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Project W 10/07/16
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The McAuliffe Saga continues: Despite cronyism evidence, DHS won’t investigate
Oct 6, 2016 | Before It's News
... GreenTech was more than a resume-builder or source of income for McAuliffe. It also brought political support. Foreigners with visas can contribute to political campaigns—foreigners like Wang Wenliang, a billionaire who served in China’s communist government and donated $120,000 to McAuliffe’s gubernatorial campaign in 2013. -
Million-yuan bribes and money-back guarantees … how Chinese lawmakers bought their seats
Oct 5, 2016 | South China Morning Post
By Choi Chi-yuk
Business executives seeking elected office in Liaoning province, the epicentre of an unprecedented vote-rigging scandal, were willing to make payments ranging from hundreds of yuan to millions, sources say. -
China’s vote-buying scandal: are laws passed by fraudulently elected legislators still valid?
Oct 7, 2016 | South China Morning Post
By Choi Chi-yuk
The Chinese northeast province of Liaoning is facing an unprecedented legislative crisis in the aftermath of the dismissal of hundreds of lawmakers in a vote-buying scandal, sources say. -
U.S. Weighs Iran-style Sanctions on North Korea, Risking a Rift With China
Oct 6, 2016 | Foreign Policy
By Dan De Luce
... In a move welcomed in Washington as a potential sign that China was ready to clamp down on companies linked to North Korea, Beijing authorities last month announced a criminal investigation against Dandong Hongxiang Industrial Development Co. and its owner. -
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The McAuliffe Saga continues: Despite cronyism evidence, DHS won’t investigate
Oct 6, 2016 | Before It's News
Gov. Terry McAuliffe’s GreenTech saga has kept CRC busy over the years. By the look of this week’s news, that story isn’t ending soon.
The Department of Homeland Security’s Inspector General reported that DHS Deputy Secretary Alejandro Mayorkas fast-tracked visa applications for the EB-5 program from McAuliffe’s company, GreenTech Automotive.
The IG report found that Mayorkas had asked a judge to fudge application rules, told his staff he wanted to review GreenTech’s decision, and at one point said, “Let me take it home and rewrite the report.” This was after GreenTech’s application had previously been denied, and rejected on appeal.
The Daily Caller observed that, according to government rules, the director of the Office of Governmental Ethics “may recommend” that DHS launch an investigation, so long as the OGE director “has reason to believe” a violation occurred. Despite the information revealed in the report, DHS and OGE are acting as if no such reason was found.
GreenTech is a fascinating example of crony capitalism. Here’s a brief history, based on work by CRC’sDr. Steven J. Allen):
Terry McAuliffe created GreenTech, an electric car manufacturer, in 2009 as a resume-builder before running for governor. He wanted to run as a successful businessman. But, although it would have been to his advantage to build his manufacturing plant in Virginia, he didn’t build there. (Perhaps, he couldn’t: The Virginia Economic Development Partnership suspected a “visa-for-sale scheme.”) Instead, he took the project to Mississippi, and received about $5 million in subsidies from Mississippi taxpayers. The expectation of Mississippi officials, and their rationale for the subsidies, was that the effort would create lots of jobs.
But GreenTech didn’t follow through. Its original projection was 1,500 jobs, which was later lowered to 350. Most recently, a photo of employees shows around 75 people.
The small number of jobs makes sense: Not much work is being done. GreenTech promised to produce at least 30,000 cars every year. Since 2009, the company has built only 25 cars—and sold zero.
GreenTech, it is clear, does not have a standard business model. Subsidies and handouts are part of that model. In addition, the company counts on revenue from the EB-5 visa program, conducted under the Immigration Act of 1990. EB-5 lets government agencies and private companies give green cards to foreigners who invest $500,000 in a rural or economically distressed U.S. company. It’s a niche business but a lucrative one: GreenTech raked in $67 million for procuring 100 visas—nearly triple its revenue from car production.
GreenTech was more than a resume-builder or source of income for McAuliffe. It also brought political support. Foreigners with visas can contribute to political campaigns—foreigners like Wang Wenliang, a billionaire who served in China’s communist government and donated $120,000 to McAuliffe’s gubernatorial campaign in 2013.
