Severing a family's ties, China's President signals a change

Hong Kong: His son landed contracts to sell equipment to state oil fields and thousands of filling stations across China. His son's mother-in-law held stakes in pipelines and natural gas pumps from Sichuan province in the west to the southern isle of Hainan. And his sister-in-law, working from one of Beijing's most prestigious office buildings, invested in mines, property and energy projects.

In thousands of pages of corporate documents describing these ventures, the name that never appears is his own: Zhou Yongkang, the formidable Chinese Communist Party leader who served as China's top security official and the de facto boss of its oil industry.

But President Xi Jinping has targeted Zhou in an extraordinary corruption inquiry, a first for a Chinese party leader of Zhou's rank, and put his family's extensive business interests in the cross hairs. Xi has widened the inquiry into Zhou to include his wife, a son, a brother, a sister-in-law, a daughter-in-law and the son's father-in-law, all of whom have been taken away by the authorities in recent months, according to relatives and witnesses.

The finances of the families of senior leaders are among the deepest and most politically delicate secrets in China. Officially, the Chinese leadership has said nothing about the corruption investigation into Zhou or the detention of his immediate relatives, and Xi's ultimate intentions about how to handle the case remain a matter of speculation.

Some political analysts argue that a leader of Zhou's status would not face an inquiry of this kind unless Xi regarded him as a direct threat to his power. Zhou's family's financial dealings lost their immunity only because Zhou fell from favor, not because elite business dealings were being criminalized.

But another school of thought is that Xi considers the enormous agglomeration of wealth by spouses, children and siblings of top-ranking officials a threat to China's stability by encouraging mercenary corruption and harming the party's public standing.

An investigation by The New York Times of the assets held by Zhou's relatives highlights the considerable sums involved and illustrates how deeply invested members of the party establishment are in industries where political connections are important.

Three of Zhou's relatives - a sister-in-law, a son and the son's mother-in-law - hold or have controlled stakes in at least 37 companies scattered across a dozen provinces, from Audi dealerships to property firms, according to corporate documents filed with the government. Seventeen focus on investments in energy, mostly in ventures with the state-owned oil giant China National Petroleum Corp., which Zhou headed in the 1990s. Nine center on Sichuan province, where Zhou served as party chief from 1999 to 2002.

In all, the holdings examined by The Times are worth at least 1 billion renminbi ($160 million) although that estimate is based on a limited assessment of each company's value and does not include real estate or overseas assets, which are more difficult to identify and assess.

Even so, these assets make Zhou the third member of the nine-man Politburo Standing Committee that ruled China from 2007 to 2012 to have family members with documented wealth exceeding $150 million.

Long Ties to Oil Industry

No evidence has emerged that proves Zhou, 71, was involved in the investments or did anything illegal. Nor is it clear that his relatives violated any Chinese laws or actively used their relationship with Zhou to secure deals. But Xi appears confident that he has enough evidence to eliminate Zhou's influence.

Zhou began his career as an oil field technician, spending more than a decade in the 1970s and early 1980s working his way up the administration overseeing the Liaohe Oil Field in northeastern China. He kept rising through the ranks until he became head of CNPC, the nation's largest energy company, which accounts for more than half of China's oil production and three quarters of its gas production.

Zhou later became party chief of Sichuan, one of the country's most populous provinces. In 2002, he was appointed minister of Public Security and, in 2007, he joined the Politburo Standing Committee, the party's top echelon, and assumed control of the body overseeing  the police, courts and intelligence agents.

At least three of Zhou's relatives profited from CNPC's rise: his oldest son, Zhou Bin; Zhan Minli, his son's mother-in-law; and his sister-in-law, Zhou Lingying, the wife of a younger brother.

Zhou Bin, 42, is majority owner of a Beijing company that sells equipment to Liaohe as well as to CNPC oil fields in at least three other provinces, corporate records show. His mother-in-law, Zhan, 71, owns companies selling natural gas with CNPC in two provinces. And Zhou Lingying, 63, teamed up with CNPC to sell natural gas in another province and owns stakes in companies that also work with CNPC in western China, according to the documents.

All told, the three relatives hold or have recently held ownership stakes in at least 11 companies that have done business with CNPC or the other state-owned oil giant, Sinopec, company documents show. At least four of the companies are owned in part by CNPC subsidiaries.

In each case, the investments came long after Zhou left CNPC and had ascended to the Politburo.

An Office Suddenly Closes

A short walk south from CNPC headquarters in Beijing, the offices on the 21st floor of the gleaming New Poly Building are dark and locked. It was here that Zhou Lingying and her business partners, through their company, Beijing Hongfeng Investment Co., bought control of CNPC assets in Sichuan, the province Zhou ran until 2002.

Late last year, employees abruptly stopped coming to work after government officials showed up one day to examine the company's records, a security guard said.

Much of what can be traced of Zhou Lingying's businesses leads to the New Poly Building. She owns stakes in at least seven companies with addresses there, investing in energy, mining and real estate projects across the country. They include a mining project in China's far western Xinjiang region, property and energy investments in Sichuan and a struggling potash mine there acquired from CNPC.

Weeks after her brother-in-law was elevated to the Politburo Standing Committee, Zhou Lingying setting up her principal holding company, Beijing Honghan Investment Co., with her son, Zhou Feng, in December 2007. Records show at least four other companies linked to Zhou Yongkang's relatives sprang up about the same time.

Links Stretch to California

On the other side of the Pacific Ocean, Zhan Minli lives in an Orange County, Calif., retirement community of ranch-style homes and broad lawns.

Zhan said the holdings in her name were actually controlled by Zhou Yongkang's son, Zhou Bin, who is married to her daughter, Huang Wan. She said it was customary in China to put assets in the name of one's parents, and suggested that her son-in-law used her name because his own mother had died in a traffic accident.

Zhan said she and her husband were longtime U.S. passport holders despite Chinese documents that said they had retained Chinese citizenship. Property records show they have lived in the United States for nearly three decades, moving from Maryland to New Jersey and finally to Southern California, where their house has an estimated value of more than $700,000.

Several firms in deals with CNPC are registered under Zhan's name and that of a business partner, Mi Xiaodong, 43, identified by the Chinese business magazine Caixin as a college friend of and proxy for Zhou's son. The companies have invested in gas projects on Hainan Island and in Hebei province outside Beijing as well as in a housing development outside the capital. Zhan and Mi also owned a Beijing company, dissolved in February 2009, that held an oil drilling firm in northwestern China's Shaanxi province, where CNPC ran an oil field.

Zhan denied any wrongdoing or having much knowledge of these investments.

"I've never seen the oil field we owned," she said. "I don't know how money laundering works."

An Elusive Figure

Zhou's son, Zhou Bin, is more elusive, although records show he is also plugged into the family business.

His name appears in the records of only one of the 37 companies examined by The Times, an energy investment firm in Beijing named Zhongxu Yangguang Energy Technology Co. His wife and his wife's parents also feature in the company's filings.

Although Zhan denied any knowledge of Zhongxu, company records show she owned 80 percent of it when it was set up a decade ago. Its assets climbed more than sixfold in the years after Zhou Yongkang joined the Politburo Standing Committee in 2007, to $27 million in 2012.

In 2009, Zhou Bin assumed control of the firm, taking Zhan's stake. An audit that year showed the company was selling products to CNPC oil fields across the country. It also sold sales management systems to 8,000 CNPC filling stations.