Thread by @PekingMike

THREAD: The book "Red Roulette" is a rare insider's account about corruption at the highest levels of China's government. Much of what the author, Desmond Shum, says can be backed up with documents. But the docs also show how much he may be holding back. Let's dive in! (1/x)

(2/x) First, have a read of @LiYuan6 excellent article about the book. No one is better plugged in than she is. nytimes.com/2021/09/24/bus…

@LiYuan6 (3/x) So the biggest claim in "Red Roulette" centers around the gigantic stake the Wen family took in Ping An Insurance ahead of its 2004 IPO. This was facilitated by Shum's wife, Duan Weihong (Whitney Duan).

@LiYuan6 (4/x) This was extensively covered in @DavidBarboza2 Pulitzer Prize-winning investigation in 2012. The publication of that story was a major life event for Desmond Shum and Whitney Duan, as Shum outlines, giving the backstory. Read Dave's story here!
nytimes.com/2012/10/26/bus…

@LiYuan6 @DavidBarboza2 (5/x) The FOUNDATIONAL DOCUMENT for this story is the excellent 2007 IPO prospectus for the domestic listing of Ping An. Chinese IPO prospectuses are REMARKABLY detailed. EVERY CHINA FORENSIC REPORTER SHOULD SAVE THIS DOCUMENT.
pingan.com/app_upload/ima…

@LiYuan6 @DavidBarboza2 （6/x) The Ping An IPO prospectus may have been issued in 2007, but it is a LIVING DOCUMENT. The players are still playing. So let's have a quick look inside to see where the Wen family fortune came from.

@LiYuan6 @DavidBarboza2 (7/x) You need to read Chinese, but what this says, on page 56, is that China Cosco shipping sold a big chunk of its shares to several companies in 2002, including a company called Taihong Investment (天津泰鸿投资）. Desmond Shum talks about this at length in the book.

@LiYuan6 @DavidBarboza2 (8/x): You can still find this company on Qixin, Qichacha or other Chinese websites that scrape up company information from the government registries. They are great. You see here that Duan Weihong is listed as the legal rep and a shareholder of Taihong.
qixin.com/company/ceceb5…

@LiYuan6 @DavidBarboza2 (9/x): So there's another company that is listed as a shareholder of Tianjin Taihong. It is "Tianjin Century Peace Real Estate" (天津市世纪和平置业有限责任公司). This one is INTERESTING. It has TWO shareholders.

@LiYuan6 @DavidBarboza2 (10/x): One of them is Beijing Taihong (referred to mostly in the book as Great Ocean). It was formed on Nov 14, 2002, ONE DAY before Wen Jiabao was introduced at the Great Hall of the People as the new No. 3 member of the Politburo Standing Committee, the next PREMIER of China.

@LiYuan6 @DavidBarboza2 (11/x): And who owns Beijing Taihong? Three people. Whitney Duan is one shareholder. Another is Chang Lili (常丽丽）a pseudonym for Wen Jiabao's daughter, Wen Ruchun. ALso discussed in the book.

@LiYuan6 @DavidBarboza2 (12/x): Again, this is all in the book. In a matter of minutes, owing to the pretty awesome transparency of Chinese corporate records, we were able to corroborate what Desmond Shum was saying. But here, dear readers, is where we encounter our first snag.

@LiYuan6 @DavidBarboza2 (13/x): You see, what Desmond Shum has given us is a tell much book, but it is certainly not a tell-all book. For the third shareholder of Beijing Taihong is another person, Jin Yi. (金怡）。And Jin Yi most definitely does NOT show up in "Red Roulette."

@LiYuan6 @DavidBarboza2 (14/x): Jin Yi is phenomenally important. She's a Rosetta stone of princeling shareholdings, showing up here in Ping An-related companies but also as a major pre-IPO shareholder in Dalian Wanda, the huge property company. I mentioned her in this story: nytimes.com/2015/04/29/wor…

@LiYuan6 @DavidBarboza2 (15/x): So I just said that Chinese corporate disclosure is really awesome. Actually that is only half true. When @DavidBarboza2 was researching Ping An and I was researching Wanda at Bloomberg and at the NYT, we could get ID information on people.

@LiYuan6 @DavidBarboza2 (16/x): So we knew Jin Yi's age (she was born in 1964), we knew her purported hometown (in Shanxi), we even had a grainy ID photo. And with ID numbers we could avoid cases of mistaken identification. There are a lot of Wang Wei's and Li Aiguo's in China.

