LONDON—China’s biggest political scandal in decades has embroiled not just the U.S. but increasingly the U.K.

The series of publicly known events culminating in the removal of rising political star Bo Xilai from power appeared to have been triggered by an attempt by Bo’s former police chief to seek asylum in a U.S. consulate in Chengdu back in February.

However, it looks increasingly like it was the death of a British businessman last year that set off the chain of events.  And while it might not lead to any firings in the U.K. government, it certainly appears to have ruffled feathers in London.

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Murder in Chonqging?
Last November, Neil Heywood — a 41-year old Briton who liked to hint at a life of intrigue (his license plate contained the numbers 007) — was found dead last November in his hotel room in the southwestern municipality of Chongqing, which at the time was under Bo’s stewardship.  The cause of death was initially reported as cardiac arrest from overconsumption of alcohol.

Now it looks as though Bo’s ex-crimefighter, Wang Lijun, had evidence suggesting that Bo’s wife, Gu Kailai had engineered Heywood’s death. 

New details on Tuesday about Wang’s frantic 36-hour stay at the U.S. consulate in Chengdu in February suggest he tried to give American diplomats information implicating Gu in Heywood’s death and demonstrating that Bo had tried to prevent an investigation into his wife’s role. 

In a startling revelation, also on Tuesday, sources close to the Chinese investigation told Reuters that Heywood had threatened to expose Gu’s plan to move large sums of money overseas after a dispute over his cut from the transaction.   

Chinese officials began stepping up their inquiry into Heywood’s death after Wang was whisked away by Beijing authorities following his visit to the U.S. consulate.

Scandal sends China's netizens into afeeding frenzy

In Britain, opposition members of Parliament (MPs) have raised questions whether the U.K. government had been too cautious or slow to raise concerns in the case because it did not want to jeopardize commercial prospects in China.

During Tuesday’s Parliament session, Foreign Secretary William Hague presented MPs with a detailed timetable of events surrounding Heywood’s death.

“We have demanded an investigation. The Chinese authorities have agreed to conduct an investigation. There’s been a further discussion of that this afternoon,” he told MPs.  “

Hague said Foreign Office officials first heard in mid-January of rumors circulating amongst British expats in China.

But it wasn’t until a month later — a day after Wang’s ill-fated visit to the U.S. consulate — that officials flagged the case with Hague and other ministers back in London.

British government under heat
Hague’s appearance in Parliament coincided with a visit to 10 Downing Street by one of China’s top ministers, Li Changchun.

Li — the propaganda chief and a member of the all-powerful Communist Party Politburo Standing Committee — held a meeting with British Prime Minister David Cameron, who raised the matter with him.

In an abrupt departure from the earlier muted approach, Cameron has promised to demand more from the Chinese on Heywood’s death, which has become tabloid fodder over here.  Cameron also read the riot act to his intelligence chiefs.

The Foreign Office has declined to comment further on Li’s meeting or the situation regarding Heywood.

The story, in the meantime, continues to rivet the public in Britain and in China.

“I guess it’s just a good story for normal people,” said an overseas Chinese national now living in London who only wanted to be identified as Lucy.  “Murder, high-powered officials, it’s got all the ingredients.”

 

The British businessman whose murder has sparked political upheaval in China was poisoned after he threatened to expose a plan by a Chinese leader's wife to move money abroad, two sources with knowledge of the police investigation said.

It was the first time a specific motive has been revealed for Neil Heywood's murder last November, a death which ended Chinese leader Bo Xilai's hopes of emerging as a top central leader and threw off balance the Communist Party's looming leadership succession.

Bo's wife, Gu Kailai, asked Heywood late last year to move a large sum of money abroad, and she became outraged when he demanded a larger cut of the money than she had expected due to the size of the transaction, the sources said.

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She accused him of being greedy and hatched a plan to kill him after he said he could expose her dealings, one of the sources said, summarizing the police case. Both sources have spoken to investigators in Chongqing, the southwestern Chinese city where Heywood was killed and where Bo had cast himself as a crime-fighting Communist Party leader.

Gu is in police custody on suspicion of committing or arranging Heywood's murder, though no details of the motive or the crime itself have been publicly released, other than a general comment from Chinese state media that he was killed after a financial dispute.

The sources have close ties to Chinese police and said they were given details of the investigation.

Bo ouster shows "ruthless" China politics: ex-U.S. envoy Huntsman

They said Heywood - formerly a close friend of Gu and who had been helping her with her overseas financial dealings - was killed after he threatened to expose what she was doing.

