* Billionaire faces verdict on murder, fraud other charges
* Hanlong group head Liu Han was connected to former
* Former security tzar Zhou Yongkang targeted in graft probe
* Zhou made behind-the-scenes power grab - sources
* Zhou was patron of disgraced Politburo member Bo Xilai
(Updates with Liu and brother getting sentenced to death)
By Benjamin Kang Lim, David Lague and Charlie Zhu
BEIJING/HONG KONG, May 23 Liu Han seemed to
thrive in the company of officials.
Even a birthday party in 2011 for Liu's primary-school aged
son drew a crowd of bureaucrats in Chengdu, the capital of
China's western Sichuan province where the flamboyant mining
tycoon was based. "There was a mayor of a nearby city with a
population of three or four million," recalls Australian
political lobbyist John Halden who helped win approval for Liu's
mining investments in Western Australia and was invited to the
October 15 celebration. "There were senior people from the
provincial treasury and about seven or eight officials from the
city of Chengdu."
But Liu's close ties with officialdom didn't last. When
Chinese President Xi Jinping was named President at the end of
the annual parliamentary session in March last year, the
48-year-old Liu was detained and surrounded by a different class
of public servants; corruption investigators and prison guards.
The billionaire head of the privately-held Sichuan Hanlong
group of companies is the first high-profile casualty of a power
struggle wrapped in a corruption crackdown that is convulsing
the senior echelons of the ruling Communist Party. On Friday, a
court in central Hubei province sentenced Liu to death after a
sensational trial on charges of murder, gun-running, fraud,
extortion, illegal gambling and a string of other offences. Liu
had denied all the charges.
Liu's most serious offense, however, could well be political:
He was caught up on the wrong side of a titanic power play,
multiple sources say, because of his business partnership with
the son of former domestic security chief, Zhou Yongkang. In a
campaign unprecedented in modern China, Xi is determined to
bring down Zhou for making a behind-the-scenes grab for power,
the sources say.
To get at Zhou, Xi last year began rolling up the
strongman's extensive network of patronage, assembled over more
than four decades in the oil industry, Sichuan provincial
politics and the internal security services. More than 300 of
Zhou's relatives, political allies, business associates,
underlings and staff, have been arrested, detained or
questioned, according to people briefed on the investigation.
Liu was one of them.
Investigators have targeted the giant, state-owned China
National Petroleum Corporation - where Zhou was once general
manager and Communist Party Secretary - and its subsidiaries.
First, they detained six senior executives from the oil
giant late last year. Then, late last year, Xi launched a probe
into Zhou himself and people around him. Several of Zhou's men
have been felled, including Jiang Jiemin, briefly the top
regulator of state-owned enterprises, and former Vice Minister
of Public Security Li Dongsheng.
Authorities seized assets worth at least 90 billion yuan
($14.5 billion) from Zhou's family members and associates, two
sources said. Liu's assets were included in these seizures.
Ahead of his trial, the official Xinhua news agency reported
that authorities had last year "seized and frozen enormous
amounts assets of Liu Han and the Hanlong group".
Zhou is the most senior leader targeted in a corruption
probe since the Communists took power in 1949. With the approval
of China's two previous leaders, Hu Jintao and Jiang Zemin, as
well as other senior officials, sources close to the leadership
say, Xi broke with an unwritten rule that incumbent and retired
members of the Standing Committee were immune from corruption
The Communist Party's Central Commission for Discipline
Inspection, China's top anti-corruption watchdog, and the
Ministry of Public Security declined to comment on the
investigation when reached by telephone. The office of the
Communist Party spokesman also declined to comment when reached
Although he retired in late 2012 from the elite Politburo
Standing Committee, the apex of political power in China, the
71-year-old Zhou wanted to rule from behind the scenes and had
become a threat to leadership stability, according to multiple
sources with leadership ties.
One of Xi's influential patrons, former vice president Zeng
Qinghong, was the catalyst for the investigation into Zhou,
three sources with ties to the leadership said.
"Zeng proposed to central (authorities) that Zhou Yongkang
be investigated for posing a political risk to the collective
leadership," one of the sources said.
Neither Zhou nor his representatives were available for
comment. No evidence has emerged that Zhou or his relatives have
violated any Chinese laws or used Zhou's influence to clinch
"TIGERS AND FLIES"
As part of his vision for a rejuvenated China, Xi is
preaching a return to the austerity of the Party's early years.
An attack on corruption is at the core of this campaign. Xi
pledges to go after "tigers and flies" in rooting out
wrongdoing. He warns that popular disillusionment with rampant
official graft threatens the Party's hold on power.
While there is little risk for Xi and his supporters in
taking down Liu, a similar move against someone as senior as
Zhou Yongkang will take much more political courage.
