Caixin
Aug 21, 2015 01:00 PM

How General Used His Military Service to Amass Fortune

(Beijing) – More than three years after being placed under investigation, the hammer finally came down on Gu Junshan, the disgraced deputy head of the military's General Logistics Department.

Gu received a suspended death sentence from the top military court for embezzlement, bribery and abuse of power, the official Xinhua News Agency said on August 10. His military rank of lieutenant general was stripped and all his personal property was seized.

A report published by the PLA's news site, 81.cn, cited an official in the military court as saying that Gu was given a lenient sentence, essentially life in prison if he behaves well for two years, because he came forward with information about misdeeds by other people.

Gu's name was removed from the website of the Ministry of National Defense in early 2012, triggering speculation that he was being probed. In August 2013, the investigation was confirmed by an officer in the People's Liberation Army in an interview with state media. On April 1, 2014, military prosecutors officially charged Gu.

The investigation into Gu raised the curtain on a corruption crackdown that has engulfed the military over the past three years. The campaign has brought down more than 40 senior officials, including two former vice chairmen of the Communist Party's Central Military Commission (CMC), Xu Caihou and Guo Boxiong. Gu was a close ally of Xu.

As the Gu's case comes to a close, details about his rise and fall, as well as a massive business network built by Gu and his family, have emerged.

Land Dealings

The inquiry into Gu was triggered by a disputed development project on a plot of land originally owned by the military in Shanghai. The Hong Kong news magazine Phoenix Weekly reported that the parcel involved covered 267 hectares owned by the air force. A source close to the military told Caixin that Gu used his power to sell half of the land to developers for 2.7 billion yuan, and that he got a kickback of 6 percent.

An internal brief from the Central Commission for Discipline Inspection (CCDI) about Gu's case in May 2012 said he controlled dozens of plots of land in the central areas of Beijing, Shanghai, Harbin and other cities. Developers bought cheap land from Gu and paid him 60 percent of their profits from reselling the parcels at higher prices. A source close to Gu said he wanted a further promotion and needed money to build up his network.

People close to the inquiry said Gu owned more than 60 large apartments in the capital and had seven luxury villas put in his brother's name. Gu told investigators that the apartments were kept as gifts to higher military leaders.

During Gu's tenure in the General Logistics Department, which oversees the military's construction projects and land management, the PLA went on something of a construction binge, building and renovating accommodation for serving and retired soldiers. Xinhua reported that from 2003 to 2007, the CMC spent 2.5 billion yuan on improving soldiers' living quarters. Between 2005 and 2007, the logistics department invested another 500 million yuan in the area.

The campaign also involved land sales by the military. Xinhua reported that in 2009 the military made 30 billion yuan by selling property it owned. In 2010, Gu also promoted reforms of military property leasing businesses. In an interview with state media, he said idle property was a huge resource for the military that could provide capital support for training and operations.

Following Gu's downfall, the PLA launched a series of audits and inspections to get to the bottom of the huge investment campaign backed by Gu. According to 81.cn, the PLA set up a special audit team in April 2012 to check retired officials, construction projects, property management, procurement and other matters. In July 2013, the CMC launched inspections on construction projects and property assets.

Phoenix Weekly cited Fan Changlong, a vice chairman of the CMC, as saying that the exact number of properties owned by the military is unclear, and about one-third of military-owned land lacked necessary ownership documents.

In 2015, the CMC halted property leasing business by lower-level military departments. An inspection and rectification campaign will run from June until January next year on military construction and property projects.

The Family Business

An official confiscation of property at one of Gu's houses in his rural hometown in the central province of Henan required four military trucks, which were filled with expensive liquor and a number of gold items, including a boat, wash basin and Mao Zedong statute. About 400 kilograms of gold bars and other items were found in the home.

In Dongbaicang Village, Gu and his siblings also built a compound covering 1.3 hectares of land. It consists of seven villas with their own courtyards. Each is decorated with luxurious furniture.

In downtown Puyang, a city in Henan, the Gu family also owned a residence that locals dubbed the "General's House." One of Gu's brothers once told villagers that the home, designed according to ancient Chinese architecture, cost more than 100 million yuan.

As Gu's career took off, his wife, Zhang Shuyan, rose from a worker in a small pharmaceutical company to political head of the Puyang Public Security Bureau. However, a source close to the matter said she seldom appeared in the bureau.

Gu has four siblings. His youngest brother, Gu Xianjun, was for a decade the village chief of Dongbaicang. Gu Xianjun's tenure in the position coincided with his brother's rise from a mid-level officer in Jinan to the head of the General Logistics Department. During that period, Gu Xianjun handled sales of more than 200 hectares of rural land in the village to developers.

Villagers said they benefited very little from those deals. A former village official said Gu Xianjun ignored other officials when making decision on the sales. He was also involved in property development in Dongbaicang and projects related to the Puyang military zone.

Gu Xianjun also owns a factory that makes military tents and a furniture plant, both of them suppliers to the military. A source close to the factories said the tent maker has never received a business license, and no business registration document can be found with the local government. The two factories closed in 2012.

In November 2007, months after Gu Junshan became head of barracks construction of the General Logistics Department, Gu Xianjun registered Rongjin Construction Investment Co., a property developer. Business registration documents show that the company was held by Gu Xianjun and his wife Xu Min, and had registered capital of 10 million yuan. Rongjin soon became a major developer in Puyang. It invested in a number of luxury apartment and office building projects in the city. These included a 397 million yuan residential complex in 2009 and a 376 million yuan project in 2011.

In 2011, Gu Xianjun paid 100 million yuan to the Puyang government as down payment for a 20 hectare parcel of land on which he planned to build a luxury hotel. But the work never started due to the investigation into Gu Junshan.

Climbing the Ladder

In January 1971, Gu was recruited by the military and was stationed at an air force base in Liuhe County, in the northeastern province of Jilin, to serve under the Shenyang Military Region.

Gu was a mechanic at a military airport. In the eyes of his fellow soldiers, the short, stout Gu was friendly but a weak performer. He was eager to curry the favor of superiors. One of his former supervisors said that "he was good at networking and that was why he could climb to high positions."

Gu's wife is the daughter of the former deputy political commissar of Gu's regiment. The father-in-law helped Gu get transferred to the Puyang military zone to work in a military-affiliated business, a move that gave Gu's career a major boost.

In the late 1980s, the Puyang zone set up a joint venture with Zhongyuan Oil Service Ltd. and Gu was named deputy director. People close to Gu said he used his ties with Zhongyuan Oil to buy cheap steel, timber and oil, and then sell it at high prices to turn a profit. Gu also won support from local military leaders by sending them gifts. In 1993, he was promoted to logistics chief of the military zone.

Gu's career got another boost in 1994 when a senior official from the Jinan Military Region visited Puyang and was impressed by the reception Gu gave him. The next year the official promoted Gu to the production office in Jinan. Over the following years, Gu became the deputy dean of Jinan Army Commander Academy and was sent to study at the National Defense University, training that could lead to future promotions.

In July 2001, Gu was transferred to Beijing as the deputy director of the infrastructure and barracks construction division of the General Logistics Department. Two years later, he became a major general.

Gu's rise through the ranks of the logistics department was smooth. He became the head of the barracks construction division in June 2007 and promoted as deputy chief of the department in 2009. Two years later, he became a lieutenant general. His downfall came about just six months later.

(Rewritten by Han Wei)

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