"Heywood told her that if she thought he was being too greedy, then he didn't need to become involved and wouldn't take a penny of the money, but he also said he could also expose it," the first source said.

The sources said police suspect the 41-year-old was poisoned by a drink. They did not know precisely where he died in Chongqing. But they and other sources with access to official information say they believe Heywood was killed at a secluded hilltop retreat, the Nanshan Lijing Holiday Hotel, which is also marketed as the Lucky Holiday Hotel.

The sources said Gu and Heywood, who had lived in China since the early 1990s, shared a long and close personal relationship, but were not romantically involved.

The sources did not know details of the offshore transactions that Heywood facilitated for Gu, but said exposure of the deals would have imperiled her and her ambitious husband, who was campaigning for promotion to the top ranks of China's leadership. Bo has since been ousted over the scandal.

'Jackie Kennedy of China' suspected in death of British businessman

"After Gu Kailai found that Heywood wouldn't agree to go along and was even resisting with threats - that he could expose this money with unknown provenance - then that was a major risk to Gu Kailai and Bo Xilai," said the first source, requesting anonymity due to the sensitivity of the case.

It was not possible to get official confirmation of the case police are building against Gu. The Chinese government did not respond to faxed questions about the case. Some of Bo's leftist supporters have said the case could be a campaign to discredit him.

Gu, who is in custody and facing a possible death sentence for murder, and Bo could not be reached for comment. Bo has not been seen since appearing at parliament in March, when he held a news conference decrying the "filth" being poured on his family.

Efforts to contact Heywood's mother and sister at their homes in London were unsuccessful. The door to the mother's home carried a note saying she would not speak to reporters.

Heywood was Gu's 'soulmate'
Heywood had spent his last week in Chongqing in Nan'an district, an area politically loyal to Bo, and stayed at two hotels: the Nanshan Lijing Holiday Hotel and the Sheraton hotel.

Staff at each hotel said they knew nothing of a British man dying there. A guard was barring access to an apparently empty row of villas within the grounds of the Nanshan Lijing Holiday Hotel on Sunday and Monday, saying a meeting was going on.

Heywood's falling-out with Gu followed a period in which she had grown distant from her ambitious, perpetually busy husband and she had turned to Heywood as a soulmate, sources said.

"Bo and Gu Kailai had not been a proper husband and wife for years ... Gu Kailai and Heywood had a deep personal relationship and she took the break between them deeply to heart," said Wang Kang, a well-connected Chongqing businessman who has learned some details of the case from Chinese officials.

"Her mentality was 'you betrayed me, and so I'll get my revenge'," Wang said in his office, decorated with pictures of himself meeting senior officials, including Bo's late father, the revolutionary veteran Bo Yibo, a comrade of Mao Zedong.

Heywood got to know the powerful family when Bo Xilai was mayor of Dalian in the 1990s. Heywood helped with getting the couple's son, Bo Guagua, into an exclusive British school, Harrow, said one of the sources with police contacts.

The scandal over Heywood's death broke in February when Bo's former police chief, Wang Lijun, fled to a U.S. consulate after he had confronted Bo with allegations of Gu's involvement. He spent about 24 hours inside the consulate before he left into the hands of Chinese central government authorities.

Bo was stripped of all his party positions last week, ending his bid to join the upper echelons of the Chinese leadership at a Party Congress late this year, and opening the door to jockeying among rivals to get a place in the new lineup.

It was not immediately clear how Heywood would have helped Gu shift large sums of money offshore, though China's capital controls pose a formidable barrier to anyone trying to move large sums of yuan out of the country.

Chinese leaders' salaries are not extravagant and there have been questions about how Bo managed to fund the expensive Western schooling and lifestyle for his son, Bo Guagua, who also studied at Oxford university and is enrolled at Harvard. Bo said in March the schools were funded by scholarships.

The sources said there had been no sign of any dispute between Gu and Heywood until October and November when the argument over funds began. The lack of a paper trail made it difficult for police to determine how much money was involved, they added.

Police suspect Heywood took a poisoned drink, according to one of the sources, and died on November 15. Both sources said Gu was not present at the scene.

The sources said Heywood had stayed at the Nanshan Lijing Holiday Hotel, a secluded complex of rooms and villas in green hills overlooking Chongqing that Gu Kailai had visited in the past. Staff there said they had no knowledge of the death of a British man at the hotel in November.

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BEIJING – The political shock waves set off from within a U.S. diplomatic compound by a disgruntled ex-cop in the southwestern city of Chengdu have culminated into what may well be China’s biggest political scandal in years.  

