breadcrumb

How a PLA General Built a Web of Corruption to Amass a Fortune

Gu Junshan Rose Up the Ranks With Bribery and Fabricated Revolutionary Credentials

More than twenty policemen lined up at the gate of a massive mansion in a village in the central province of Henan at midnight on January 12, 2013, loading heavy crates onto two military trucks.

Hours later—loaded with twenty crates of expensive liquor and a number of gold items, including a boat, wash basin, and Mao Zedong statute—the trucks disappeared. Behind them was the now empty mansion owned by Gu Junshan, Deputy Head of the People’s Liberation Army General Logistics Department, who once held the rank of lieutenant general. He had been detained a year earlier.

The official confiscation of property from the families of Gu and his brother took two nights. Officers from the People’s Armed Police and members of the military prosecutor’s office did it at night to avoid attracting attention. It yielded four truckloads of items.

The raid of a property owned by another brother of Gu, who was the Chief of the Dongbaicang Village, apparently came too late. It found only empty liquor crates. The younger Gu went into hiding and was arrested seven months later.

No official statement about the investigation into Gu has been released. In early 2012, Gu’s name disappeared from the PLA’s website. Despite media speculation that Gu was being investigated, there was no official confirmation until August 2013, when a PLA officer and military professor, Gong Fangbin, mentioned Gu’s case in an interview with the online forum of a state media outlet.

Gong said that “Gu and his predecessor’s cases made citizens unsatisfied.” The predecessor was Wang Shouye, a former military logistics official who later became a deputy commander in the PLA Navy. Wang received a suspended death sentence in 2006 for taking bribes worth 160 million yuan and keeping mistresses.

Despite the secrecy surrounding Gu’s case, details of his extravagance, the massive scope of corruption, and his fast rise to power have emerged. Gu left behind a slew of properties from Henan to Beijing—and the story of a reckless grab for power and money.

A Networker

Puyang, a city in Henan Province, saw a large number of military investigators arrive from Beijing in early 2012. The team soon expanded to include members from the Communist Party’s Central Discipline Inspection Commission and the country’s top prosecutor’s office. The probe also grew to cover more than ten charges.

Investigators found a massive web of businesses woven by Gu and his family, and a heavily edited family and personal history to add legitimacy to his rapid rise in military rank. Gu’s rise from a humble beginning was dotted by many calculated moves.

Gu, born in 1956 to a rural family in Dongbaicang Village in Puyang, has five brothers and sisters. He joined the military at age seventeen.

The short, stout Gu was sent to the northeastern city of Jilin, where he joined the ground team for the military airport. Many of his fellow military newcomers did not like him, thinking he tended to spend more time currying the favor of superiors than doing his job. In peer reviews, Gu was often rated “bad.”

But his attention was focused on higher-ups. A fellow soldier said that as soon as a military official was sent to be the political instructor of the regiment, Gu became a frequent visitor, often bringing gifts. The instructor later became a division commander and helped promote Gu, the source said.

Gu also spent time courting the daughter of Zhang Longhai, his regiment’s Deputy Political Commissar. Despite strong opposition from Zhang, the daughter, Zhang Shuyan, married Gu. The father-in-law also rose in military rank and became the Deputy Political Commissar of a major military division.

In 1985, the central government decided to reduce the size of the military, and Zhang helped to move Gu, a soldier with lackluster skills, to the military-affiliated industry in his hometown of Puyang. The move was a blessing for Gu.

The Puyang military zone set up several factories and Gu served as Deputy Director for the zone’s business arm. The country was switching from central planning to a market economy, and sources said Gu managed to profit from moving between the controlled and free markets. He bought quota-controlled resources, such as steel, lumber, and oil, from state-owned dealers and sold them for a high price. Backed by the windfall, Gu bought expensive gifts for local military leaders, sources said.  

