Chinese Party Boss Sentenced to 18 Years for corruption but not death

About 10 years ago, China set up their first "social security" funding system, and now political leaders are getting caught looting the funds for personal projects or funds. The articles below describe how the normal penalty of death for corruption was waived for the former Communist Party chief in Shanghai. His methods of extracting funds, including investing in shell companies, is one that was used prior to the1980's by union leaders in the US who controlled the union pensions (now much more controlled).

The last entry in the AP article describes how a new anti-corruption bureau in China had their website overrun by users the first day with people wanting to read more how to report corrupt officials. That is the type of model the Iraqi Commission of Public Integrity was formed on, but the Iraqis replaced the honest commissioner with a tainted one last year.

Anti-corruption success in China will depend upon an increasing support for the anti-corruption bureau and an increasing number of public prosecutions. In Iraq, there are many prosecution cases waiting in the courts, but no high level officials have been prosecuted and sentenced yet, so China seems to have more progress than Iraq.
vj

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from the latimes.com and the 2nd article below is from the AP

http://www.latimes.com/news/printedition/asection/la-fg-shanghai12apr12,1,5355897.story
From the Los Angeles Times
Former Communist Party chief in Shanghai sentenced for corruption
The graft charges are part of a massive pension fund scandal that toppled dozens of officials and business people.
By Don Lee
Los Angeles Times Staff Writer

April 12, 2008

SHANGHAI — The Communist Party's former chief in Shanghai was sentenced Friday to 18 years in prison for graft in a massive pension fund scandal that toppled dozens of officials and businesspeople and exposed some of the corruption behind the development of China's richest and most glamorous city.

The official New China News Agency said Chen Liangyu, 61, was convicted of extorting or accepting bribes of more than $340,000 and abusing his position. The court in Tianjin, where a secretive trial was held last month, also confiscated about $43,000 of Chen's personal assets, the news agency said.

The sentencing was the culmination of an investigation that began in mid-2006 into Shanghai's multibillion-dollar social security fund, which Chen and others misused for personal gain. Government prosecutors also accused Chen of using his power to benefit his family, friends and underlings, who took bribes from developers and other businesspeople in the form of salaries for phantom jobs, apartments and trips overseas.

Once a national Politburo member and one of China's most powerful men, Chen was ousted as Shanghai's party boss in September 2006 -- the highest-ranking official to be purged in more than a decade. It wasn't the bribes per se that got Chen in trouble, analysts said; in fact, the amount he was forced to give up was insignificant. Rather, they said, his downfall was due to his open defiance of central government orders to curb speculative real estate development that was fueling an overheating economy.

Chen's lawyer, Gao Zicheng, declined to comment. "I could only say that the procedure is legal," Gao said in a telephone interview. "Whether there is an appeal or not depends on Chen's personal will."

Rumors had swirled in recent days that Chen could receive a more severe punishment, possibly even death. But some analysts had expected him to get a lighter penalty, something closer to 10 years, partly because of the risk of fostering a brutal climate for the Communist Party's political elite.

"I was shocked this guy got 18 years," said Minxin Pei, director of the China program at the Carnegie Endowment for International Peace in Washington. "That sends out a very strong message. It's not just about corruption. It's about asserting central government authority. It says to local officials, 'No matter how strong you are, don't mess with us.' "

Corruption has been a long-standing problem in China, exacerbated by market reforms that have given local governments greater power and avenues to wealth, largely by exercising control over real estate. Beijing has conducted numerous anti-corruption campaigns over the years, but it has struggled to corral party officials in a system in which patronage and local political machines are hard to break.

In the last five years, nearly 15,000 officials, including 35 at the provincial or ministerial level, were investigated for embezzlement, bribery and misappropriation of public funds, China's top prosecutor said in a report last month.

Chen had built a strong political base in Shanghai over 10 years as a district head, mayor and then the party's secretary here from 2002 to 2006. Trained as an architect, he was said to have been protected by Jiang Zemin, China's former leader whose power base was Shanghai.

Hu Jintao replaced Jiang as president in 2003, and the removal of Chen was seen by some as Hu's way of eliminating a political enemy and consolidating his power.

Chen's fall from grace elicited comparisons to Chen Xitong, the onetime party chief of Beijing and a member of the Politburo who, under Jiang's maneuverings, was ousted in 1995 for corruption. Three years later, Chen Xitong was given a 16-year jail term but was released in 2006 for medical reasons.

Chen Liangyu has been held in Qincheng Prison in Beijing's northern suburbs. During his incarceration, some real estate projects in Shanghai were reported to have been put on ice, and some developers were said to have gone into hiding.

Chen's sentencing came after a closed trial in Tianjin No. 2 People's Intermediate Court, the second-lowest court in the Chinese legal system. No journalists or family members were allowed inside for the proceedings March 25, according to Caijing magazine, a respected publication in Beijing.

In addition to four charges of taking more than $340,000 in bribes, Chen faced two counts of abuse of power and a charge of dereliction of duty, the magazine said.

