China Confidential is learning more about a purported "black book" of alleged complicity by Wall Street investment bankers in alleged acts of financial fraud and corruption on the part of Chinese companies that sought to raise capital in the United States during the public listing boom. Click here or scroll down for yesterday's exclusive story, headlined "Could China's Black Book Put Wall Street Bankers Behind Bars?"
Some of the information that is becoming available has a comic edge. For example, a source in Hong Kong tells China Confidential that the so-called book--really, a massive file or database--includes an account of a U.S. stock exchange representative being shown $3 million in actual, physical cash in a Chinese company's vault after he repeatedly questioned a cash or cash-equivalent entry in the company's audited financial statements. Another case allegedly documents a Chinese CEO, seeking to go public in the United States, keeping his company's "real books"--opposed to its "IPO books"-- in the trunk of his luxury car.
Numerous instances of payoffs are also allegedly documented, as well as instances where Communist Party officials used family members and offshore shell companies to hold shares in high-flying firms.
Big Name Firms
Many, but not all, of the black book cases involve mid-cap companies and lower-rung bankers. The biggest name firms on Wall Street--a few of which no longer exist--allegedly also appear quite prominently in the tome, which, sources say, was compiled by a bureau of China's Ministry of State Security, or Guojia Anquan Bu (Guoanbu), which is responsible for both foreign intelligence and domestic security.
Assuming the story is accurate, there is a cruel irony about the dreaded MSS--a KGB-style organization known for domestic repression as well as overseas spying--publishing a black book, even for internal use or selective circulation (i.e. blackmail). Black books have been written and published to document crimes against humanity by the Chinese and Soviet Communist governments and Nazi Germany. The latter work--which was ignored by corporations and banks eager for German business--surfaced before World War II and the death camps, when prisoners were tortured, beaten, and killed in secret police stations and concentration camps. Click here to read an archived Op-Ed essay on the Chinese and German black books by the late, great journalist and champion of human rights, A. M. Rosenthal.
In line with its foreign intelligence mission, the MSS has itself created thousands of front companies in the West in order to steal commercial and scientific secrets and conduct espionage operations against the United States and European countries.