Already removed from a powerful regional post, the controversial but high-flying political star Bo Xilai has been purged from all his positions in China’s ruling hierarchy, and now his wife has been named a murder suspect, according to official announcements.

It was Bo’s former police chief and trusted aide, Wang Lijun, who ultimately led to Bo’s downfall and the criminal detention of his wife for her suspected role in the death of a British businessman. 

In February, Wang was said to have sought asylum in the U.S. consulate in Chengdu, spending roughly 30 hours there. Now in government hands, the former police chief has reportedly turned against his boss, with incriminating evidence of the Bo family’s crimes and corruption.

“No Hollywood movie can match this Chongqing political drama,” observed prominent blogger Michael Anti, referring to the megacity by the Yangtze River, over which Bo held sway for five years.

And coming in the midst of China’s once-in-a decade leadership transition – the nation’s first political succession in the glare of Internet-driven public opinion and perhaps its most challenging ever – the political upheaval has torn away the aura of leadership unity, with sobering implications for China’s future.

 

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To Communist Party, former favored son is ‘dead’
The latest bombshell came on Tuesday when China’s state-run news agency Xinhua reported that Bo’s wife Gu Kailai was detained and is being investigated for her suspected role in the “intentional homicide” of British businessman Neil Heywood – once a close family friend.

 

The other suspect in Heywood’s death is Zhang Xiaojun, who is described as an “orderly” working in Bo’s family home.

An inquiry has been re-opened on the basis of information provided by Wang, the ex-police chief, in connection with Heywood’s death. His death last November was originally blamed on “excessive” alcohol, but now poison is suspected, with a possible motive of economic disputes with the Bo family.

'Jackie Kennedy of China' suspected in death of British businessman 

Bo – a princeling, or son of one of the Communist Party elders, Bo Yibo - gained national fame for his own crackdown on crime and corruption and for his effort to revive a Maoist-era “red culture” movement.  He attempted to use the so-called Chongqing model of development as a jumping board for joining the highest leadership body in the power transition later this year. The Chongqing Model emphasized state-led investment, with development zones, transportation links and incentives to lure business, according to Bloomberg.

“He was bound to fail,” said Professor Hu Xingdou, an analyst and frequent government critic. “He was going against the tide with his Chongqing model that was repeating the methods of the disastrous Cultural Revolution.”

With the announcement of Bo’s wife’s detention, China’s Communist Party seemed to officially disown the former favored son.  

Bo’s conduct has “seriously violated the party’s disciplinary rules, damaging the affairs of the party and the country and badly harming the image of the party and the country,” the People’s Daily, the Communist Party’s flagship newspaper declared Wednesday.

The leaders’ decision over Bo “was signaling that they were able to act very quickly, to make a decision on it and to get it over with as soon as possible because they do not want to derail the actual transition that’s coming later in October this year,” according to Damien Ma, a top China analyst at Eurasia Group, a consulting firm.

Ma dismissed suggestions that Bo’s dismissal reflects any factional fighting within the Communist Party or that it would lead to Tiananmen Square protests-style turmoil. “No, him alone is not going to create another 1989,” he said.

China’s leaders essentially disowned him “very quickly, and that was clearly to show to the rest of the Party that Bo Xilai is dead; do not support him.  It’s telegraphing to his supporters that this is done, we’ve made the decision, let’s move on, I think that’s what the message is,” said Ma.

China’s challenging future
“The decision showed that the top leadership has achieved unity where before there might have been differences of opinion,” concurred Hu.  “And this unity is good for leadership succession and also good for social stability, because now no one will sympathize with Bo.”

The professor also described as “understandable the crackdown on Internet rumors while deliberation was going on, but now that there is leadership unity, it is natural to allow the freedom to comment.”

Moreover, for Hu, the decision also showed the “determination” to fight corruption and crime. “But it was accidental in this case because without the Wang Lijun incident, Bo’s crimes and corruptions might not have been exposed,” he added.

Ma was skeptical about the idea that Bo’s case had anything to larger political reform.

“The Communist Party is trying to institutionalize a lot of the norms and procedures, but at the end of the day, these mass-scale personalized politics happen, and they happen with a lot of fierceness and unpredictability,” he said, referring to the impact of Bo’s case on succession politics.

As for the challenges for China’s next generation of leaders? 

“I would say that, over the next decade, political and social risks in China are actually going to be more challenging and more difficult than the past 30 years combined,” said Ma. “They are facing a lot of issues they’ve never dealt with before, primarily socio-economic inequalities and political issues that are brought out by this enormous economic growth, and they haven’t had time to pause and think about what to do about them.  Frankly, this is a very challenging decade for China internally.”

