Kenneth Rijock

Kenneth Rijock

Tuesday, August 18, 2015

CHINA'S OPACITY ON CORPORATE OWNERSHIP PROTECTS ITS POWER ELITE, NOT ITS PEOPLE


If you are following the nightmare in a northern Chinese port, where an explosion in a dangerous goods warehouse caused extensive damage, and loss of life, you should know that the Chinese leadership immediately started protecting its own in this scandal. Transparency has never been a strong suit in China, but this is unacceptable conduct.

The local database, which would have identified the officers and ownership of the corporation that holds the warehouse, mysteriously went offline for several days, according to reports from the region. When it came back up, there were curious gaps in the information. if you wanted to know why, remember that Chinese PEPs often use front men to hold title to their possessions, to disguise the fact that they acquired their wealth assets through political connections, and not through hard work.

In this case, apparently the front man was acting on behalf of a "princeling." the son of a local official, who truly owns the cyanide-laden warehouse, which was granted a permit, notwithstanding that residential structures had already been approved in the immediate area.  The front man involved has already admitted that he was holding the corporate stock for another, whom he declined to name.

Given this level of official subterfuge and opacity, operating to protect their own power structure, and its corrupt nature, how can anyone ever expect to get the truth in data out of China ? No wonder Country Risk levels for China do not decline, as the country's economy expands, but actually increases, due to corruption, and preferential treatment for China's kleptocracy.

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