The inglorious exit of Bo Xilai, Canada’s closest ally in China’s power structure

CANNES, FRANCE AND BEIJING — The Globe and Mail

Bo Xilai (C) stands as the decision of his appeal is announced at the Shandong Higher People's Court in Jinan, capital of east China's Shandong Province in this still image taken from video October 25, 2013. (REUTERS TV/REUTERS)

As China’s biggest political scandal in decades came to its unsurprising conclusion – with a court dismissing Bo Xilai’s final appeal and upholding the former Communist Party star’s sentence of life in prison – the red-roofed villa that was central to his downfall sat empty, wasting its idyllic view of the Mediterranean coast.

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The silence hanging over No. 7 Boulevard des Pins on the French Riviera speaks to the gutted ambitions of a man whose plummet from power mesmerized China for the past year and embarrassed the ruling elite as never before. Mr. Bo, who was convicted of three charges, including bribe-taking related to the ownership of the villa, went to jail China’s most charismatic and controversial politician, factors many believe turned the Communist Party apparatus against him. He was also admired abroad, openly courted by corporate Canada and successive Canadian governments.

Until his downfall last year – sparked by his wife’s admission that she murdered British businessman Neil Heywood – Mr. Bo was counted as a friend by Montreal’s powerful Desmarais family, which cultivated the Bo family for decades and saw its businesses in China grow as Mr. Bo rose in power. Canadian politicians also sought him out: Prime Minister Stephen Harper and former prime minister Jean Chrétien were among the last high-profile foreign visitors to Chongqing, the southwestern Chinese city Mr. Bo governed until his arrest on corruption charges.

Mr. Bo was seen as Canada’s closest ally in China’s power structure, a relationship that was expected to bear even more fruit if – as many had expected – he rose to the very top, the seven-man Standing Committee of the Politburo. With his pro-business policies and command of English, he looked to some like a reformer to whom Canada could attach its China policy.

“We sort of hunger for a Chinese leader who is open and easy to communicate with,” said David Mulroney, a former Canadian ambassador to China who said he’d met Mr. Bo repeatedly over the past two decades and was one of those “who believed in him as a reformer.”

“Over his career, [Mr. Bo] met a lot of Canadians – he was the most Canadian-friendly of all [the senior Communist Party leadership],” Mr. Mulroney said.

Sergio Marchi, who was a minister of international trade under Mr. Chrétien before serving as president of the Canada China Business Council, personally met with Mr. Bo eight or nine times. He defended Mr. Bo as “a friend of Canada.” Many in the Canadian business and political establishment “were genuinely cheering” for Mr. Bo to achieve high political office in China, he said.

That seems impossible now. Mr. Bo’s appeal of his September conviction was dismissed by the Shandong Provincial Higher People’s Court in just an hour on Friday. State television showed images of Mr. Bo standing in court, hands cuffed before him, bearing a wry smile.

Ties between Mr. Bo and corporate Canada are rooted in the long friendship between the Bo and Desmarais clans, which stretches back to the 1970s, when Mr. Bo’s father, vice-premier Bo Yibo, visited family scion Paul Desmarais Sr. on his way to Washington to help prepare for Richard Nixon’s breakthrough trip to China.

There’s no evidence that the Desmarais family or Power Corporation, the massive holding firm they control, profited directly from their friendship with the Bo family, although it clearly gave them high-level access to decision-makers.

But the relationship appears to have been a fruitful one. A 1996 Team Canada trade mission to the coastal city of Dalian while Mr. Bo was mayor there yielded no local deals for Canadian companies, but the following year France’s massive Total SA oil major – in which the Desmarais family is the largest known shareholder – signed a deal to up its stake in China’s largest oil refinery, West Pacific Petrochemical Corp., to 22.4 per cent. The refinery is located on an island just off Dalian.

When Mr. Bo was promoted to Beijing in February of 2004 as commerce minister for the central government, the Desmarais fortunes also gained, with Power Financial winning coveted status eight months later as one of the first foreign companies designated a Qualified Foreign Institutional Investor, allowing them to buy and sell yuan-denominated shares on Chinese stock exchanges.

The activities of the Bo and Desmarais clans have at times intersected. Power Corporation channels most of its investments in China through Hong Kong-listed CITIC Pacific Ltd., where André Desmarais has been a non-executive director since 1997. Mr. Bo’s younger brother, Bo Xicheng, served as an independent director of the CITIC Group’s investment banking arm, CITIC Securities, from 2003 to 2006.

“André [Desmarais] himself made a huge effort to court as many senior people as he could – he’s very good at that – and Bo Xilai, when he was mayor of Dalian, began a close relationship with André that André never dropped when [Mr. Bo] was [provincial governor of] Liaoning, when he was minister of commerce, when he was in Chongqing,” said Howard Balloch, another former Canadian ambassador to China who is now an investment banker based in Beijing.

