A video confession by a detained former spy chief has surfaced in China, countering sensational claims by an exiled businessman as a public tussle over corruption in the financial sector dredges up the ghosts of old deals.
Ma Jian, the vice-minister of state security detained in 2015, was an ally of Guo Wengui, a businessman also known as Miles Kwok who has made waves from his home in Manhattan in recent days with claims of corruption by Chinese security officials. The release of Mr Ma’s confession came as China sought Mr Guo’s return via an Interpol notice.
The spat follows the detention of two financial sector regulators this month, as China’s anti-corruption drive moves into the lucrative and politically fraught finance sector. Industry insiders say the burst of activity is probably the result of information gleaned from Xiao Jianhua, a well-connected businessman who made deals for families of “princelings”, the offspring of top Communist party leaders. Mr Xiao was abducted from Hong Kong and spirited across the border by security agents in late January.
“From 2008 to 2014 I used my power and position to benefit Guo Wengui,” Mr Ma confesses in a video spliced with Mr Guo’s remarks that also details bribes the tycoon is alleged to have paid.
The video has been posted on Chinese news websites and on social media. It could not be determined when it was recorded. Mr Ma remains in custody, but he is wearing a quilted jacket during the video, suggesting it may have been made when the weather was cooler.
Its release appears to be a response to Mr Guo’s allegations that senior security officials control Founder Securities, one of China’s largest securities groups. Mr Guo’s role in a boardroom battle over Founder led to his exile and the jailing of several of its executives in 2015. Backed by Peking University, Founder has a complex ownership structure.
A live online interview with Mr Guo by Voice of America was cut off mid-broadcast on Wednesday, while in China several financial media groups have published exposés of his life and career.
Mr Guo, who has done business with Mr Xiao, emerged from exile to fire his first broadside the week Mr Xiao disappeared. He predicted this month’s det-ention of Xiang Junbo, China’s top insurance regulator, to the FT in February.
The drama speaks to larger concerns over the proliferation of vested interests since China’s financial sector underwent a big change two decades ago. After bailing out its indebted state-owned sector in the late 1999s, China abruptly traded a Soviet-style financial system for one that, on the surface, loo-ked like the west’s. Banks built headquarters and listed on the Hong Kong bourse, aided by Wall Street’s big players. Money pou-red into securities brokerages and stock markets took off.
But beneath the surface, guanxi, or links built up over years of working together, have continued to play an outsize role. And even the most competent bank executives’ subservience to higher ranked party officials have overridden normal fiscal discipline.
Additional reporting by Ma Nan