@LiYuan6 @DavidBarboza2 (17/x): Nowadays it is really hard to get that kind of information, and given most NYT/WSJ/WPost reporters have been kicked out of the country, it is harder than ever to do these kind of stories. But I digress. Back to Jin Yi!

@LiYuan6 @DavidBarboza2 (18/x): So she is phenomenally important because her shareholdings cut across companies and she is clearly linked to the Wen family, but maybe another family too. So @jotted asks Desmond Shum who she is, surely he knows?

@LiYuan6 @DavidBarboza2 @jotted (19/x): He says he's met Ms. Jin but won't give any more details about her. I can understand why if she represents as-yet unexposed princeling families. And perhaps he doesn't know. But given she is one of 3 shareholders in Beijing Taihong, I find that hard to fathom.

@LiYuan6 @DavidBarboza2 @jotted (20/x): So it is very possible that Jin Yi is "Jane Jin," a former Deutsche Bank employee in China. She was in the trove of documents obtained by Suddeutsche Zeitung and shared with the NYT in 2019. The Deutsche Bank spreadsheet says she knows Wen Jiabao's daughter.

@LiYuan6 @DavidBarboza2 @jotted (21/x): And this allows me to get back to corroborating more of the Desmond Shum book. Shum mentions a guy named Huang Xuhuai, a close confidante of Wen's wife, Zhang Beili. He is ALL OVER the Deutsche Bank docs.

@LiYuan6 @DavidBarboza2 @jotted (22/x): Huang Xuhuai was hired by Deutsche Bank and paid millions. He was also a frequent golf partner for the Deutsche Bank China head, and played with Wen's son, Winston Wen. It is all here in this Oct 2019 story:
nytimes.com/2019/10/14/bus…

(23/x): So there is documentary evidence to corroborate much of what Shum is saying in his book. I really do recommend it. It is very well written, very easy to read.

(24/x) But of course it is important to remember that as difficult as it has been for Desmond Shum, to have his ex-wife disappear for the last four years, to live in fear, he has also prospered mightily under this system. And some of his money is very safe from Beijing.

(25/x): In particular, the couple prospered from the sale of the Beijing airport logistics center that they sold to a foreign company. And you can see that some of this wealth has been stashed in the British Virgin Islands. In the infamous P.O. Box 957.

(26/x): this is the location used by many princelings and politically connected Chinese business types to hide wealth. See my many tweets on this.

https://twitter.com/PekingMike/status/1188873611001679873?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1188873611001679873%7Ctwgr%5E%7Ctwcon%5Es1_c10&ref_url=https%3A%2F%2Fpublish.twitter.com%2F%3Fquery%3Dhttps3A2F2Ftwitter.com2FPekingMike2Fstatus2F1188873611001679873widget%3DTweet

(27/x): For me, the most important take from the book is a better feel for how Xi Jinping's anticorruption campaign, which began 8 years ago, has really taken out his political rivals, while leaving demonstrably corrupt people alone.

(28/x): That isn't new. When one asked the late, great professor Rod MacFarquhar whether Xi's campaign was meant to cleanse China of corruption or to take out political rivals, he would invariably answer with one word: "Yes!"

(29/x): But it's a continuum. And Shum's book to me pushed the needle a bit more towards the "take out political rivals" camp. Maybe we should make a NYT needle for this?

(30/x): Shum really drove this home with his description of the political destruction of Sun Zhengcai, a talented official who, yeah, maybe was a bit corrupt in handing out favors, but was he any more corrupt than others who have gone unpunished?

(31/x): Contrast this with the opulent scene portrayed in the book, complete with a photo, of Shum and Whitney Duan going to France with Evergrande Chairman Xu Jiayin and with David Li Botan and his wife Jia Qiang, daughter of then Politburo Standing Committee member Jia Qinglin.

(32/x): there they drank flights of chateau lafite wine, "starting with a 1900 and ending with a 1990" - he talked at length about Li Botan, son-in-law to the No. 4 ranking member of the Chinese Communist Party, and how is father in law helped him get really rich.

(33/x): I wrote a lot about Li Botan in the 2015 story about Wanda, because his business empire, along with the mysterious Jin Yi (her again) and several other princeling families (including XJP's older sister) also invested in Wanda.
nytimes.com/2015/04/29/wor…

(34/x): But unlike with Sun Zhengcai, or Ling Jihua, Jia and his family, as well as many other families who acquired great wealth, have not, to my knowledge, been targets of the anticorruption crackdown, though I cannot say that for certain.

(35/35): I could go on. So much more to say. But I'll stop here. I haven't done on of these threads in a very long time, so nice to do one again and thanks for reading.
More to come, soon.