Australia and Xi Jinping’s Corruption Crackdown

Since coming to power in November 2012, Chinese leader Xi Jinping has instigated one of the most extensive anti-corruption campaigns in the history of the Chinese Communist Party. A high-profile aspect of Xi’s corruption crackdown is the prosecution of corrupt Party cadres who have fled China with their ill-gotten wealth. The Chinese Academy of Social Sciences estimates that in the years 1990-2008 over 18,000 corrupt officials left China. The US-based Global Financial Integrity group estimates that US$1.08 trillion was illegally transferred out of China over the period 2002-2011.

In July 2014, China’s Ministry of Public Security (MPS) initiated Operation Fox Hunt 猎狐行动, a major undertaking to repatriate fugitive cadres and stolen assets. By the end of 2014, Operation Fox Hunt had extradited some 680 cadres and recovered over RMB3 billion. In March 2015, the party’s Central Commission for Discipline Inspection (CCDI) launched Operation Sky Net 天网行动 to expand the work of Operation Fox Hunt.

Australia has been a focus of both Operation Fox Hunt and Operation Sky Net. This is because, according to Chinese state media, Australia is one of the top three popular destinations for corrupt cadres, along with Canada and the US. Australia is attractive because of its lack of an extradition treaty with China, the high quality of life, advanced financial system, robust legal protections for criminal suspects and public suspicion towards the Chinese legal process (particularly following reports of several high-profile cases of Australians being mistreated in the Chinese judicial system [topic link page]). Media investigations show that Chinese officials launder money into Australia through commercial investments, property purchases and directing bribe payments to spouses and children residing in Australia.

In October 2014, the Australian Federal Police (AFP) agreed to participate in Operation Fox Hunt by helping China seize the assets of Australia-domiciled suspects who had been placed on a jointly-agreed ‘priority list’. This priority list was compiled from a longer list of ‘less than a hundred’ corrupt cadres who China believes are living in Australia. Current media reports argue that there are at least seventeen corrupt officials now based in Australia, who are collectively accused of embezzling over A$1 billion. Notable amongst them is ‘China’s biggest fugitive’, Gao Yan 高严, who fled China in 2002 after being investigated for awarding government contracts worth hundreds of millions of yuan to his family and friends while acting as general manager of China’s State Grid Corporation.

The Australian authorities have refused to release further information concerning bilateral collaboration on China’s anti-corruption campaign. Observers suggest that returning fugitives to China could be politically sensitive for any Australian government. This sensitivity is primarily due to concerns about the human rights and legal process afforded these suspects by the Chinese legal system: corruption is punishable by the death penalty; torture is sometimes used to extract confessions; judicial institutions and the CCDI are political organs subordinate to the party; and, the Chinese judicial conviction rate is ninety-nine percent. The Australian media have confirmed that Chinese anti-corruption officials are operating in Australia, at least in an unofficial capacity trying to persuade fugitives to return and face trial in China.

Nonetheless, both Foreign Minister Julie Bishop and the Attorney-General’s Department have confirmed that since November 2014 the Australian government is considering requests from China to revive a bilateral extradition treaty that was signed by the Howard government in September 2007, but never ratified. China can still ask Australia to extradite corruption suspects under United Nations conventions, though Australia’s Extradition Act 1988 prohibits the extradition of any person who could then face the death penalty — making the repatriation of corruption suspects to China highly unlikely without there being a revised bilateral framework.

China has expressed particular concern that Australia’s Significant Investor Visa (SIV) scheme could be allowing corrupt cadres to immigrate to Australia with illegally obtained funds. The SIV allows foreigners who invest A$5 million in Australia to gain permanent residency in four years. A new ‘premium’ SIV class announced in October 2014 will enable foreigners who invest A$15 million to acquire permanent residency in just a year. From November 2012 to February 2015, eighty-nine percent of the 436 SIVs granted were to Chinese nationals. The Australian government insists that applicants are rigorously screened for financial integrity, but anonymous insider sources have suggested that the process is open to abuse.

Australia and Xi Jinping’s Corruption Crackdown

Links

Arts, Culture and Creative Industries

Australia and the American ‘Pivot to Asia’

Australia and the Asian Infrastructure Investment Bank

Australia in the Asian Century White Paper