Jia Qingxian, then head of Zhongyuan Oil Service Ltd., a company that set up a joint venture with the Puyang military zone, said Gu was hardworking and capable. In the joint venture, Zhongyuan provided land, personnel, capital, and sales channels, while Gu was responsible for dealing with government agencies. “That was the whole purpose of having a joint venture with the military,” Jia said.

Gu’s work, much of it done at banquet tables, helped the joint venture thrive. Profits went to Zhongyuan, which sponsored events in the military zone and provided benefits to its employees.

In 1993, Gu was promoted, becoming Deputy Head of Logistics in Puyang. A local military official said he worked day and night, and was very capable at building relations at dinner tables and home visits.

“Even when he visited the home of a leader for the first time, he would come back knowing what they need,” the source said.

Gu got another career boost in 1994. A leader from the Jinan Military Region, one of China’s seven military regions, was visiting Puyang and was received by Gu. He impressed the official and was soon promoted to the production office of Jinan Military Region. A few years later, Gu became the Deputy Dean of Jinan Army Commander Academy and was sent to study at the National Defense University, an indicator of further promotion.

The Land Game

Later, Gu was sent to Beijing to be the Deputy Director of Infrastructure and Barracks Construction in 2001. He was made a Major General, then, six months before his downfall, Gu became a Lieutenant General.

During Gu’s tenure at the barracks construction office, which was also in charge of military-owned land, the PLA was in a construction boom with large-scale building and renovation of accommodation both for serving and retired soldiers. According to Xinhua, the Central Military Commission spent 2.5 billion yuan in the campaign to upgrade accommodation for soldiers, and the General Logistics Department threw in 500 million yuan. More than 90,000 retired military officials received housing from 2003 to 2007. In addition, a nine-year, nationwide plan to upgrade and expand barracks started in 2007.

Part of the campaign involved selling land used by the military. Xinhua reported that in 2009 alone the military made 30 billion yuan by selling land it owned. 

Some parcels were flipped for fat profits. Diaoyutai No.7, a plot next to the Diaoyutai State Guesthouse and a scenic lake in Beijing, was appropriated by the military from a state-owned company in the name of conducting “scientific research.” It was, however, sold to privately held developer Zhonghe Group in 2007 and made into high-end commercial housing in 2011 that sold for 300,000 yuan per square meter. The transaction was completed when Gu was running the barracks department.

A Caixin investigation found Gu owns more than ten flats near the Second Ring Road, the expensive central area of Beijing. All of these flats were in developments on land that used to be owned by the military. Sources said Gu hoarded the flats and wanted to use them as gifts.

Caixin also found out that a land parcel sold for 2 billion yuan in Shanghai for commercial development by the military earned Gu a six percent kickback.

Gu’s earnings were much larger in his hometown, Puyang. Sources said that as a rule developers who bought land with help from the Gu family had to pay him sixty percent of their profits.

“The reason that he took so much money is because many people under him had to be fed,” said a source close to Gu. The source said that Gu also wanted to continue his ascent, meaning he needed to give more expensive gifts to foster ties. Gu felt he had deep ties in the military and did not hide his craving for power, the source said.

Gu Xianjun, Gu’s younger brother and village chief of Dongbaicang, owns one factory making military goods and another producing office furniture. Under his tenure, the village collective sold almost all of its 3,000 mu (200 hectares) of land, some to developers and some for Gu family houses. The brother also set up Rongjin Real Estate Development, the largest developer in Puyang. 

Villagers who lost their land launched many petitions in Beijing. The wife of Gu Junshan, who was also Political Commissar of the Puyang police, was based in the capital and responsible for stopping the petitioners and sending them home.

A Fabricated History

Gu came up a comprehensive—but untrue—story to add legitimacy to his status.

In the busy city center of Puyang is a large park where Gu’s father, Gu Yansheng, is buried. The park is closed to the public and opens only once or twice a year when Gu or officials from the Puyang military zone visit.