Social media afire
Not surprisingly, China’s blogosphere spun into a frenzy in the hours before the fate of Bo and his wife was officially announced, culminating in a face-off between netizens and Chinese Internet authorities.

As early as Tuesday afternoon, people forwarded posts that “a very important announcement” would be made on the primetime news program. By the time the news was finally read out on the late evening bulletin at 11 p.m., virtually every post on Weibo, China’s most popular Twitter-like service, was about the fall from grace of Bo and his family.

Meanwhile, a battle between the online “rumor spreaders” and government “rumor cleaners” raged on.  Spokesmen from leading Chinese websites such as Baidu, Sina and Tencent pledged on camera they would do their best to develop and deploy an advanced prevention system—fortified with human monitors 24/7 to prevent the spread of false information.

“We will absolutely prevent Weibo from becoming a hotbed of rumors,” said Chen Tong, the chief editor of Sina.com which hosts of Weibo.

But rumors – especially in China – often spread too quickly to contain.

And, it would appear, sometimes stories that start as rumors end up being true.

Months ago, people were talking about Heywood’s mysterious death and speculating about Bo’s ouster, but the posts always wound up being deleted minutes after being posted.

“While you are trying to refute a rumor, that rumor becomes true. Why bother to refute? Today’s rumor is tomorrow’s truth,” said one user called Yuan Tengfei on his Weibo page.

“You want us to sing red songs, but you are more black than the black society. This is sarcastic,” said another Weibo user called Longcan.  (In Chinese, “black society” means mafia.)

Boxun – an overseas Chinese Website censored in China for its bold reporting on mainland politics – fed sleepless, fascinated Chinese readers with even more dramatic rumors soon after last night’s news.  Boxun’s latest report alleges that Mrs. Bo was involved in multiple murders and that the order for getting rid of Heywood came directly from her husband, because the Englishman knew the family had transferred millions of dollars of assets to foreign countries.  (A common practice among many of China’s wealthy families.) 

Teng Biao, a prominent human rights lawyer, joked on his Twitter page: “I almost want to write a movie script. Mafia, affair, international espionage, guns, murder, trial, princeling, coup. This movie would be a big hit."

Researcher Isabella Zhong contributed to this report. 

 

Updated at 9:45 p.m. ET: The Chinese Communist Party suspended high-flying politician Bo Xilai from its inner circle Tuesday following speculation that he is connected to the murder of a British businessman, China’s news agency Xinhua reported.

In addition, Bo’s wife, Gu Kailai, once a celebrated lawyer, was jailed, as was a Zhang Xiajun, who worked in the family’s home, the Guardian of London reported.

Bo, 62, had been suspended from his position as Communist party boss in Chongqing last month after the city’s former police chief defected to the U.S. Consul and alleged that Bo had ties to the murder.

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The British businessman, Neil Heywood, was found dead in a hotel room in Chongqing on Nov. 15. At the time, police said he died of alcohol poisoning, but doubts were raised later and the U.K. embassy asked Chinese authorities to investigate further, the BBC reported.

The news agency said that Chinese law enforcement determined that Heywood had been killed and that Gu and Heywood had been fighting over unspecified “economic interests.”

Days before he was dismissed, Bo said at a news conference that some people were pouring “filth on my family.” He and his wife later disappeared from public view.

Fall from grace: China leadership contender Bo Xilai sacked

British Foreign Secretary William Hague said Tuesday he welcomed China's announcements on its investigation.

"It is a death that needs to be investigated in its own terms, on its own merits without political considerations," Hague told BBC television.

The decision to banish Bo from the Central Committee and its powerful, 25-member Politburo effectively ends the career of China’s most brash and controversial politician.

Bo and his wife had been called the “Jack and Jackie Kennedy of China,” according to the BBC. The son of a prominent Communist leader, Bo had steadily climbed the party ranks; observers of Chinese politics believed he would have been a contender when the party chooses its top leadership later this year, as it does once a decade.

Gu, an accomplished lawyer who also came from an influential Communist family, closed her law practice as her husband became increasingly powerful. In recent years, her health declined, a family friend told the BBC, and she stayed home to read books.

Ed Byrne, an American lawyer from Denver, Colo., told the BBC that when he knew Gu, she was attractive, charismatic and funny.

“They were the modern liberal element there," Byrne said.

Reuters and NBC News contributed to this report.

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