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Ripe for the Slaughter: Communist Party Goes after China's Fat Cats

By in Shanghai

China's Communist Party is cracking down on corruption. Wealthy businessmen and party officials are being targeted, and even the country's richest man is being held by authorities in an undisclosed location.

The sun is setting over Hong Kong's Victoria Harbor as the floating casinoNeptune lifts anchor and casts off. The white cruise ship slips past a backdrop of brightly lit skyscrapers and out into international waters, marking the beginning of a long night.

The mood on board is exuberant. The passengers stream into the casino and crowd eagerly around the gambling tables. The Chinese gamblers on board the Neptune have the boat to themselves. Many of them have traveled to Hong Kong from the People's Republic, and they include fat cats and wealthy businessmen who have done well for themselves. Most are in the company of conspicuously young women. The players trade in thick wads of cash for chips.

The scene must have been similarly colorful here when Huang Guangyu, 40, was still among the patrons. But the billionaire, long considered the richest man in China, disappeared in November. The Chinese authorities are holding him in an undisclosed location.

Huang, the founder of Gome, China's biggest chain of electronics superstores, is alleged to have been involved in corruption and insider trading, as well as having laundered illicit earnings in the gambling paradise of Macau.

In China's famous "socialism with Chinese characteristics," it is not unusual to see the careers of newly wealthy businessmen come to an abrupt end. Life in China is especially hazardous for the business leaders placed on the lists of wealthy individuals published by the US business magazine Forbes. The rankings are colloquially known in China as "pig slaughter lists."

To weave their way through the maze of communist bureaucracy, successful business leaders need the support of powerful party officials. Without such support, they can easily find themselves targeted by tax investigators or anti-corruption officials.

But the deep fall of corporate CEO Huang, the son of a farmer and a self-made man who worked his way up from being a minor radio merchant to the powerful head of a company with about 1,350 retail stores, is increasingly claiming political casualties.

At the beginning of the year, the vice minister for public safety and senior criminal prosecutor for economic crimes, Zheng Shaodong, was arrested, as was his deputy Xiang Huaizhu. According to reports in the Chinese media, the two top officials allegedly took bribes from Huang.

In April, two high-ranking Communist Party officials from Guangdong, China's important exporting province which borders Hong Kong, were arrested on corruption charges. They were the former police chief of the province and its former senior anti-corruption official.

Last week, Xu Zongheng, the mayor of Shenzhen, a city of 12 million people, was forced to resign over "disciplinary offences" -- the party's euphemism for corruption.

Speaking the Truth

It is not yet clear how far Beijing plans to take its spectacular sweep against corruption within its own ranks. President and Communist Party Chairman Hu Jintao apparently wants to use the affair to clean up the party ahead of October's celebrations to mark the 60th anniversary of the founding of the People's Republic. The affair is also an opportunity to fundamentally restructure the world's manufacturing powerhouse in response to the global economic crisis.

Hu recently advised his comrades to work hard and live modestly. "Party officials must see the facts and speak the truth," he said.

Three years ago, Hu subjected the major business center of Shanghai to a collective cleansing. The former local head of the party was sentenced to 18 years in prison last year. He had excessively stimulated the boom in his city -- against Beijing's will.

Now the clean-up has reached Guangdong. The affluent province already faces the urgent need to revise its outdated export model. Thousands of low-wage factories were forced to close their gates when consumers in the West suddenly started buying far fewer shoes and toys from China. Millions of migrant workers found themselves out of work.

The most recent wave of scandals has given a boost to modernizers in the party. Chief among them is Guangdong party leader Wang Yang, who promotes "new thinking" and is a close associate of President Hu. He wants to liberate the province from its dependence on the production of cheap goods, while at the same time preserving low-wage jobs for migrant workers.

To do so, Wang will have to overcome deep-rooted corruption among party officials and business leaders. The arrest of the former police chief, in particular, shows that no one can feel safe in Guangdong at the moment.

The 63-year-old Chen Shaoji was seen as a man with a clean record, and one who hunted down illegal gambling rings. But now Chen himself stands accused of having been overly fond of gambling, both in Hong Kong and Macau. Like others who were arrested, he is believed to have helped cover up Huang's alleged money-laundering activities.

Of course, beautiful women are practically a requirement in any decent scandal. Li Yong, Chen's alleged mistress and co-conspirator, is 30 years his junior. An anchorwoman on Guangdong TV, she was apparently arrested while trying to flee Hong Kong.

Those arrested will have to wait for an official indictment. In the People's Republic, party members suspected of crimes are first questioned at length by the Communist Party's disciplinary commissioners in a bizarre practice the party calls "shuanggui" ("double-track"). In this process, the communist inquisitors stake out the politically correct scope of the indictment. Only then are the defendants turned over to the public prosecutor's office. As a result, suspects in China can be locked away for an astonishingly lengthy amount of time without charges having been filed against them.

Officially, Gome founder Huang hasn't even been arrested.

Translated from the German by Christopher Sultan

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