Bo Xilai’s Fall in China Put Allies in Peril – NYTimes.com


Leader’s Fall in China Put Allies in Peril

Gilles Sabrie for The New York Times

The Nanshan Lijing Resort in Chongqing, China, where the body of Neil Heywood was found. He was a British businessman with ties to the family of Bo Xilai, whose wife has been tied to Mr. Heywood’s killing.

 

By EDWARD WONG and JONATHAN ANSFIELD

Published: May 20, 2012

 

CHONGQING, China — Early this year, as a crisis unfolded in the chambers of power here, three men flew into this fog-wreathed riverside metropolis within a day or two of one another. They were members of the inner court of Bo Xilai, the Communist Party aristocrat who ran the city, and they had come to repair a rupture between the strong-willed Mr. Bo and his equally driven police chief.

Liu Jin/Agence France-Presse — Getty Images

Bo Xilai

Associated Press

Wang Lijun, who as police chief of Chongqing confronted Mr. Bo with evidence implicating his wife in the killing.

The New York Times

Chongqing is a fast-growing municipality of 31 million.

China Daily/Reuters

Xu Ming, a wealthy businessman and friend of Mr. Bo’s.

Just days earlier, on Jan. 28, the police chief, Wang Lijun, had pressed Mr. Bo over evidence tying Mr. Bo’s wife to the death last fall of a British businessman, prompting Mr. Bo to punch Mr. Wang in the face, Mr. Wang later recounted to others. The three men — two of them powerful businessmen and the other a former intelligence agent — had befriended Mr. Bo and Mr. Wang years ago. They knew both to be controlling and impulsive, and their goal was to broker a peace.

The most famous of the three, Xu Ming, 41, listed by Forbes as China’s eighth-richest person in 2005, had flown in on his private jet. He and the others held separate meetings with Mr. Bo and Mr. Wang. The damage was irreparable. The former intelligence agent, Yu Junshi, rushed home and stuffed a bag with 1.2 million renminbi, or nearly $200,000, to take to a bank with Ma Biao, the other businessman, known for his girth. Then all three fled to Australia within days, fearful of the fallout from a possible investigation of Mr. Bo.

Those figures are now being detained as central suspects or witnesses in the Chinese government’s broad investigation into Mr. Bo’s use of power. His fall from the party’s top echelons has opened a window on how some of his closest allies from his years as a rising official in northeast China became entwined in the social and economic fabric of Chongqing, a fast-growing western municipality of 31 million that Mr. Bo governed for four years. The accounts about those allies, which raise questions about Mr. Bo’s relations with tycoons, are based primarily on interviews with six people associated with the circle, who spoke on the condition of anonymity for fear of facing official scrutiny, and a review of financial documents and company Web sites. Together, they reveal the workings of the shadowy court of one of China’s leaders, and of the panic that set in when these ambitious figures realized their world was about to collapse.

“These are powerful men with their own style,” said one person who has met with Mr. Yu. “It was all very strange, very abnormal, the way they acted at that time.”

On Feb. 6, Mr. Wang drove to the American Consulate in Chengdu and told diplomats about what he said was the murder of the Briton, Neil Heywood, which set in motion one of China’s biggest political scandals in decades: Mr. Bo has been removed from his posts, his allies are under scrutiny and his wife is a suspect in the killing.

The three men who fled to Australia have been held for two months. They left after Mr. Wang’s consulate visit, but returned to China in about 10 days on Mr. Xu’s private jet, thinking that Mr. Bo had avoided serious trouble. They were picked up by the police around the time that Mr. Bo was removed as party chief of Chongqing on March 15, according to several people who knew the men or their friends and families. One with security contacts said almost 60 people had been detained.

All three had much to lose. Mr. Xu, the billionaire, and Mr. Ma, the businessman, in particular had become involved in land deals here, and feared being brought down if Mr. Bo was investigated for corruption, their associates said.

The men could not be reached for comment, and employees at companies where they serve as executives declined to answer questions.

The first to appear on the scene in Chongqing was Mr. Yu, a fixer for the Bo family. He moved here before Mr. Bo arrived in December 2007 for his posting as party chief. Mr. Bo had sent him to gather information and build relations, according to people who have met Mr. Yu, a former intelligence officer for the People’s Liberation Army. Mr. Yu had been posted to Bangkok in the 1990s, but an agent in his network defected, and the members of his group were recalled and punished.

After Mr. Yu left the intelligence service, he returned to his hometown, Dalian, where Mr. Bo was mayor and Mr. Xu was building up his companies. Mr. Yu was investigated by the police over his business activities, and he enlisted the help of Gu Kailai, a lawyer married to Mr. Bo. He soon became friends with Mr. Bo; Mr. Xu, the billionaire; Mr. Ma, the businessman; and Mr. Wang, who was a police officer in the surrounding province of Liaoning, said people familiar with this history.

“Bo Xilai is fascinated by spies, so he likes to make friends with intelligence agents,” said Yang Haipeng, an investigative journalist in Shanghai.

