Panama Leak Reveals Hypocrisy of Macau’s Anti-Corruption Campaign

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Tuesday, April 26th, 2016 | Written by Stephen Smith

Early April saw more than 11.5 million confidential financial documents leaked from a law firm called Mossack Fonseca, a Panama City-based corporate service provider. The papers provide damning evidence of corruption in many countries, showing that wealthy individuals and leaders from around the world shuttled money into offshore accounts set up with the help of Mossack Fonseca in order to conceal wealth and dodge taxes. The papers are being collectively called the Panama Papers and while they’re shedding light on the state of many world governments, the light is particularly harsh where it falls in China. As China specialist Sarah Cook told the Guardian newspaper recently:

“I think there is a fear and a sensitivity among Communist party leaders that this exposes the degree to which the political and economic elite are so closely intertwined and so far above your average citizen in terms of wealth. This kind of blows a big hole in that [anti-corruption] effort because it exposes how the top political leaders and their families are, at the very least, super, super rich; even if this money had been obtained legally, which of course is a big question mark as well.”

China’s War on Corruption

China has been caught up in a major anti-corruption campaign in recent years, arresting more than 30,000 people in the country for supposed shady dealings. Many of the accused are suspected of using gambling to launder money and are said to have visited casinos located in the Macau peninsula of China to do so. Due to the anti-corruption crackdown, business in Macau is in a serious slump. For the last 22 months, gambling revenues in Macau have declined, putting the casino industry there in a state of crisis.

Hypocrisy Exposed

While China’s Communist Politburo Standing Committee has been outspoken about corruption, the Panama Papers reveal that top officials in the political body enlisted the help of Mossack Fonseca to conceal their wealth. Close relatives of three members of the Politburo have been implicated so far. In addition, President Xi Jingping’s brother-in-law was also shown to have an offshore account. While it’s not illegal for anyone to invest money offshore, these types of accounts are often used to launder money, leading many people to point the finger at the Chinese Communist Government, and accuse them of claiming to fight corruption while engaging in activities that raise suspicions.

A Major Cover-Up

In China, news outlets and Internet access are strictly controlled by the Chinese government, and there have been many incidents of world news being withheld from the Chinese people when events show the Politburo and the Communist government in a bad light. The scandal with the Panama Papers is playing out similarly. Within China, Internet searches relating to the matter have been blocked and attempts to access articles on the topic result in users receiving warning messages saying that the material conflicts with China’s laws and rules. The Chinese state newspaper Global Times even published a story accusing Western governments of fabricating the leaked documents to damage China and other western countries.

As mentioned, Chinese authorities have been busy deleting online social media discussions on the leaks, and “Panama” is currently amongst the most censored words on the country’s internet. Needless to say, China experts agree that the revelations are unlikely to have any real impact on how business and politics and carried out in the huge country of 1.357 billion people, as the majority of Chinese residents remain unaware of the leaks.

Little Effect Expected

With the power of the Communist Politburo Standing Committee as it is, it is very unlikely that the information revealed by the Panama Papers will be looked into. Already, there have been accusations that the Chinese government has been selective about who they pursue with their anti-corruption campaigns, leaving family members of high-ranking politicians free to continue to engage in corruption. The Chinese government is not expected to be deterred by the revelations of the papers, and the financial future of Macau continues to be bleak.

In the meantime, as As Willy Lam from the University of Hong Kong, explains: “The fact that so many members of the so-called ‘red aristocracy,’ the offspring of party members, ministers and politburo members, have been spared adds to people’s impression that Xi Jinping has master-minded the corruption campaign the past two or three years mainly to target his political enemies.”