A Family Affair
China's princelings are running amok. And Bo Xilai is just the tip of the iceberg.
Of all the inside deals that abound in China, few compare in scale and audacity to the clandestine privatization scheme that Chinese journalists uncovered in 2007. Caijing magazine discovered that 92 percent of the shares in the state-owned power generating company Luneng, with net assets valued at $9.47 billion, had been secretly transferred the previous year to two unknown private companies for $478 million. When Chinese leaders learned the identities of the princeling children involved, they pressured the magazine's publisher and editor and forced a follow-up article to be recalled as soon as it hit newsstands. Documents cited by Caijing suggest the handful of new owners might have received a windfall gain in the vicinity of $9 billion from the deal.
Foreign Policy has learned that the most sensitive individual involved was Zeng Wei, the then 37-year-old son of former president Jiang Zemin's right-hand man Zeng Qinghong. While details of profit shares, valuations of Luneng assets and debts, and the identity of several other leading families remain disputed, Zeng Wei's involvement has been confirmed by a person integral to the original investigation, business and social acquaintances of Zeng Wei who count themselves as friends, and a recently retired senior official closely acquainted with Zeng Qinghong. The transaction was subsequently unwound but no senior figure on either side of the transaction, including the current head of China's electricity grid company, ranked no. 7 on the Forbes 2011 list of the world's largest corporations by revenue, is known to have faced disciplinary action. Exactly what happened to the $9 billion remains unknown.