In a microblog post on April 24, Mr. Yang wrote that Mr. Yu was an ex-spy turned “henchman” for the Bo family who had been detained in March. Censors deleted Mr. Yang’s microblog account, and security officials asked him for his source.

Mr. Yu, well read and well mannered, moved in rarefied circles in Chongqing and kept a low profile. He was thrust into the spotlight only once, when two dogs he kept at a home in Olympic Garden Villas, a German shepherd and a pit bull terrier, bit a man to death last July, said one person who has visited Mr. Yu at the home. Mr. Wang, the police chief, persuaded Mr. Yu to put the dogs to sleep. “A dog that has caused so much trouble for you will make trouble again; it will jinx your future,” Mr. Yu recalled Mr. Wang saying, according to the person. The episode was reported in The Chongqing Evening News. Mr. Yu told the reporter he worked in the financial industry.

Business executives seeking to curry favor with Mr. Bo and Mr. Wang sometimes approached Mr. Yu. In 2009, Mr. Bo and Mr. Wang started a crackdown on criminal gangs that was also an offensive against private entrepreneurs and Mr. Bo’s enemies. Fearful of being unfairly ensnared in the crackdown, Yin Mingshan, the founder of Lifan Group, a motorcycle company, arranged a banquet with Mr. Yu, said two friends of the banquet’s organizer. “All the bosses needed protection,” one of them said. Representatives of the company did not answer calls seeking comment.

Right after the campaign began, Mr. Xu and Mr. Ma started real estate projects in Chongqing through a complex web of companies. “Bo Xilai would always give Xu Ming advantages in doing business,” said one person.

In the 1990s, Mr. Xu built up his main conglomerate, Dalian Shide, whose holdings range from home appliances to finance to building materials, by winning contracts from local officials, including a lucrative deal to provide window frames while Mr. Bo was mayor of Dalian. Mr. Xu also received generous loans from state banks, including from China Guangfa Bank, where Mr. Ma was a branch chief.

Mr. Ma left the bank years ago and started an insurance company. After Mr. Bo arrived in Chongqing, Mr. Ma and Mr. Xu set up several companies to develop Chongqing real estate, according to financial records and information from government and company Web sites. Mr. Xu and Mr. Ma have roles in at least three companies founded in 2009: Chongqing Heshengyu Real Estate Development, Chongqing Shenghe Construction and Guanghua Huihuang.

Mr. Xu found ways to keep himself veiled. He sometimes used a Hong Kong company, Golden International Investment, to invest in local companies. Records in Hong Kong list Mr. Xu and three other Dalian Shide executives as the directors of Golden in 2003.

The companies bought at least 123 acres of land in Chongqing, according to Chinese news media reports. Mr. Xu and Mr. Ma often met their allies discreetly in hotels. One sweltering night last summer, Mr. Ma walked with Mr. Yu, the former spy, into the lobby of the Nanshan Lijing Resort, set in misty hills on the city’s outskirts. Mr. Wang, the police chief, greeted them there in a respectful manner, and they dined with Mr. Xu, said one witness.

The resort was known as a rendezvous point for people close to Mr. Bo, and Mr. Heywood’s body was found in a villa there on Nov. 15. Police investigators determined that Mr. Heywood had been poisoned, and suspected Mr. Bo’s wife, Gu Kailai, was involved.

Tensions built between Mr. Bo and Mr. Wang, the police chief, and things fell apart after they had their explosive meeting on Jan. 28. Mr. Xu beseeched Mr. Yu to fly to Chongqing from Beijing. On Jan. 31, Mr. Yu met with Mr. Wang for an entire night in Mr. Wang’s suite at police headquarters. The next day, his driver switched cars; picked up Mr. Ma, the businessman, at the airport; and drove him and Mr. Yu to the Foggy City Hotel, where Mr. Bo sometimes dined and held meetings. Mr. Ma met with Mr. Bo while Mr. Yu waited in the lobby. “When Ma Biao came out, his face looked ashen,” said a friend of Mr. Yu’s.

On Feb. 2, the two made their run to the bank. Mr. Yu told Mr. Ma to take the bag of cash inside by himself so the two would avoid being recorded together on security cameras. Then they flew out of Chongqing. That day, the local government announced that Mr. Wang had been removed from his police chief job.

Mr. Xu flew in on Feb. 3 and met with Mr. Bo. Within a week, he and the other two left for Hong Kong from northern China, and proceeded to Australia. “We thought they weren’t coming back,” one person familiar with them said.

But they returned. Then on March 14, as word quietly spread of Mr. Bo’s purge, Mr. Yu realized that he and his cohorts would be detained. He told his wife and son to go for a stroll that evening outside their Beijing home, so they would not witness the arrival of the police, his wife told a friend. But the police did not arrive until later that night, and the family watched as Mr. Yu was led away.

Edward Wong reported from Chongqing, and Jonathan Ansfield from Beijing. Ian Johnson contributed reporting from Beijing. Shi Da and Mia Li contributed research from Beijing, and Hilda Wang contributed research from Hong Kong.

 Bo Xilai’s Fall in China Put Allies in Peril – NYTimes.com.

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