Assistant Editor, Fraud Magazine
David Barboza has been a correspondent for The New York Times based in Shanghai, China, since November 2004 and has served as the paper’s Shanghai bureau chief since 2008. In 2013, Barboza was awarded the Pulitzer Prize for International Reporting “for his striking exposure of corruption at high levels of the Chinese government, including billions in secret wealth owned by relatives of the prime minister, well documented work published in the face of heavy pressure from the Chinese officials.”
At the 2014 ACFE Asia-Pacific Conference in Hong Kong, China, Barboza spoke with attendees about his exposure of Wen Jiabao, the prime minister of China.
Barboza started by explaining that early on, during dinners with people in finance and banking, he heard "rumors" that interesting things were happening with the sons and daughters of high-ranking families. He heard that they held secret shares in major companies, even listed companies.
With this information, Barboza decided he wanted to look into the most powerful men in China. In 2010, one major rumor was that Jiabao's family held secret shares in the world's largest insurance company and that his wife controlled the diamond industry. It was known that his son had co-founded one of the biggest private equity firms, and it was rumored that state department memos mentioned that children of the elite controlled each of these different businesses.
Jiabao's family just so happened to also hold shares in a listed company that had a public prospectus. On the prospectus, listed with major companies like Goldman Sachs and HSBC, were many Chinese companies he'd never heard of. Barboza told attendees, "I asked myself: Who are these companies? Who are the shareholders behind these Chinese-listed companies?"
After extensive research — which included a trip to the cemetery to confirm a relative's name and the names of her kin, all listed on the tombstone — Barboza discovered that hidden behind fake names and layers of partnerships and investment vehicles, many relatives of Jiabao's became extraordinarily wealthy during his leadership. They controlled assets worth at least $2.7 billion. Barboza uncovered a detailed look at how politically connected people profited from an intersection of government and business.
"I wonder to this day why it took so long for me, or someone else, to find out this kind of thing. It's sitting in public records," Barboza told attendees. "And while it did take me over a year to do this project, I'm amazed at how much is out there in the public domain. Just within three months, we knew we had a story, just by seeing relationships."
"So, to me, I think one of the big lessons is, often it's sitting right in front of you," said Barboza. "And you've got to make the connections."
Read David Barboza's full New York Times report here.