China Watch Blog

China Watch Blog reports that an industrial park Party boss in Jiangsu Province got fired yesterday after he was seen kneeing on a dining table and apologizing to angry people who caught him and other government officials at a lavish banquet.

Zhang Aihua, the Party secretary of Binjiang Industrial Zone in Taizhou City, and at least 30 officials were caught having expensive dishes and liquors in the park’s reception center last Friday, China News Service reported.

There were four tables piled with high-end cigarettes, premium liquors, and rare dishes. A whistleblower estimated that each table would cost at least 10,000 yuan (US$1,612), the report said.

The whistleblower notified local residents who besieged the officials in the banquet room and condemned them for corruption. To seek retreat, Zhang knelt on the table and said with a loudspeaker: “I am wrong. Please forgive me. You can ask me to do anything if you let us go.”

The scene was videotaped on a mobile phone and posted on the Internet, attracting many hits.

Taizhou authorities held a meeting on Sunday night after the video went viral and decided to strip Zhang of his position, the report said.

China Watch Blog has learnt that tax evasion and fraud do not discriminate and can be perpetrated by anyone – from middle-class Americans to high profile celebrities starting with Al Capone, Willie Nelson, and continuing more recently with Wesley Snipes.

Bruce Bronstein is making a name for himself as a master storyteller in his four novels that tell riveting accounts of tax evasion and fraud and what it takes to go after the perpetrators. His lengthy career with the IRS, handling some of the country’s most complex and controversial cases, provides the backdrop for Bronstein’s compelling stories. His novels, a perfect blend of humor, crime and the inner workings of the IRS and our legal system, make for a read not easy to put down.

Stan, a corrupt tax lawyer, subject to disciplinary action for failing to meet the standard of conduct expected of tax practitioners, is involved in the death of an IRS agent. The agent’s death, which has been staged to look like an accident, is at the center of Bronstein’s first book Nondisclosable. When IRS officials find circumstantial evidence in the dead agent’s audit files that incriminate the lawyer, it’s rendered useless because they can’t disclose the information. Although police lack the hard evidence needed to solve the mystery, the IRS is prepared to extract revenge against the lawyer – who soon finds himself embroiled in a variety of criminal conspiracies. Forced to face legendary agent Louie Lipschitz, the lawyer fears there is no escape in sight…

Full Disclosure, Bronstein’s second book, shows the corrupt lawyer going to prison at the same time the department is prosecuting another case that involves the largest individual tax cheat in history. Before the case is concluded, it leads to yet another tax case that implicates a man who was once the most powerful person in the U.S. The consequences of the investigation take a deadly turn and potential witnesses suffer a horrible fate. To ensure the prosecution is successful, law enforcement officials must take extreme measures and make tough decisions that have them deal-making with a notorious figure. Full Disclosure takes readers on a roller-coaster ride through our criminal justice system, showing how the unpredictability of one case can impact another seemingly unrelated case in an ironic twist of fate.

Imagine a bribery conspiracy, fraud, abuse of power and illicit sex – now imagine it’s taking place within the IRS! In Den of Thieves, the third novel by Bronstein, a shocking discovery is made that undermines the integrity of the IRS when its own employees, responsible for the administration of the nation’s tax laws, are found to be manipulating the system in a plot so ingenious only one intrepid IRS agent can solve the mystery. As Lipschitz, their fearless agent, finds himself matching wits with a brilliant sociopath currently behind bars, it’s not certain that even he can overcome all the challenges placed in his path.

Due for release this summer, Reversal of Justice finds Erica Whitman plotting revenge against the federal government due to her imprisonment for her role in a conspiracy to defraud the IRS. As she schemes to have her conviction overturned, Erica is also planning a diabolical strategy that she believes will guarantee her instant wealth while helping her extract revenge on federal prosecutors. While the Justice Department and IRS officials once again deal with an ingenious and calculating criminal mastermind, more colorful characters surface that challenge the authority of the IRS. Meanwhile, the police are forced to deal with murder contracts placed on the head of Louie Lipschitz, who has incurred the wrath of more than a few of these characters.

Bruce Bronstein is a former IRS Tax Law Specialist who also worked in the Appeals Division where he handled some of the largest and most complex cases in the country. His 30 years of experience specializing in civil fraud cases brings distinct authenticity to his novels and takes the subject of tax controversy to new levels. Drawing five star reviews on Amazon.com, his informative and witty novels explore how controversial tax issues are handled by the various functions within the IRS and our legal system.

