Scourge of Family Feuds Blights China

For the Sydney Morning Herald, John Garnaut writes about a recent economic feud between two politically-connected businessmen in China to illustrate the rise of “‘Mafia-isation’ of government and business.” He Dehua, the son of reformist party leader Hu Yaobang, claims that his luxury real estate company was raided by members of an opposing political faction with the aim of taking over the company. While the raid happened in 2009, Hu is only now speaking to the media after the recent leadership transition in Beijing:

”At least 200 thugs, armed with sticks, guns, chains and other tools of violence” forced their way through the gates of the Lakeside Villas at 8.30am on Sunday, August 2, 2009, according to a complaint Mr Hu has prepared to send to a member of the Politburo Standing Committee.

Mr Hu alleges the armed occupation enabled his rival’s company to complete a discounted purchase of property from Mr Hu’s company and on-sell at an enormous profit. He estimates the raid and other illegal dealings have cost his company more than 600 million yuan (about $90 million). He believes his adversaries were backed by senior party figures and says police chiefs have told him they had no power to intervene.

Collusion between officials, developers and mafia-style ”black society” thugs has become common in China, where the law is explicitly subordinate to politics and politics is shaped by money.

[…] Mr Hu has levelled his accusations at a subsidiary of SOCAM Development, a member of the Shui On Group, which is chaired and controlled by Hong Kong billionaire Vincent Lo. Mr Lo, the son of a Hong Kong property tycoon, graduated from the University of NSW in 1969 and secured his foothold on mainland China in Shanghai in the 1980s.

[…] Mr Lo enjoys close ties with members of the ”Shanghai faction” that rose to power following the purge of Mr Hu’s father and other reformers in the late 1980s.

Garnaut’s report includes footage of the raid and interviews with witnesses:

Mr. Hu has previously spoken out in favor of rule of law and an end to entrenched corruption at the highest levels of the government.

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