As China continues its rapid descent into police state repression and President Xi Jinping’s ruling Communist Party faction tightens its increasingly brutal grip on the country, the bill for all the unseemly intimacies that Ottawa has cultivated in Beijing since the days when the Liberal party ran the roost in Ottawa is coming due. It’s going to sting. The whirlwind is spinning suddenly, at a dizzying, nightmarish pace. The Canadian economy will take a hit, perhaps in the billions of dollars. The political fallout is going to be atrocious.
It’s not so complicated if you think of the catastrophe as a series of falling dominoes.
The first to fall was Communist Party kingpin Bo Xilai, whose last foreign-dignitary guest was Prime Minister Stephen Harper. Bo was sentenced to life in prison on bribery charges in 2013. He’d been Canada’s go-to guy in China’s ruling elite for more than a decade. Jean Chrétien, who championed Canada’s trade links to China while he was prime minister and took up the lucrative business himself immediately after leaving office in 2003, called Bo an “old friend.”
But the domino that fell just last week will have even more seismic reverberations: Michael Ching Mo Yeung, vice-president of the Canada Asia Pacific Business Association. The South China Morning Post identifies him as the person named as Cheng Muyang, a fugitive who appears on a “Most Wanted” list of 100 people Beijing’s dreaded Central Commission for Discipline Inspection published last week. Of the 100 fugitives, 26 are said to have absconded to Canada. They are now sought by Interpol on charges of money-laundering, embezzlement and other such crimes. The South China Morning Post noted in its piece about his identity that it does not have evidence of Ching’s guilt or innocence. (Ching could not be reached for an interview for this piece.)
Beijing’s “Most Wanted 100″ is the most audacious move to date in its Operation Skynet effort, which is what you get when you combine a fraud squad with an old-style Stalinist purge and a cunning geopolitical muscle-flexing shakedown. Operation Skynet agents have been combing through Vancouver’s real estate transaction records in recent weeks. Within hours of Beijing’s Most Wanted list making the rounds, police in Harbin, the capital of China’s Heilongjiang province, arrested and jailed Qu Zhang Mingjie, a local Communist Party official. Qu is the mother of the woman Vancouver Mayor Gregor Robertson calls his sweetheart, the pop star Wanting Qu, formerly Tourism Vancouver’s “ambassador” to China.
There are quite a few wobbly dominoes involved in all this. Last year, when Ottawa finally pulled the plug on the scandal-riddled Immigrant Investor Program, there were nearly 46,000 Chinese millionaires on the IIP waiting list, hoping to make their way to Canada. In the four years leading up to 2012, when Canada stopped taking IIP applications, permanent-residency certificates had been issued by Ottawa (and by Quebec under the Canada-Quebec Accord) to more than 50,000 investor-class immigrants, the overwhelming majority from China. To give you an idea of just how heavy the traffic was, the United States had admitted fewer than 9,000 investor immigrants over the same period.
Beijing says the IIP was one of the main conduits used by corrupt officials to abscond with an amount of loot that Washington’s Global Financial Integrity agency estimates at $1.25 trillion during the decade preceding the 2012 IIP hiatus. Beijing is finally tightening the noose around Canada’s neck, and it’s going to cost us all dearly, Christine Duhaime, a Bay Street specialist in international money laundering and counter-terrorist financing, told me this week.
“China is going to want to get it all back. This is not a casual exercise. This is an active recovery operation, and all that money is going to be removed back to China,” Duhaime said. “In Canada, it’s in the billions. I’m sure it’s in the tens of billions. This is a major monetary drain on the Canadian economy. The whole thing is being driven by China now. It should have been driven by us.
You won’t hear a lot of cabinet-level noise about this in Ottawa. Over the past three years, Canada has helpfully deported roughly 1,800 people to China, and the plan now is all about cutting Canada’s losses. Last December, Guy Saint-Jacques, Canada’s ambassador in Beijing, told the official China Daily that Canada was on the verge of ratifying a 2013 deal then Foreign Minister John Baird inked that would help Beijing recover the loot its officials have spirited out of the country, in exchange for a cut of the proceeds.
“I don’t know why we agreed to this,” Brock University professor Charles Burton, a China specialist and former diplomat in Beijing, told me. Dazzled by the promise of riches in China, Canada’s politicians have finally been backed into a corner. Even if Canada can secure a piece of the forfeited-assets pie, it’s China that’s setting the rules now, and there’s no telling a fugitive from justice from some hapless apparatchik from a faction on the outs with President Xi. “We have no means to ensure due process of law or even whether the information we’re getting is valid,” Burton said.
It’s not like we didn’t know this was coming.
Four years ago, businessmen from Mainland China, almost all of them government officials, started arriving in Canada with bags of cash. Between April 2011 and June 2012, 592 Mainland Chinese passengers arriving at Vancouver International Airport were caught with undeclared cash amounting on average to $16,700 each. At Pearson International in Toronto over that same period, 79 Mainland Chinese and 10 Hong Kong arrivals were caught with $1.8 million in undeclared cash.
China restricts private citizens from taking out more than $50,000 per individual per year.
“We knew this was illegal,” Duhaime said. “We did nothing to stop it.” Canada has shut down the Immigrant Investor Program, but the small pilot project set up in its place – a test run of 50 spots available to applicants meeting tough new disclosure rules – is still full of holes, Duhaime said. “We need to stop it now. It doesn’t come close to meeting financial crime standards. If it were up to me, I’d be on this first thing tomorrow morning at 8 o’clock.”