However, the park’s gates opened wide in 2012 when Beijing investigators were tracing Gu’s history. The tombstone for Gu Yansheng, who died in 1990, was carved with the title of a Yuhuatai Martyr, a name reserved for revolutionaries killed in a massacre in the eastern city of Nanjing in 1927. 

In May 2011, six months before Gu’s investigation, a book named Memories of Life and Death was published in Shanghai. It told the life story of Zhou Gao—a Communist Party spy who infiltrated the rival Guomindang and was killed in 1949—and Gu Yansheng’s friendship with Zhou. The book told how Gu helped take Zhou’s belongings and diaries to his family.

These diaries do exist and are kept in the Nanjing Yuhuatai Memorial. The writer of the book, Sun Yuehong, is an employee of the memorial. She said the story was based on interviews with Gu Junshan, who said his father told the family the legend in his final days.

Those who worked with Gu in the military in Jilin remember a different story. Gu’s father worked as a security guard for China’s first premier, Zhou Enlai.

The Hometown

In addition to the park, the city of Puyang bears the clear mark of Gu, it’s most prosperous son, in politics, businesses, and a large number of residences. Whenever Puyang had a new Party chief or mayor, Gu would return to meet them, sources said.

The local military zone had a villa set aside for Gu for these homecomings. In 2010, with Gu’s help, the military zone received money from Beijing to build a new hotel. A suite was set aside for Gu, but has not been used.

The Gu family has many businesses in the city. Most of their companies have the character for rong, a reference to protecting the family’s prosperity. Even the road leading to Gu’s mansion in Puyang had its name changed to Rong House Avenue.

The Gu mansion in Dongbaicang covered 20 mu of land. Gu Xianjun, the younger brother, bought the land for it from villagers for 1.2 million yuan in 2009. It contains seven villas for the six Gu brothers and sisters, and one left over for a gift. Each villa has a separate courtyard, surrounded by precious trees from across the country. The rooms are filled with expensive wood furniture.

Also in Puyang is a massive construction dubbed by local residents the “General’s House.”

It was also built on land owned by Dongbaicang Village. From above, the mansion resembles a pistol, and it is basically a traditional Chinese mansion. It was designed by architects from the Forbidden City Design Institute and modeled after the Emperor’s palace in Beijing. Two painters from the Forbidden City were hired to decorate it—at a price of 3,000 yuan per day each. The work took two years and finished in 2011. 

The house has never seen its owner. A villager said that his son was a contractor for the mansion, but a 37,000 yuan fee had not been paid two years after work was completed.

Caixin Media Company Limited is a media group dedicated to providing high-quality and authoritative financial and business news and information. Through periodicals, online content, mobile apps,...

By Caixin staff reporter Wang Heyan. This article was first published by Caixin.

Media

01.21.96

Jackie Chan, American Action Hero?

JAIME WOLF

Whenever Jackie Chan leaves Hong Kong to make a public appearance in Shanghai, Taipei or Tokyo, or in Kuala Lumpur, Singapore or Seoul, hundreds—sometimes thousands—of his fans gather in a frenzy of adoration. Last June, Chan, the martial artist, comic actor and stunt man who...

Sinica Podcast

06.04.10

Suicides, Strikes, and Labor Unrest in China

KAISER KUO, JEREMY GOLDKORN & more

A spate of suicides leaves ten dead at the Shenzhen campus of Foxconn, the giant electronics manufacturer that makes many of the world’s most popular consumer electronics. A rare strike paralyzes production at Honda Motors, shutting down all of the company’s manufacturing...

Sinica Podcast

04.22.11

China’s Second Internet Bubble?

KAISER KUO, JEREMY GOLDKORN & more

Interest in Chinese Internet companies has reached a fever pitch. Fueled by the fact that roughly fifty percent of the companies that went public on NASDAQ last year were Chinese in origin, at least seventeen more high-profile companies are planning foreign IPOs this year. Yet...