China’s Operation “Fox Hunt” just secured the cooperation of the American government to expropriate hundreds of billions of assets from corrupt former Chinese officials and business executives who moved to the United States thinking they escaped from the reach of the Communist Party.
After Xi Jinping was appointed President in 2012, China stopped reporting capital inflows and outflows. But a Wall Street Journal analysis of trade data and foreign-exchange reserves suggests that, in the 12 months through September 2014, about $225 billion flowed out of China in illegal capital flight.
With China missing its national growth target for the first time since 1998 and the nation’s leading economic indicators continuing to plunge to the lowest level since the depths of the 2009 financial crisis, China unleashed an “Anti-Corruption Storm” against corrupt officials and businesses to deflect blame for the economy’s failing prospects.
After taking power in late 2012, Xi banned official Communist Party extravagance, such as banquets and year-end gifts. He vowed to not only target low-level corrupt “flies,” but to root out the rich and connected “tigers,” regardless of their position.
Xi has purged a number of powerful “tigers” in China. On December 5, Zhou Yongkang, the former Head of Domestic Security and one of the nine members of the Communist Party Politburo was arrested for “trading his power for sex and money.” Earlier this summer, General Xu Caihou, Senior Commander of the world’s largest standing army, was arrested for accepting bribes and Su Rong, former Vice Chairman of China’s top advisory body, was arrested for bribes and illegal land deals.
China has never had “sunshine laws” that require officials’ assets to be registered and made public. Without a legal system in place to fight corruption, China relied on severe family punishment to deter officials from being too corrupt. But today, this approach is ineffective, since corrupt officials can simply transfer their assets abroad and move their families overseas to avoid punishment.
President Xi commented that “tigers” are huge targets, and “flies” are everywhere and easily caught, but “foxes” are quite cunning. So on July 22, 2014, he launched “Fox Hunt 2014” to hunt “foxes” who have illegally transferred assets out of China.
China’s Supreme People’s Court, the Supreme People’s Procuratorate, the Ministry of Public Security, and the Ministry of Foreign Affairs jointly issued a notice on October 10, 2014, urging overseas “economic criminals” to turn themselves in before being captured.
But the foxes knew China only had a few judicial extradition agreements with foreign governments due to differences in the definition of “corruption.” Corruption means theft in most countries, but in China corruption can mean “prostitution” or “economic issues.”
According to The Diplomat magazine, the Chinese governmental departments gave lists of extradition requests—for over 2,000 corrupt former officials and criminals living abroad—to U.S., Canadian, Australian, and European law enforcement agencies. But “each of those Western countries acted as though they never received the lists.”
But in the last six months, China has agreements with Canada and Australia to recover ill-gotten assets from corrupt Chinese officials and criminals, according to Reuters.
On December 29, 2014, the Director of the White House Press Office, Jeff Rathke, officially acknowledged that the “United States and China are parties to a number of existing multilateral and bilateral agreements that allow for mutual legal assistance.”
With the new cooperation from Western law enforcement, China’s Operation Fox Hunt is about to reclaim hundreds of billions of dollars of foreign real estate, jewels, stocks, bonds, and cash from thousands of corrupt former Chinese officials and business executives who thought they had cleverly escaped with their ill-gotten gains.