China censors Namibia corruption case that may touch president's son

It has blocked any references to the investigation even though Hu Haifeng is not a suspect, underscoring the taboo against covering China’s 'princelings.'

A potential corruption scandal may be brewing in Namibia involving a Chinese company that until last year was headed by the son of China's President Hu Jintao.

Though Hu Haifeng isn't accused of involvement in the case, it has proven so sensitive that Chinese censors scoured the Internet in China of all references to it.

The severity of the censorship underlines the strict taboos in play when it comes to China's taizidang, or "princelings." These are the children and spouses of the Communist Party's senior cadre, who often become prominent in business, politics, or the military. Their privileged background can stir public resentment – and Chinese leaders have to be on guard against scandals in their family that rivals can exploit. 

Namibia investigates fraud, graft

In the Namibia case, anticorruption investigators allege that the company, Nuctech, defrauded the government over the supply of X-ray scanners, a deal backed by a $100 million Chinese loan.

A Nuctech representative in Namibia has been arrested, along with two other suspects, on accusations of diverting $13 million to a trading company in Namibia.

Since leaving the company, Hu Haifeng has been promoted to the position of party secretary of Tsinghua Holdings, the parent company of Nuctech. Namibia's prosecutor general Olivia Imalwa told the Monitor that no formal charges had been laid so far in the Nuctech case.

However, the commission's head last week told Reuters that he was still seeking to interview Mr. Hu and senior Nuctech management about the alleged fraud. None have been named as suspects in the case. Nuctech declined to comment.

Nuctech isn't the only Chinese company accused of graft in Namibia. A Chinese engineering company contracted to build a rail line is also being probed over alleged transfers to the same trading company, according to local media reports.

Censors protect prince of princelings

So far, the political blowback in China has been contained. That reflects both the case itself, which remains murky and unknown in China, and the power dynamics within the ruling Communist Party, says Bo Zhiyue, a senior fellow at the National University of Singapore who studies elite politics in China.

"People can talk about it... In the end, it all depends on the political balance between different groups. If Hu Jintao is dominant, I don't see any backlash coming," he says.

Princelings have flourished in China's capitalist economy and have been tapped to run large companies, including state-owned behemoths. Researchers have estimated that as many as 90 percent of companies in key sectors are in their hands.But that may overstate their reach, particularly as the economy matures and more private companies form, say analysts.

Princelings aren't unique to China. In most political systems, the offspring of senior leaders walk a gilded path. Still, the perception that a privileged few receive all the economic spoils remains potent in China. In 1989, it was a rallying cry for protesters in Tiananmen Square.

The very whiff of a scandal that might brush the president's son has been a red flag to China's ever-vigilant censors.

Two leading news websites, Sina.com and 163.com, which carried stories on the Nuctech case on their technology channels, without naming Hu, were blocked – an unusually strong reaction from authorities, says Xiao Qiang, a professor of journalism at the University of California-Berkeley and editor of China Digital Times. Internet searches on keywords like "Namibia bribery" are now denied, a common tactic in China.

The severity of the censorship underlines the strict taboos in play, says Mr. Qiang. "This is more than princelings. This is the current's president's son. It can't be more sensitive than that," he says.

Dynastic politics

As well as in business, dynastic politics are strong within China's ruling party. A 2007 congress saw the promotion of several princelings to senior slots, including vice-premier Xi Jinping, widely seen as China's leader-in-waiting. His father, Xi Zhongxun also served as vice-premier under Mao Zedong before being purged and later rehabilitated. 

Analysts agree that China's princelings have an advantage in businesses that rely on access to senior policymakers. But charting a political career can be more complex, and a family name isn't enough to assure their rise, according to Li Datong, former editor of a reformist magazine in Beijing. 

Nuctech supplies security scanners to airports in China and around the world. It began as a technology research unit in Tsinghua University in Beijing. Its 2008 contract to supply scanners to Namibia was worth $55 million. 

Pushing case could alienate big ally

Like many African countries, Namibia has been receptive to increased Chinese trade and investment.

But much of China's financing hinges on contracts for infrastructure projects going to Chinese companies. That adds to the disquiet in Namibia over the latest allegations, says Graham Hopwood, executive director of the Institute for Public Policy Research, a think tank at the University of Namibia in Windhoek.

"Some members of the ruling party arguing that the [Nuctech] investigation shouldn't push China too hard, because they see China as an important ally. On the other hand, there are those who say that corruption by powerful foreign companies is a threat to Namibia's national interests," he says.

• Scott Baldauf contributed reporting from Johannesburg.

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