Bo Xilai, China and Media Hypocrisy

The story of Chinese "princeling" Bo Xilai, his "Jackie Kennedy wife" Gu Kailai, and murdered "British businessman" Neil Heywood is a textbook case of mass media hypocrisy in covering international affairs.

Consider for example the Letter from China headlined "Corruption Nation: Why Bo Xilai Matters" in the latest New Yorker, and last week's investigative piece by Bloomberg on Gu's four sisters who "controlled a web of businesses from Beijing to Hong Kong to the Caribbean worth at least $126 million.”

In both articles, as in the general flow of news agency reporting of the matter, the focus is firmly on Chinese corruption. The cesspool  represented by Neil Heywood, who Reuters reported was "poisoned after he threatened to expose a plan by a Chinese leader’s wife to move money abroad,” remains firmly in the shadows.

Heywood was no ordinary "British businessman." He was a fixer for the global black market centered on and run from The City, London's financial center. His main job seems to have been helping corrupt Chinese officials move hot money into safe havens abroad. On the side he reported to MI6, Britain's nefarious spy agency (a link he advertised in a pathetically juvenile manner by incorporating 007 on his car license plate).

Why is China "corruption nation" and not Britain?

The New Yorker piece sins by omission; the Bloomberg article engages in active distortion. Noting the use of offshore tax havens by Gua's sisters, it says that is "not unusual: P.O. boxes in jurisdictions such as the Cayman Islands and British Virgin Islands can serve as the address for thousands of companies. While the majority of tax haven-based companies are set up for legitimate reasons, offshore jurisdictions have been linked to multiple frauds and corruption cases...".

The Bloomberg authors do not say what "legitimate reasons" are served by accounts and shell companies with untraceable owners in off-shore tax havens (of which there are now over 70, most of them in tiny former British colonies). I can see none; those who use tax havens want to avoid taxes, evade legal responsibility, and stash the proceeds of crime.

Illicit outflows from China are the largest of any country in the world. Sarah Freitas notes in her blog at Washington-based Global Financial Integrity that the country lost $2.74 trillion over the past decade. Partial estimates from a number of sources including the IMF and the World Bank indicate that global black market assets amount to over $30 trillion.

Assets in the trillions of dollars cannot be managed by hoods carrying around suitcases filled with high denomination currency notes. Major financial institutions are involved, and they operate in a coherent system that drains an estimated $1 trillion from developing countries every year. 

Mainstream media have been incurious about such numbers, and especially in the mechanisms used to move and manage the money. The growth of a global black market that Britain developed as its Empire dwindled in the 1960s is perhaps the most uncovered international story of our time.  

The corruption represented by that enterprise is not just victimless "white collar" crime. The global black market sustains terrorist organizations, drug traffickers, civil wars, coups against elected governments, trafficking of women and children for the sex trade, and a host of other organized criminal activities. It feeds the huge speculative "hedge funds" that have driven oil prices beyond $100 a barrel during a global recession. It kills democracies.  

To bring the current situation into political focus it is necessary to see it as a second British Empire, one that employs drug mafias and "Islamic terrorists" instead of conquering armies and rewards its primary agents -- bankers -- not with titles and tiaras but with munificent "bonuses" even as their above-ground organizations wallow in public funds to avoid bankruptcy.

Public outrage about those bonuses is often reported in the mass media, but strangely, there has never been an investigation into the rationale for them. The halfhearted excuse that the bonuses are necessary to ensure the integrity of those who deal with billion dollar flows is not valid; there are thickets of safeguard procedures and special oversight and audit arrangements to impose honesty.

As we move into a period of individual connectivity rich with democratic promise it is critically important for people everywhere to recognize that corruption at the national level is sustained by a global system run by a violent and unprincipled elite. Unless we dismantle that system the world will continue to be in a state of perennial violent disorder.