China Watch Blog has learnt that embezzlement involving a total of 365 million yuan (US$57.9 million) and other irregularities were found in 133 projects partly financed by foreign loans or donations, the National Audit Office said.

Of that, 128 million yuan had been taken or misappropriated in six environmental protection projects by September 2011, while the other 237 million came from six projects overseen by central government entities in 2010, the auditor said in separate statements, the Shanghai Daily reported.

Other irregularities in land use, bidding, accounting and equipment management also were found in the projects.

“The management and execution of foreign-funded projects are generally well regulated due to strict selection of projects, regulated procurement on equipment, and high-quality project management,” the auditor said. “But problems exist.”

The auditor said the problems mainly fell in three categories – misuse of fund, loopholes in project management and irregularities in bookkeeping.

It attributed the cause of problems to the complicated levels of oversight, the frequent changes of personnel, the large areas and the huge amount of construction work involved in the projects.

The auditor inspected 34 environmental protection projects involving 14.1 billion yuan in foreign funding. Their total funding amounted to 34 billion yuan.

It also inspected 99 projects supervised by the central government in agriculture, energy, transport, education and urban construction. Of those, 34.5 billion yuan of their total 424.6 billion yuan budget came from foreign sources.

Besides money embezzlement, six of the environmental projects misused 540 hectares of land, and 13 projects involved accounting irregularities totaling 235 million yuan.

Eighteen of the central government projects were found to have violated rules in bidding, sourcing, equipment handling and planning, involving misused funds of 650 million yuan.

Another 20 projects were found breaking accounting and payment regulations, resulting in 1.18 billion yuan in irregularities.

The auditor said great attention has been paid toward resolving the problem.

“Individuals violating the rules and laws will be charged with administrative or criminal penalties,” the auditor said.

All but 11 of the problematic projects had their problems resolved, officials said.

China Watch Blog has learnt that Hong Kong’s billionaire Kwok brothers, whose arrest last week on suspicion of corruption has gripped the financial hub, said on Tuesday they had done nothing wrong and insisted it was business as usual at the family conglomerate they jointly run.

The investigation into Raymond and Thomas Kwok, co-chairmen of Sun Hung Kai Properties Ltd <0016.HK>, is the biggest case launched by Hong Kong’s Independent Commission Against Corruption (ICAC) since it was set up in 1974 to root out graft.

“I can tell you definitely that I personally did not do anything wrong and I believe that Thomas Kwok has done nothing wrong,” Raymond Kwok told reporters as the pair faced the media at the company’s headquarters in Hong Kong’s busy Wan Chai district, in their first public appearance since their arrests.

The brothers, worth $18.3 billion according to Forbes magazine, said the investigation would not affect business decisions at Asia’s largest developer, and that sales and development plans would go ahead as scheduled.

“There is one thing I must say to you: ‘Don’t worry, here at SHKP it is business as usual’,” said Thomas Kwok, reading in Chinese from a prepared statement as the company’s executive directors stood behind the brothers in a show of solidarity.

The company owns some of the former British colony’s largest properties, including its tallest building, the International Commerce Centre that houses Morgan Stanley and the Ritz Carlton.

The arrests last Thursday of the two brothers, along with Rafael Hui, a former No. 2 official in the Hong Kong government, came days after the election of Beijing-loyalist Leung Chun-ying as the city’s next leader. He has pledged to address soaring property prices.

The Hong Kong public has been increasingly aggrieved at the perceived cozy ties between government and big business, and some observers have interpreted the arrests as a first move in an attempt to rein in the power of the monied elite.

The brothers and Hui were released on bail and have not been charged with any offence.

China Watch Blog has learnt that Sun Hung Kai Properties Ltd plunged on March 30 – the most in 14 years and lost US$4.9 billion of market value after anti-graft investigators arrested the billionaire brothers who run Hong Kong’s biggest developer.

Co-chairmen Thomas and Raymond Kwok were detained by the Independent Commission Against Corruption, Sun Hung Kai said on Thursday. Rafael Hui, a former No. 2 official in the government, was also arrested on March 29, a source said.

The arrests mark one of the highest-level investigations in the ICAC’s 38-year history.

Sun Hung Kai plunged 13 percent, the most since January 1998, to close at HK$96.50 (US$12.43) in Hong Kong on Mar 30 after a suspension on Thursday. The stock has dropped 17 percent since the company said on March 19 that Executive Director Thomas Chan Kui-Yuen was arrested by the ICAC.

Citigroup Inc and Barclays Plc cut their ratings on the developer’s stock.