The Desmarais’ courting of Mr. Bo carried on right up until his spectacular fall. Eight days after Mr. Heywood was found murdered in a Chongqing hotel, André Desmarais and his father-in-law, Mr. Chrétien, arrived in the same Yangtze River metropolis as the head of a delegation from the Canada China Business Council, an organization founded by Paul Desmarais Sr. André Desmarais and Mr. Chrétien were greeted by Mr. Bo like old friends.

In photos still posted on the website of the Chongqing government, Mr. Bo is smiling widely as he clasps hands with Mr. Chrétien and Mr. Desmarais. However, the same pictures, and all mention of the visit to Chongqing, have been belatedly scrubbed from the website of the Canada-China Business Council.

Observers say it is clear Mr. Bo’s trial was less about taking bribes or meddling with the investigation into the death of Mr. Heywood – whose murder earned his wife, Gu Kailai, a suspended death sentence – and more about a consolidation of power by China’s new President, Xi Jinping, as he asserts leadership over the country.

“The denial of Bo’s appeal serves notice to both sides of the political spectrum in China,” said Russell Leigh Moses, dean of the Beijing Center for Chinese Studies. To those on the left, “their cause needs to be larger than just one man. And to those who want reform, it holds out the hope that changes in the system will continue to proceed in an orderly fashion, but driven from the top – with the law firmly in the hands of the Communist Party.”

The case against Mr. Bo centred heavily on the villa on Boulevard des Pins, though only a rusting metal sign on the door reading, “Residences Fontaine St. Georges” provides any hint of the mystery surrounding the place, which also has a Canadian connection.

Residences Fontaine St. Georges was managed for several years by Mr. Heywood, the man whose murder at the hands of Mr. Bo’s wife, Ms. Gu, set in motion the entire scandal.

At Mr. Bo’s initial trial on charges of abuse of power, billionaire Xu Ming, who is also in custody, testified that he purchased the villa via intermediary companies and gave it to Ms. Gu with Mr. Bo’s knowledge. The transaction was central to the most serious charge that Mr. Bo was convicted of: corruption. In dismissing his appeal Friday, the Shandong Provincial Higher People’s Court referred again to the “complicated plan” to buy the $3.5-million villa via middlemen while putting it under the “real control and ownership” of Ms. Gu.

Part of that plan involved Investissements Custodian, a tiny firm controlled by Jean-Marie and Joanne Bergman of Montreal.

French records show that Investissements Custodian established Residences Fontaine St. Georges in 2001 for the specific purpose of managing the 4,000-square-metre Cannes villa. Investissements Custodian held shares in the villa until 2006, when its shares were transferred to Russel International Resorts, a company Chinese courts found was controlled by Ms. Gu.

Mr. and Ms. Bergman have said little about how their company ended up as part of China’s trial of the decade. Ms. Bergman told an interviewer this summer that they held shares of the villa in trust after being approached by what she called a “reputable intermediary” that she refused to name. She said they never knew who the real owner of the villa was.

In an e-mail exchange with The Globe and Mail this week, Ms. Bergman declined to explain how her company ended up purchasing property on behalf of Mr. Bo’s family. ”We have nothing further to help you in your research,” she wrote.

Even if Mr. Bo himself vanishes from view – a prospect that is not at all clear, given the strong likelihood his sentence will be reduced for medical or other reasons – there may be reason for the ruling elite to fear the shadow he leaves behind, Mr. Moses warned. “We should not ignore the possibility that the end of Bo’s legal options could be the beginning of him being seen as a martyr to those who are dismayed at the inequalities they see as still dominant in China,” he said.

Indeed, some of China’s legal leaders noted that Mr. Bo should have been afforded the chance to make his case publicly at appeal. But his provocative defence at his first trial made official China “very embarrassed,” said human rights lawyer Li Fangping. He was subsequently muted so he could not “take advantage of the chance to win back influence and gain more support, which would run counter to [Communist Party] expectations.”

Pu Zhiqiang, another prominent civil rights lawyer, added: “Anyone who says Bo’s case was tried independently knows nothing about China.”

Still, Mr. Bo’s own fate is unlikely to be one of pain and suffering. His sentence is likely to be served at Qincheng, a secretive prison for the political elite north of Beijing. In an interview with the South China Morning Post, it was likened to a “five-star hotel” by Bao Tong, a former policy secretary who served seven years there after standing against the 1989 Tiananmen Square crackdown. Beijing media have described conditions at Qincheng that include luxuries rarely afforded inmates, such as milk at breakfast, regular freedom to walk the grounds alone and the ability to wear clothing provided by family.

Mr. Bo serving time there also has a discomfiting historical ring to it. It’s the same prison where his father was sent for a time during the Cultural Revolution.

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