This year, foreign journalists in China have produced a series of exposés looking at questionable financial dealings of the relatives of China’s political elite. The New York Times’ David Barboza wrote in October about the role Premier Wen Jiabao may have played in the financial success of Ping An insurance company, and the financial benefits acquired by his relatives in the process. Barboza now looks at the role of Dai Xianglong, a top regulator who oversaw the insurance industry and whose family also benefited tremendously from the purchase of Ping An shares:
With growing attention on the wealth amassed by families of the politically powerful in China, the investments of Mr. Dai’s relatives illustrate that the riches extend beyond the families of the political elites to the families of regulators with control of the country’s most important business and financial levers. Mr. Dai, an economist, has since left his post with the central bank and now manages the country’s $150 billion social security fund, one of the world’s biggest investment funds.
How much the relatives made in the deal is not known, but analysts say the activity raises further doubts about whether the capital markets are sufficiently regulated in China.
Nicholas C. Howson, an expert in Chinese securities law at the University of Michigan Law School, said: “While not per se illegal or even evidence of corruption, these transactions feed into a problematic perception that is widespread in the P.R.C.: the relatives of China’s highest officials are given privileged access to pre-I.P.O. properties.” He was using the abbreviation for China’s official name, the People’s Republic of China.
The company that bought the Ping An stake was controlled by a group of investment firms, including two set up by Mr. Dai’s son-in-law, Che Feng, as well as other firms associated with Mr. Che’s relatives and business associates, the regulatory filings show.
The New York Times article includes an infographic outlining the beneficiaries of the sale of Ping An stock by Cosco shipping company in 2002.