Corruption of Princelings May Have Caused HK Company's Huge Losses

In business news, a Hong Kong company is under investigation after posting more than a billion dollars in foreign exchange losses. One analyst says the losses are due to corruption by the controlling Communist Party interests. Our NTD reporter in Hong Kong has the story. A week ago on Friday, Hong Kong police raided the offices of Citic Pacific Ltd. as part of an investigation into its financial records. The steel and property company had posted $1.6 billion in losses, mostly from bad foreign exchange bets. Two days ago, the company's two top executives were forced to resign, partly on allegations of a cover-up. Critics say the bad bets and huge losses are because of corruption of China's "Princelings"—relatives of the most powerful Communist Party officials. Last November, Citic Pacific in Hong Kong was taken over by Citic Group, which is controlled by mainland China's central authorities. Jin Zhong is the Editor-in-Chief of Hong Kong's Open Magazine. He says that since last fall, the company has essentially been controlled by the CCP's Princelings, who make financial bets with little oversight. [Jin Zhong, Editor-in-Chief, Open Magazine]: "Under [China's] one-party dictatorship, the country's economic lifeline is in the hands of the Princelings. They are corrupt and do not follow any regulations. The Citic Pacific incident is a case-in-point." Jin Zhong says that the CCP's control of Citic Pacific is part of a larger strategy to control Hong Kong economically. [Jin Zhong, Editor-in-Chief, Open Magazine]: "Hong Kong is a finance gateway of imports and exports. Therefore, [the CCP] needs to strengthen the financial sector in Hong Kong in order to really control that city." Citic Pacific's ousted Chairman Larry Yung has a close relationship with top Chinese officials, and this may have allowed him to avoid facing charges so far. But since Hong Kong has an independent court system, Yung may not be able to escape trial if he's indicted there. [Jin Zhong, Editor-in-Chief, Open Magazine]: "The law in Hong Kong is that if you commit a crime, the regulatory commission and the Independent Commission Against Corruption will act on it. Hong Kong has freedom of the press, as well as a democratic framework." NTD News, Hong Kong.

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