China's corruption crackdown catches up to its 'naked officials'

Gao Shan, a former Bank of China branch manager in Harbin, lived a modest life with his wife and daughter in Vancouver, Canada. He kept a low profile in the country, keeping his name off the mortgage, car registration and utility bills.

His identity and whereabouts were uncovered when he was involved in a car accident. Gao was soon arrested by the Canadian immigration authorities for his failure to report that he was an employee of the Bank of China. He had good reason to hide: he allegedly fled China with $180m stolen from his clients.

What makes his case more intriguing is his carefully planned exit strategy from China. Before he fled the country, he told his co-workers that his wife was studying in Beijing and his daughter was staying with her grandmother at his hometown. But in fact, his family had secretly moved to Canada and settled in Vancouver.

Gao is known as a ‘naked official’ in the colourful lexicon of Chinese bureaucratic speak, which means an official whose spouse and children are living overseas permanently. The so-called naked officials are often closely connected with China’s endemic corruption problem and many have either fled or are preparing to leave China with ill-gotten gains.

The term first appeared in the Chinese media in 2008, when state prosecutors discovered a senior corrupt official was living alone in China and his wife, kid and mistresses had moved overseas. The term naked official has since become popular and even the government acknowledges it officially.

It is not clear how many naked officials there are in China. One estimate puts that figure at 16,000 to 18,000 former officials who have fled with 800 billion yuan ($140bn), according to the Chinese Academy of Social Sciences, an influential state-affiliated think bank.

Beijing has just concluded a comprehensive audit of naked officials in the country. All local governments apart from the coastal province of Guangdong remain conspicuously silent about the number of naked officials within their ranks. Guangdong has reported 2190 naked officials whose families are living abroad on a permanent basis.

The career prospects of these officials are in limbo. They essentially have two choices: move their families back to China or leave their current posts. This is part of Beijing’s unprecedented crackdown on corruption.

The crackdown could have serious consequences for Australia: of 59 publicly documented cases of naked officials who have fled overseas, seven of them ended up in Australia, including one of the most senior officials on the run, Gao Yan, a former provincial governor of Jilin, party secretary of Yunan and former chief executive of State Grid.

Australia is clearly one of the top destinations for corrupted Chinese officials. Liu Tienan, a former vice minister of the powerful National Development and Reform Commission, the key economic planning agency was caught last year with a fake Australian passport and $2 million in cash.

Beijing has recently announced plans to go after corrupt officials who are living overseas. This could put a strain on the China/Australia relationship.

The Canadian experience is the best guide for Australia here: for years, Beijing has accused Canada of being a safe haven for the country’s financial fugitives. The most high profile was the case of Lai Changxing, who was an alleged smuggler and in the ‘90s was accused of a running multi-billion dollar smuggling operation, as well as bribing senior officials.

Beijing demanded Lai’s extradition for more than a decade. It became a major headache for Canadian officials as Lai attempted to delay his return to China by dragging it through the court system. He was eventually extradited on the explicit promise that he would not be executed by Beijing.