Extradition of Former Chinese Official Changes
Outlook
Yu Zhendong, former Bank of China head in Kaiping, Guangdong
province, was extradited from the US to China on April
16 to face embezzlement charges in China. During his period
as Bank of China head in Kaiping from 1993 to 2001, he
is accused of embezzling US$485 million by lending money
to himself or overseas associates, then escaping to the
US using false travel documents.
This is the first time that a Chinese official accused
of corruption has been extradited from the US to China
to face charges. The US government said that the Chinese
government agreed to sentence Yu to a maximum jail term
of 12 years, and not sentence him to death.
During his term as head of the Kaiping branch, Yu approved
overseas "investments" to his friends and associates
outside China, then transferring Bank of China money to
them. In October 2001, he went to Hong Kong, then Canada
and the US on fake travel documents. China's Justice Ministry
and the US Department of Justice began investigations
in 2002. In September 2003, when the Chinese Justice minister
visited the US Department of Justice, the US returned
US$3.5 million, a portion of the funds embezzled by Yu
and his cohorts, signalling goodwill and a willingness
to cooperate on the case.
The Hong Kong government has filed charges against Yu's
four partners, who sent the money from China to Canada
and the US via Hong Kong banks, and violating local banking
regulations.
Embezzlement of funds is a major obstacle in China's
economic reform, especially of state-owned enterprises,
where senior officials have largely unchecked power to
make investment decisions. Some Chinese estimates are
that nearly 10,000 officials have left China, mainly for
the US, taking US$100 billion with them. Most frequently,
when they reach the US, they have claimed political asylum
to prevent extradition and repatriation.
The Yu extradition signals that the Chinese and US sides
have adopted a more pragmatic approach to these crimes,
and will deal with them as economic, and not political,
cases. If both sides handle this case properly, it will
lessen the attraction of the US as a final destination
for corrupt Chinese officials.
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