"If the leaders are using the corruption crackdown just to
bring down their political rivals, there will be grim
consequences, as many officials in China are believed to have
corruption problems," says Zhao Guangbin, managing director of
Shanghai and Toronto-based consulting firm, Gateway
The government and state media have not made any official
statement about Zhou or the case against him. An announcement is
expected around the fourth plenum of the party's elite
205-member Central Committee later this year, two sources said.
Xi and other top leaders have yet to decide whether to put Zhou
on public trial, according to multiple sources with leadership
Investigators want "to make it an ironclad case", one of the
sources said. If Zhou is charged, the authorities may avoid
publishing detailed allegations to minimize any damage to the
Party's image, the sources said.
Zhou was last seen in public at an alumni event at the China
University of Petroleum in Beijing on Oct. 1. He has been under
virtual house arrest since the investigation into his affairs
began last year.
Zhou is believed to have orchestrated the bugging of senior
Chinese leaders. At Zhou's behest, Beijing's civilian
intelligence chief Liang Ke ordered his most trusted men to bug
the telephones of Premier Li Keqiang and his immediate
predecessor, Wen Jiabao, their families and aides in the run-up
to the party's 18th congress in 2012, said one source close to
the current leadership and another who has been briefed about
The eavesdropping was aimed at "looking for evidence of
(any) corruption", one source said. It was unclear how the
authorities discovered the bugging. Liang was taken into police
custody this year and is himself undergoing investigation for
Further alienating Xi and other top leaders, Zhou backed the
now disgraced Bo Xilai to join the Politburo Standing Committee
in the run-up to the 2012 Communist Party conference that would
install a new leadership. The charismatic Bo, who was the former
Party boss of Chongqing in Sichuan province, would have been
beholden to Zhou (himself a former Sichuan Party chief) and a
powerful rival to Xi had he succeeded in reaching the top level.
At the peak of his influence, Zhou Yongkang held one of the
most powerful positions in China. As domestic security chief, he
oversaw the police force, the civilian intelligence apparatus,
the paramilitary People's Armed Police, judges and prosecutors.
During his five-year watch, the budget for maintaining internal
stability exceeded the public figure for military spending. The
position, deemed too powerful, was downgraded after he retired.
To ensure his influence past retirement, Zhou had nominated
Bo Xilai to succeed him as domestic security chief and tried to
orchestrate the younger man's promotion to the Standing
Committee, the sources with leadership ties said.
But Bo's rise was aborted in 2012 by the attempted defection
of his Chongqing police chief, Wang Lijun, to the U.S. Consulate
in Sichuan province. After apparently abandoning his bid for
asylum, Wang implicated Bo's wife in the 2011 murder of British
businessman, Neil Heywood. Bo's wife and his former police chief
have been convicted and jailed. Bo himself was sentenced to life
in prison last year for corruption and abuse of power.
Zhou had envisioned himself as the power behind the throne
in retirement if and when Bo took over, the sources said. "Zhou
Yongkang wanted to be Cixi'," a third source said, referring to
the empress dowager of China's last imperial dynasty who ruled
from behind the scenes.
Zhou and Bo also toyed with the idea of Bo becoming premier
and ranked number three in the Standing Committee behind
President Xi and Li Keqiang, who would have been kicked upstairs
and made head of parliament, three sources with ties to the
This scenario never played out. But the leadership was
shocked when it learned about the alleged plot, the sources
said. It was unclear how it was uncovered. "This would have
overturned the 17th congress resolution," one source told
Reuters, referring to an unpublicised decision made at the
party's five-yearly conclave in 2007 to make Li premier. "It
would have been tantamount to a palace coup," a second source
Zhou also attempted to gain influence over a top aide to
then President Hu Jintao, Ling Jihua, three sources said. Ling's
son, Ling Gu, aged in his 20s, was killed driving a Ferrari in
Beijing on March 18, 2012. One young woman was also killed and
another injured. Soon after the crash, a Zhou ally, Jiang
Jiemin, then chairman of state-owned oil giant China National
Petroleum Corp (CNPC), sought to buy the silence of the dead
victim's bereaved family and the surviving passenger, the
"Millions (of yuan) were paid," a third source said. "When
(President) Hu Jintao found out, he was very disappointed."
Jiang used CNPC funds to make the payments, sources said. Ling
Jihua has been demoted to head a low-level ministry for
attempting to cover up the crash. He could not be reached for
comment. Jiang Jiemin was briefly elevated to be the top
regulator of China's state-owned enterprises, but was sacked
soon afterwards. He is now in custody on suspicion of
corruption, sources say.
Zhou Yongkang's son Zhou Bin, who has business interests in
the energy sector, is also a key target of the corruption probe.
In a sign of Zhou Yongkang's lingering influence in the security
apparatus, Zhou Bin eluded a warrant for his arrest and fled to
the United States early last year after receiving a tip-off from
an ally, said one source with direct knowledge of the matter.
"Central (authorities) were shocked and angry", the source said.