New China News Agency said Chen had helped some businesses obtain fiscal subsidies or compensation for building demolition, as well as in dealing with unused real estate. The news agency said Chen had urged his family members to return all the illicit money after the case against him was launched.

Charges that Chen abused his power were tied directly to his role in the funneling of Shanghai's pension money to developers and other companies for hotels and other projects. Dozens of Shanghai officials and businesspeople have been implicated in the scandal, and a number of them have been jailed. On Monday, Zhang Rongkun, once one of the richest men in China, was sentenced to 19 years in prison for securing loans from Shanghai's pension plan for use in his company's private investments in a toll road.

With Chen's sentencing, observers said, the Shanghai pension fund case is essentially closed. As a result of the scandal and the ensuing probe, officials scrutinized other such funds in China. Analysts said it wasn't clear how much of Shanghai's social security money that was put at risk was lost or recovered.

don.lee@latimes.com
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from the AP
http://ap.google.com/article/ALeqM5joRKgqff5aaQCr72TS6czPMdZ0UQD8VVP0780

Ex-Shanghai Party Boss Gets 18 Years

By CARA ANNA – 20 hours ago

SHANGHAI, China (AP) — China sentenced the former Communist Party chief of the country's financial capital to 18 years in prison Friday, but spared him the usual punishment for serious economic crimes — death.

Chen Liangyu, who had been a member of China's powerful 24-seat Politburo, was the highest-level Chinese official to be purged in a decade. Like most high-ranking officials, however, Chen avoided the death penalty.

"This is what I suspect they see as a reasonable compromise," said Steve Tsang, a China expert at St. Antony's College at Britain's Oxford University. "A strong message was sent out, yet it protects current and former members of the Politburo from the full price they have to pay for certain crimes in China."

Chen had been accused of being at the center of a scandal involving the misuse of a third of Shanghai's pension funds — a case that highlighted Beijing's troubles in keeping corrupt officials from looting social security funds set up only a decade ago.

The official Xinhua News Agency said Chen was jailed "for taking bribes and abusing power." It said the Tianjin No. 2 Intermediate People's Court showed leniency because the 61-year-old Chen "showed remorse" and returned the money.

Chen's lawyer, Gao Zicheng, indicated Chen would appeal. "If Chen appeals, it's not over," he said before hanging up.

Chen showed no emotion in court footage aired on state-run China Central Television. It was his first appearance on state-run TV since he was summarily dismissed from his posts in 2006.

The party chief in Shanghai, China's commercial and financial capital, is one of the country's more powerful posts. Chen's removal signaled President Hu Jintao's growing power within the factions that comprise the party's collective leadership. The man who replaced Chen, Xi Jinping, has already been promoted again and is widely seen as being moved into position to succeed Hu.

The Shanghai scandal saw more than an estimated $400 million in pension funds improperly invested in real estate and toll road projects that included Shanghai's new Formula One race track. More than 25 local officials have been detained in the investigation.

Chen used his influence as party boss in 2004 to channel $120 million in social security funds to an unidentified company, Xinhua said citing court documents.

At the center of Chen's rise and fall lay real estate deals, a driver of Shanghai's fantastic growth. The court found him guilty of extorting money accepting bribes of more than $340,000 from organizations and individuals over an 18-year period from the time he headed one of Shanghai's districts in 1988.

Among Chen's crimes, Xinhua said, were funneling land to his brother to develop, getting a new house for his father and arranging a deputy general manager's job for his son at the local soccer team, the Shanghai Shenhua Football Club.

Tsang, the China expert, said the reported amount was almost certainly far less than Chen actually took and was fixed by political bargaining.

"The party boss of Shanghai guilty of a quarter million dollars' worth of bribery? Of course it's too little! Come on, give me a break," Tsang said, adding that the sentence was clearly politically decided.

The court on Friday also confiscated $43,000 of Chen's assets.

Corruption is a popular topic in China. In December, a Web site created by China's newly created anti-corruption bureau crashed after barely a day because too many visitors tried to log on to register complaints.

In 2006, the vice mayor of Beijing who oversaw Olympic construction projects was fired and expelled from the Communist Party on charges of bribery, though Beijing officials insisted Liu Zhihua's alleged misdeeds had nothing to do with Olympic projects. He has yet to be put on trial.

At the same time, China installed a new supervisor for construction projects for the Beijing Olympics as part of efforts to prevent corruption. In January 2007, China's top auditor said fighting corruption in construction projects for the Olympics would be a priority.

Last year, nearly 2,000 local government officials were either disciplined or charged with crimes, the Xinhua News Agency reported in late December, citing the Communist Party's organization department.

"Ah, what country doesn't have corruption?" asked a woman selling pirated DVDs on a Shanghai street after being told of Chen's sentencing.

"What can I say about this? Are they going to take the money and give it back to the people? Ha! I don't think so," said the woman, who gave her family name as Zhang.