Also part of this story: ties between Hillary Clinton’s brother and an official, now on the lam, from former Soviet Georgia. The GreenTech saga is a quagmire, which you can explore in CRC’s full report on Gov. McAuliffe here, updated here.
http://beforeitsnews.com/opinion-conservative/2016/10/the-mcauliffe-saga-continues-despite-cronyism-evidence-dhs-wont-investigate-3196092.html
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Million-yuan bribes and money-back guarantees … how Chinese lawmakers bought their seats
Oct 5, 2016 | South China Morning Post
By Choi Chi-yuk
Following exposure of huge electoral corruption in Liaoning, some fear similar practices involving up to tens of million of yuan could be happening elsewhere
Business executives seeking elected office in Liaoning province, the epicentre of an unprecedented vote-rigging scandal, were willing to make payments ranging from hundreds of yuan to millions, sources say.
Handing out cash to voters or contributing tens of millions of yuan to powerful political brokers were two ways they sought to game legislative elections.
Following the exposure of the biggest electoral fraud scandal since the founding of the People’s Republic of China in 1949, the sources said the corruption was so widespread that other legislators found it difficult to refuse bribes.
The scandal has sparked concerns that similar under-the-table deals could be going on elsewhere across China as various local legislatures prepare for elections early next year.
“In the hope of winning a legislative seat, some may offer targeted electors red packets containing cash ranging from 500 to 5,000 yuan [HK$5,800] at banquets they organise,” said a mid-ranking official in Shenyang, the provincial capital. “Others may give huge amounts, ranging ... to tens of millions of yuan to brokers, usually political heavyweights such as the heads of regional legislatures, in the expectation of ‘good news’.”
The official, who declined to be identified, is familiar with the massive electoral fraud in Liaoning three years ago, which led to the expulsion last month of 45 of the province’s 102 National People’s Congress deputies and 454 of the 612 members of the provincial people’s congress.
On the mainland, lawmakers above the township and county levels are mostly elected by people’s congresses representing the administrative division or divisions immediately below. For example, a majority of NPC deputies are elected by provincial legislators, who in turn are elected by prefectural-level lawmakers.
The official said brokers would usually offer full refunds if the would-be legislator failed to get elected.
But a veteran journalist in Liaoning said one business executive had complained bitterly after not getting a refund following a failed run in 2013.
The official said one of the 454 sacked provincial legislators was a friend who had accepted more than 100,000 yuan in total from numerous red packets handed out at banquets before the 2013 election.
But she had won her seat as a result of her hard work, not bribing others, he said.
“The young woman lawmaker was nothing more than a grass-roots worker who had no fortune with which to bribe others for a place in the legislature,” he said. “She’s working as usual these days, after being removed from the provincial lawmaking body and surrendering all the money she took.”
He said accepting bribes before legislative elections had become established practice in Liaoning.
“You are actually breaking the unspoken rules when you refuse to take the gift packs, including red packets and stuff such as tea or valuable items, while others accept them,” he said.
Worse still, the official said, some candidates found they had no choice but to bribe others because so many rivals had been bribing their way into legislatures in recent years.
A former provincial lawmaker in Liaoning said paying for a seat had long been common in local elections.
“One has to deal with a lot of ‘troublesome matters’ before landing a seat at the people’s congress,” he said.
http://www.scmp.com/news/china/policies-politics/article/2024933/million-yuan-bribes-and-money-back-guarantees-how
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China’s vote-buying scandal: are laws passed by fraudulently elected legislators still valid?
Oct 7, 2016 | South China Morning Post
By Choi Chi-yuk
The Chinese northeast province of Liaoning is facing an unprecedented legislative crisis in the aftermath of the dismissal of hundreds of lawmakers in a vote-buying scandal, sources say.
The Communist Party’s discipline watchdog in the province is also feeling the squeeze, having to draft in legions of personnel from other agencies to cope with the flood of corruption investigations.
“At least two disciplinary staff from my department have been temporarily transferred to work for them,” a mid-level official in Shenyang said, adding that his office was one of many across the province supplying personnel to help with the probes.
