‘Red Roulette’ by Desmond Shum exposes the hidden fortunes of China’s red aristocrats – The Australian Financial Review

While he presumed she had been detained, there was never a trial, and he did not know whether she was dead or alive. That was until his phone rang on Saturday, September 4, just days before Red Roulette was due to hit the shelves. His ex-wife was on the line.

Whitney told me that shes on temporary release and could be redetained at any time. She asked me to cancel the books publication, Shum, 52, says in an interview with The Australian Financial Review from his home in Oxford, England.

It was a ridiculous request which could only be dreamed up by some bureaucrat in Beijing, where they can disappear a book off all the shelves in China overnight. But this is the rest of the world. The book was already on the way to the bookstores, contracts have been signed. I cant disappear the book even if I wish to.

With US and British newspapers already previewing the book, Shum says the authorities in China were desperate to kill off the story they did not want told. He believes Duan was calling him under duress to pass on a threat. In some respects it was a breakthrough. He knows she is still alive and his 12-year-old son, Ariston, spoke to his mother for the first time in four years.

Duan and Shum in Switzerland in 2004. Shum says the photo was taken while they were on a trip with Auntie Zhang.

Duans reappearance is another twist in Shums story which, if true, confirms suspicions about the lengths to which the Chinese leadership will go to cover up information about the privileges available to those in power. It comes at a politically sensitive time for Xi, who last month spoke out against wealth inequality and is stepping up a crackdown on the private sector.

A journalist said to me recently you will be a marked man for the CCP [Chinese Communist Party] for the rest of your life. I knew that when I made the decision to publish but when someone says it to your face, it still sends a chill down your spine, Shum says.

I was resigned to the fact that I was signing my life away. I dusted off my will to make sure things are in order. I perceived what my ex said on the phone as threats, so I notified the UK police.

While there is no way to verify much of what Shum has written, his memoir is being taken seriously by seasoned China watchers. His ex-wifes links with Zhang were the subject of an explosive New York Times investigation in 2012 which showed Wens relatives controlled assets worth at least $US2.7 billion ($3.7 billion).

A key moment in Red Roulette is his account of a dinner at Beijings Grand Hyatt Hotel in 2002, when Duan introduces him to Auntie Zhang a well-connected diamond trader in her own right, who was married to one of the most powerful men in the country.

Shum, who moved to Beijing in 1997 and had only met the charismatic Duan a year earlier, writes affectionately about his ex-wifes ability to insinuate herself into the world of the elite. In the book, he compares it to a Chinese soap opera about ladies-in-waiting vying for the attention of an empress in an ancient imperial court. My encounter with Aunty Zhang in the Grand Hyatt at the beginning changed everything for me, Shum tells me.

From that moment on, the doors opened.

Shum writes about the ministers, vice-ministers and the heads of powerful state-owned enterprises who flocked nightly to the private dining rooms they set up discreetly in the top floor of a Beijing hotel. Officials were wooed with private lunches where the fish maw soup would cost $US1000 ($1400) a pop, or a $US10,000 set of golf clubs or a $US15,000 watch. The couple travelled on private jets with members of the so-called red aristocracy, including the son-in-law of a top official who told Shum he had not completed his business training in China until he had spent time in prison.

The couple also spent lavishly on themselves. He writes that Duan spent $US200,000 on a special car licence plate for her Audi which exempted the driver from regular Beijing traffic rules. They enjoyed luxury holidays with Zhang, including one trip to the Australian outback, although Shum says they never did any business in Australia.

While Duan made her name setting up the investment vehicle for the Wen familys investment in insurance giant Ping An, Shum says their biggest deal was the countrys largest air cargo logistics hub attached to Beijings international airport. Shum writes that it took 150 different chops Chinese seals that act as a form of signature from officials within seven different government ministries to get the project approved.

My employees waited for months trying to curry favour with officials, bringing them fine teas, doing their errands, taking them to saunas, looking after their wives and kids. One of my employees accompanied so many people to so many bathhouses that his skin started peeling off, he writes. To seal the deal, he was only allowed to build the project after agreeing to include tennis courts, a gym, karaoke bar, theatre and other facilities worth $US50 million in the new customs building.

Under their arrangement, Zhang would get 30 per cent of any profits from their joint enterprises and they and any other partners would share the remaining 70 per cent, he writes. In theory, the Wens were responsible for putting up 30 per cent of the capital as well, but they rarely did, he adds.

Red Roulette depicts Wen as a workaholic who was oblivious to his wifes business dealings, an account that contradicts US State Department documents released by WikiLeaks that suggested he was not happy she used their relationship to build her diamond-trading empire.

Despite Xis anti-corruption crackdown when he came into power in 2012, Shum says the relatives of Chinas Party elite are still shielded.

It is baked into the system. Seven busloads of top princelings came to the 100th [Communist Party] anniversary party [in July] and joined Xi in Tiananmen Square. The only reason they were there was because of their bloodline. They are not even contributing citizens, but they are still the real powerbrokers, he tells me.

While he is now critical of a system he and Duan made a fortune exploiting, Shum says he is not ashamed of anything they did.

We were careful, and we never actually did hard-cash-on-the-table corruption. We did do influence peddling for sure, he says. He goes on to explain he was just trying to succeed in a system that many believed at the time was making China a better place.

Red Roulette: An Insiders Story of Wealth, Power, Corruption and Vengeance in Todays China (Simon & Schuster) was released this month.

The entire world, myself included, looked at China and thought whatever they are doing is making things better. They are becoming more free, they are becoming more prosperous. Press freedom is loosening up. People have more liberties. We are all contributing to that.

Shums view has since changed. Already angry about Duans detention and the direction China was heading under Xi, Shum says the final straw was the 2019 protests in Hong Kong, which prompted a security crackdown by the Chinese authorities on the city where he was raised. That prompted him to take a book he initially started writing for his son to the publishing houses in New York.

In June 2019, I flew back to Hong Kong to be in the protests. I was a couple of hundred metres from the tear gas at the frontline. I saw the police brutality. I thought maybe I can do something with my book.

He is not be surprised by Xis latest crackdown on Chinas technology giants and billionaires such as Jack Ma, saying the state started taking back control of the private sector as early as 2008 during the global financial crisis. This merely accelerated under Xi.

Shum says he and Duan had dinner with Xi and his wife, Peng Liyuan, in 2008 but he was not impressed. Xi, who was pegged as a potential successor to then president Hu Jintao, let his wife do all the talking that night. But he says Duans charms did not work on Peng. The couple were already too powerful, too guarded.

Shum, who says he is now retired and focusing on his son, concludes the interview by congratulating the Australian government on pushing back against Chinas economic coercion.

He paints a hawkish picture of a country where he spent most of his life but to which he can never return. I ask if he ever expects to see Duan again.

They may let her out of the dark cell while the spotlight is on her, but I dont think they will ever let her out of the country.

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'Red Roulette' by Desmond Shum exposes the hidden fortunes of China's red aristocrats - The Australian Financial Review