for international cooperation and allows China to work more closely with foreign countries," says Chen Lei, a corruption expert at Beijing Normal University.

The government is also stepping up its long-running domestic efforts to combat fraud. The Chinese parliament is studying proposals obliging all government employees to report their property holdings, widening the scope of corruption probes to officials' relatives and increasing the penalties for corruption.

"Though the new laws look very good," says Liao. "The problem is whether or not they can be enforced. Still, the central government's political commitment to fight corruption is in place."

Despite these efforts, many corruption experts say that as the government tightens the screws on fraud, the exodus will likely grow larger.

"A lot of corrupt officials do not dare stay in China now," says Mao. "There will be more and more officials heading abroad, and they will be taking more and more money with them."