The turmoil follows a special meeting last month of the country’s top legislature at which the Standing Committee of the National People’s Congress decided to expel 45 national legislators from Liaoning elected in 2013.
Million-yuan bribes and money-back guarantees … how Chinese lawmakers bought their seats
The committee also announced that 454 of Liaoning’s 612 lawmakers at the provincial level were dismissed for buying their way into the local legislature.
According to Xinhua, NPC Standing Committee chairman Zhang Dejiang told the meeting that the Liaoning electoral fraud “challenged the bottom line of the Chinese political system, and a zero-tolerance approach will be taken towards any offences in elections”.
With two-thirds of the provincial lawmakers disqualified and the provincial body rendered inoperable without a standing committee quorum, sources said question marks had risen over the validity of laws and regulations enacted by the Liaoning legislature in the last few years.
“Nobody knows how to deal with the laws and regulations enacted by the provincial legislature since early 2013,” a former Liaoning provincial lawmaker said late last month. “The National People’s Congress is handling this hot potato for the time being.”
The source said it was very likely that the central authorities would let the issue go as if it had never happened.
“Handling the case strictly in accordance with the law is the last choice for the central authorities because it is too complicated and has never happened before,” he said.
Peking University law professor Zhang Qianfan said if the lawmakers were unqualified from the start, the laws and regulations they enacted over the past 3½ years should also be revoked.
But the professor also said that in a practical sense, it might not matter who sat in the legislature’s seats.
“Given that the people’s congress is more or less a rubber stamp, the decisions over the years might have turned out to be the same, even if you had swapped the original hundreds of provincial legislators with another batch of lawmakers,” Zhang Qianfan said.
“Some decisions may not be made by the legislators themselves. They are only required to give procedural approvals to what is tabled by the Communist Party or the government, which decides things in a real sense.”
http://www.scmp.com/news/china/policies-politics/article/2025813/vote-buying-debacle-drives-liaoning-uncharted
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U.S. Weighs Iran-style Sanctions on North Korea, Risking a Rift With China
Oct 6, 2016 | Foreign Policy
By Dan De Luce
To stop Pyongyang's march to a nuclear arsenal, the White House is looking to target Chinese companies that bankroll Kim Jong Un’s banned weapons.
The Obama administration is heatedly debating whether to trigger harsh sanctions against North Korea that would target Chinese companies doing business with the hermit regime, in a crackdown like the one that crippled Iran’s economy, Foreign Policy has learned.
But some White House officials worry that the tough economic penalties, which have already been approved though not deployed, would cause a serious rift with Beijing.
Officials told FP that the approach would be similar to the sweeping secondary sanctions that were slapped on global banks handling transactions with Iran. Those sanctions are widely credited with bringing Iran’s economyto its knees in 2013 and forcing Tehran to the negotiating table over its nuclear program.
But a decision to go after Chinese banks and trading companies that deal with Pyongyang could rupture Washington’s relations with Beijing, which bristles at any unilateral sanctions imposed on its companies or drastic action that could cause instability in neighboring North Korea.
The push for possible tougher action in U.S. policy stems from growing alarm over North Korea’s bid to build more capable ballistic missiles and potent nuclear weapons, as illustrated by last month’s fifth nuclear test by Kim Jong Un’s regime — its largest to date. Some experts believe North Korea already has succeeded in building nuclear warheads that could be placed on a missile, and a series of test launches demonstrates that the North has developed medium-range missiles that could strike Japan or Guam. U.S. intelligence officials believe it is only a matter of time before Kim’s regime produces a long-range intercontinental ballistic missile that could reach the United States.
“In the past two or so years, there’s a general appreciation that the situation has become worse and that we, the United States and the responsible nations of the world, need to up our game,” said a senior government official, who spoke on condition of anonymity.
As a result, the administration is “looking at a more active and more aggressive use of the authorities” for sanctions, the official told FP.
The political calendar in the United States also is shaping the internal discussions, with some officials arguing that President Barack Obama would be better placed to order the move in his final months in office, rather than leaving it to a new administration to enter into a heated dispute with China.