After negotiations with Chinese authorities, Zhou Bin
returned to China via Singapore later in the year, the source
said, adding that he has been detained and investigated for
corruption and his links to gangsters. It has not been possible
to reach Zhou Bin for comment.
From Zhou Bin, the investigation led to Liu Han. Two sources
briefed on the investigation said the younger Zhou and Liu were
business partners. They gave no further details but the
well-connected Chinese magazine Caixin reported in February that
Liu and Zhou Bin had worked together on deals in power
generation and tourism in Sichuan. This has not been
independently confirmed. Reports in China's domestic media have
noted that the rise of Liu Han's business empire coincided with
Zhou Yongkang's posting as Sichuan Party secretary from 1999 to
Without mentioning Zhou Yongkang, Zhou Bin or the wider
crackdown, the authorities in February acknowledged the probe
into Liu was driven from the top. A 10-month investigation
"under the strong leadership of the central committee of the
Communist Party" had solved Liu's case, the official Xinhua news
agency reported on February 20.
Liu set up Sichuan Hanlong in 1997. With his younger
brother, Liu Wei, the pair built a fortune from building
materials, construction and property, according to reports in
the official media and interviews with former employees.
He also had global ambitions. In 2009, Hanlong made its
first major offshore investment, taking a $200 million
controlling stake in Perth-based Moly Mines , a
company planning to develop one of the world's biggest
molybdenum deposits in West Australia's Pilbara region. The
company also paid $40 million for a stake in another molybdenum
play, Colorado-based General Moly Inc.
Hanlong also took stakes in two other Perth-based miners,
Marenica Energy, which has rights to a uranium deposit
in Namibia, and Sundance Resources Ltd, which has
extensive iron ore deposits straddling the border of Cameroon
and Congo. Hanlong eventually had 12,000 employees worldwide and
annual revenues of $2.5 billion, according to statements on the
websites of its listed companies. It is unclear how the
confiscation of Liu's assets has affected his stakes in Chinese
and overseas companies. Hanlong Vice President Kang Huanjun
declined to answer questions about the company . "Thanks but I'm
not able to make any comment," he said when called on his mobile
Former managers, staff and colleagues say the chain-smoking
Liu made no secret of his love for expensive cars, banquets,
fine French wines and heavy gambling. "All the meetings we had
with him were pretty short, just one or two hours," says Collis
Thorp, former chief operating officer at Moly Mines. "He was
most interested in heading out to the local casino."
Aside from his business success and extravagance, Liu was
known for his philanthropy, particularly to help victims of the
devastating Sichuan earthquake in 2008. He also appeared to be a
dedicated family man. On his regular visits to Australia, Liu
sometimes travelled with his attractive, 37-year-old wife, Yang
Xue, and their two young children, a boy aged about 10 and a
girl slightly younger, according to former staff members and
advisors who met the family.
An entirely different picture of Liu emerged before and
during his 20-day trial in the central province of Hubei, which
ended on April 19, according to lurid reports in the
Far from a benevolent high-roller, Liu was portrayed as a
violent and ruthless crime boss. He and his brother were accused
of leading a gang responsible for nine murders, multiple
assaults, harbouring criminals, obstruction of justice, loan
fraud, kidnap and contract rigging.
At the time he was detained, his gang had stakes in 70
companies and had accumulated assets worth almost 40 billion
yuan ($6.4 billion), according to the official coverage of his
arraignment and trial, which was closed to the public.
Ahead of his trial, state-run television broadcast an
interview with his wife Yang, dressed in what appeared to be
prison garb, where she described how Liu paid off government
officials. "He would take me to dinner with them and during
dinner he would give them lots of gold, jade and other precious
gifts worth several hundred thousand to millions of yuan," Yang
said. "Sometimes he bribed them through gambling." The pair
appear to have been divorced since Liu was detained because Yang
was described as his former wife in this interview and another
televised excerpt of the trial carried on state television.
While Liu Han insists he is innocent, his brother Liu Wei
has pleaded guilty and told the court he was ready to accept
punishment for his crimes. Liu Wei, also known as Liu Yong, was
also sentenced to death by the court in Hubei on Friday. Another
34 defendants in the case were given sentences ranging from 11
years in prison to death, Xinhua news agency said.
Only three relatively junior officials from Sichuan were
tried alongside Liu. But Xinhua reports have quoted witnesses
questioned as part of the investigation saying the tycoon had
close ties with senior provincial and Beijing officials. Former
Hanlong group executives and advisors say it was clear that Liu
enjoyed close ties with senior government and party officials.
Visibly distressed and in tears at stages of his trial, Liu
seemed to understand at the time that he would be lucky to avoid
the death sentence. As Yang was escorted from the court after
giving evidence in a televised segment towards the end of his
trial, a sobbing Liu called out to her. "Look after the
children," he cried, "look after my mother." Yang promised she
(Editing by Bill Tarrant)