“Looking at the calendar, all the players on North Korean policy are acutely aware that there is a need, and we have a chance to solidify this robust policy so that the next administration is working on a higher platform,” the senior official said.
Alarmed by Pyongyang’s relentless pursuit of a nuclear-armed missile arsenal, South Korea and Japan also are pressing for a more aggressive approach to the North. U.S. lawmakers from both parties have urged the White House to embrace hard-hitting sanctions.
U.N. resolutions and new legislation adopted by Congress in February give the administration far-reaching legal authorities to block assets, file criminal charges, and cancel visas for individuals or organizations violating sanctions rules on North Korea. But so far, the administration has yet to wield those authorities in a decisive manner, taking action in a relatively small number of cases while it seeks to persuade China to take a more assertive role.
With China as North Korea’s only economic partner of consequence, any sanctions strategy aimed at squeezing Pyongyang will involve punitive measures against Chinese companies and banks. And Washington would much rather have Beijing lead the effort against those companies instead of taking unilateral action that would almost certainly touch a raw nerve in the Chinese leadership.
China has repeatedly voiced support for U.N. Security Council resolutions barring any commercial backing or supplies for North Korea’s nuclear weapons or missile projects. But Beijing also has made clear that it opposes unilateral sanctions by other governments, and Chinese officials are wary of any penalties that would create a food shortage or energy crisis that triggers upheaval in its impoverished neighbor.
“We’re willing to cooperate with relevant countries under the condition of mutual respect and on equal footing, but at the same time oppose any country’s so-called long-arm management of Chinese entities or individuals according to its internal laws,” the foreign ministry said in a statement toBloomberg News this week.
In a move welcomed in Washington as a potential sign that China was ready to clamp down on companies linked to North Korea, Beijing authorities last month announced a criminal investigation against Dandong Hongxiang Industrial Development Co. and its owner. The company had maintained deep ties to North Korea, conducting $500 million in business over five years, and even had alleged commercial links to a Kim regime group that hackedSony Pictures. The U.S. Treasury Department last week announced criminalcharges against the company and several individuals, accusing the company of links to a notorious North Korean bank, Kwangson Banking, and alleging that it had set up shell companies and offshore tax havens to hide its illegal activity.
It’s unclear if China’s criminal inquiry against Dandong Hongxiang represents a more aggressive tack by Beijing against companies flouting U.N. sanctions, or is merely an isolated event. But experts say China has not changed its fundamental calculus on Pyongyang — that stability on the Korean peninsula must be preserved at all costs.
U.S. diplomats are in discussions with China at the U.N. Security Council on a new resolution that would possibly close remaining loopholes in the international sanctions against North Korea. A Security Council resolution adopted in March — two months after a nuclear test by Pyongyang — included a “livelihood exception” that allows Chinese companies to buy coal and other items from North Korea as long as the proceeds are not used for prohibited weapons programs. The resolution also allows China and other states to maintain financial accounts or bank offices inside North Korea unless there is “credible information” showing the business relationship is being used for illicit activity.
U.S. officials hope the talks with China will produce a stricter sanctions resolution to ensure Beijing’s cooperation and pile pressure on North Korea by choking off its access to hard currency through coal, iron ore, and other exports. But the talks are moving at a glacial pace, and it remains unclear if Beijing is ready to alter its approach. Without U.N. backing, Washington will face a difficult choice.
Pursuing Iran-style sanctions would almost certainly ratchet up tensions with China, with potentially damaging economic and other unpredictable consequences.
Yet no change in course would mean tolerating North Korea eventually building a stockpile of sophisticated nuclear missiles aimed at the United States, enabling Pyongyang to engage in nuclear blackmail on an unprecedented scale.
“It could become the defining issue in the U.S.-China relationship. It could push Beijing and Washington into a very unhappy place,” said Evan Medeiros, who served as Obama’s top advisor on Asia affairs at the White House National Security Council until last year.
Pursuing Iran-like sanctions against North Korea would mean “hardcore secondary sanctions in ways that the Chinese aren’t going to like,” he said.
“But the U.S. is simply going to have to be willing to countenance friction in the U.S.-Chinese relationship that the U.S. hasn’t been willing to accept to date, because the North Korean threat is becoming too serious,” said Medeiros, now at the Eurasia Group since leaving the White House.
Obama has tended to avoid confrontation with China on most issues, including over the South China Sea and economic disputes. The administration, however, did take a forceful stance against Beijing-backed cyberhacking in the United States.
“They have placed a premium on trying to manage the relationship with China in a constructive way and to contain areas of friction or competition,” said a congressional staffer.
No decision has been taken on whether to trigger the harsher sanctions, and the administration may in the end opt to take a more incremental approach, avoiding a major clash with China. But as North Korea continues to advance toward its goal of building nuclear-tipped, long-range ballistic missiles, pressure will inevitably build on the next American president to back a tougher line on sanctions despite resistance in Beijing.
Since approving new sanctions legislation in February, U.S. lawmakers from both parties have complained that relatively few companies or individuals have been blacklisted and charged.
“You have sanctioned no Chinese banks at the end of the day, and they are probably the major financial institutions for North Korea,” Sen. Bob Menendez (D-N.J.) said at a hearing last week with top State Department officials.
Republican Sen. Marco Rubio, speaking at the same hearing of the Senate Foreign Relations Subcommittee on East Asian and Pacific Affairs, accused the administration of timidity when it comes to sanctions that could antagonize the Chinese government.
“We know who these companies are. We haven’t moved fast enough on it. There’s no reason not to have moved faster. There’s plenty of targets of opportunity and plenty of information out there about them,” Rubio said.
Asked about future sanctions enforcement against North Korea, White House spokesman Josh Earnest told reporters Wednesday that “we don’t want to telegraph our intentions.”
If the United States decided to turn the screws against large numbers of Chinese companies trading with North Korean state enterprises, experts in and outside the government disagree as to whether the case of Iran sanctions can be applied successfully to Pyongyang.
“There are some tempting parallels, but there are very distinct differences,” said John Park of the Harvard Kennedy School, who co-wrote a recent studyof North Korea’s sanction-busting methods.
Unlike North Korea, Iran is heavily dependent on the international oil market and has to rely on the international financial system, including the SWIFT financial transaction network, to sell its oil. “They were vulnerable. You could block these type of activities outside of Iran,” Park said.
But North Korea operates in a gray zone of illicit companies and trade, and almost all of its business is done inside China’s economy.
Beijing is wary of any international measure that would usurp its authority on its territory. If Washington pressed ahead with secondary sanctions, it would “hit the wall of sovereignty right away,” Park said.
About 70 percent of North Korea’s trade runs through China, including most of its food supplies.
North Korea has adapted its tactics over the years and proved savvy at circumventing sanctions. It pays lucrative fees for skilled Chinese middlemen who handle finances and logistics while concealing Pyongyang’s involvement in transactions, said Park, who cited accounts from North Korean defectors. Instead of adopting cloak-and-dagger methods, managers from the Kim regime’s enterprises operate openly, integrating themselves in the expatriate business community in China in provinces near North Korea while exploiting consulates to buy prohibited or dual-use goods for weapons programs.
Apart from coal and iron ore, North Korea profits from the export of small arms and cheap labor. North Korean workers are sent to factories in China and the timber and construction industries in Russia. The wages are transported back to Pyongyang, with the North Korean workers reportedlyreceiving only about 10 percent of the money.
Unlike Washington, Beijing promotes trade with North Korea as a way of preventing instability, even as it criticizes Pyongyang’s pursuit of nuclear weapons.
About a year ago, China and North Korea launched a cargo and container shipping route to bolster the North’s coal exports to China. The project appears to have paid off. North Korean coal exports to China hit a record monthly high of about 2.46 million tons in August, according to the Korea International Trade Association. Coal exports to China generate more than $1 billion in income for the regime annually and roughly a third of North Korea’s export income, U.S. officials said.
When coal and other commodity prices spiked between 2007 and 2010, North Korea secured large sums of cash from its coal exports and probably still has funds left over from the boom, Park said.
“They’re living off of the proceeds from a hit record from years ago,” he said.
https://foreignpolicy.com/2016/10/06/u-s-weighs-iran-style-sanctions-on-north-korea-risking-a-rift-with-china/
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