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Desmond Shum made a fortune in China, investing in Ping An, helping build Beijing’s Airport City Logistics Park and creating a hotel and business complex called the Genesis Beijing. His business partner was his ex-wife, Whitney Duan (aka Duan Weihong), a politically-connected billionaire who disappeared from the streets of Beijing in 2017. I met Shum in October 2012, while I was working on an investigation for The New York Times about the enormous wealth held by relatives of then-Prime Minister Wen Jiabao. At the time, Shum and Duan disputed aspects of my reporting.¹Shum has written in his book that Zhang Beili told him I went to Hong Kong and got a box of documents from associates of Bo Xilai. This is a ridiculous claim. I never got any box of documents from Hong Kong or anywhere else, and no one aided me. Most of my research was based on the government’s corporate records, which I ordered. Anyone could have done it, and I still have all the receipts! But now, Shum has published a remarkable book, Red Roulette, an insider tale about how he and his ex-wife partnered with China’s political elites, including the Wen family. What follows is a lightly edited Q&A.

Q: Let’s start with how you came to write this memoir, this insider tale about business and corruption in China. Why did you decide to tell this story?

A: I made the decision in 2018, largely because [my ex-wife] Whitney Duan had been missing for about a year and my son was getting to an age where he began to ask questions about where his mom was, and to search for things online, all the typical stuff that a kid would do. Also, there were rumors swirling around about it [her unexplained disappearance], so I decided that maybe I should write a story that I could give to my boy and say, “Well, this is how I see it. This is what happened, in my view.” And so this could be a father’s gift to his son. That was the beginning. 

Take us back to 2017, when she disappeared, apparently detained by the Chinese authorities, for what many believed were investigations seeking information into corruption at the highest levels of the Chinese government. You were overseas at the time, and she went missing from her office in Beijing. What did you think happened to her?

She disappeared in September [2017], and I was thinking that when Chinese New Year’s rolls around, maybe we’ll hear something. And then six months passed, and then a year passed, and another Chinese New Year period, and I thought at least I’d hear something. And then I started to realize that maybe there will be no end to it. I also got quite angry because I knew what we had done. And you know what the CCP can do to people. They control the courts and judges and they can charge her with anything and it will stick. I kept asking, “Why do they need to make a person disappear?” It was all very upsetting. 

For four years, remarkably, you got no word about what happened to her, even though the two of you have a young child. There were rumors at various times that she may have died in custody. Did you take those rumors seriously?

No, not really. I mean, I didn’t know what to believe, actually. Anything can happen. Anything was possible. There was a common friend of ours who came to see me in London and this person told me that she’d never come out alive. If she did come out, they’d jab something down her spine and she’d be a vegetable. And that was sort of a shock to me. The person who told me this is well respected. If someone of that stature tells you something like that, you assume it’s a known practice in China. That really disturbed me. 

Obviously, she and you at one time had close ties to the family of Wen Jiabao, who served as premier from 2002 to 2012. As you write in the book, you also had close ties to Sun Zhengcai, who rose to a position on the Politburo and was in line to become premier. After my series on the Wen family wealth, including at least $2.7 billion in assets and the Chinese government’s arrest and conviction of Sun Zhengcai in 2018, many concluded her disappearance was linked to one of these cases. Is that likely why she was taken?

First of all, we’d divorced a few years before [her disappearance]. So I don’t know what was happening in the period [just before she was detained]. There was a gap in my knowledge, so to speak. So I had to guess what might have caused it. So first, I was thinking maybe Xi Jinping is taking her as a political hostage. But then Sun Zhengcai was sentenced and usually after the main character is sentenced, the other associates [or people implicated in a case] will be too, all around the same time. And that didn’t happen. So then I had to come up with another theory but it was all pure guessing.

In any case, you decided to write Red Roulette: An Insider’s Story of Wealth, Power, Corruption, and Vengeance in Today’s China, a powerful tell-all story that describes your life, the life of Whitney Duan (or Duan Weihong), and how you partnered with the country’s political elites to build an enormous fortune, including a stake in Ping An Insurance, one of the world’s biggest financial services firms. No one else who has been involved with China’s political elites has gone public, naming names and describing how the system works. Isn’t this a very risky thing to do?

Well, for almost a year, before moving forward, I consulted with many different people. There was a lot of back and forth. I said yes I want to do it, and they said, “It’s costly to do it.” And some people said, “It’ll be too stupid to do it.” Most people would say, “It will just cost too much personally.” Others said, why not just do a short exposé. And so we went back and forth on the topic. But as time dragged on I started to think it was just so unfair what happened to Whitney. And then there was what was going on in Hong Kong. I grew up in Hong Kong and what happened in Hong Kong just broke my heart, seeing what the [Chinese Communist Party] has been doing to it. And I flew back in June 2019 to join the marches, and then I flew in again to vote in the local council election, which the democrats won by a landslide. And then, I am there and I’m just a couple hundred meters from the front lines and smelling the tear gas, and seeing the news and seeing young people bracing for tear gas and trying to defend their dignity and liberty. And I thought, you know what, that’s very touching. It was a moving reminder of what happened on June 4th, and so it was a touching moment for me. So I said, “Maybe with my book I can tell the world about the [Chinese Communist Party] CCP and what really happened behind the curtain, behind closed doors.” So these two things pushed me to decide to publish the book. Finally, I embarked on it in 2019.

In the book, you describe your life growing up in Shanghai and Hong Kong, studying in the U.S. and returning to do business in China. Then you met Duan Weihong, who goes by Whitney. You write that you had been relatively successful in being a bridge between the east and west, but Whitney introduced you to a very different world. Can you talk about your early foray into business in China and then meeting Whitney?

Back in college, I always wanted to do something with China. I followed the China stories in The Wall Street Journal. I’d go back during summer vacation. My father obviously was on the China train working for Tyson Foods. Their friends were doing business in China. You listen to their stories during weekend gatherings, and such, so I wanted to do something in China, given my language capability and all that. So I figured that was my calling. I worked with ChinaVest and had a great time learning from entrepreneurs and the people around me, but then I moved to Beijing in 1997 and left the company [a few years later]. I decided to leave the company because I felt it was so predictable. The career path and the university at that time was very quick. I had moved to China and became the chief rep in Beijing. I had a service apartment, a club membership, a comfortable situation, but I felt like I was in the private equity business and we used to have a saying, “You’re fighting a war 3,000 miles from the trenches. And the entrepreneurs are the ones who are in the trenches, we are just the knees who are very far back.” I started to feel like I had to be in the trenches. So around July 2000, I decided to quit and do something else. I joined this IT company and they were doing software and short messaging. I had to raise money and make a move into a huge office and started hiring people from Motorola. But things didn’t really work out with the company due to a retrenchment. So that was a down period. I describe that in the book in detail. It raised a lot of self doubt because I had never really had a down patch in my career. So it led to a lot of self reflection, and that was the period when I met Whitney.

You wrote that she could command a room, and it turns out she was also cozying up to the country’s political elites, partnering with them, meeting them, advising them and their families. This was a very different business world, right?

Definitely. She was at the center of the beast. I never knew what that was like. I figured people like that existed but you’re really never close to it. And she was. Whitney was building those relationships at a completely different level. What I and many others were doing was quite superficial; it was like a Westerner going to China and making a few friends and then saying, “I have real close friends who know the deep secrets of the state.” Yeah, right!

At the time, what was your view of the Chinese Communist Party? Did you see Beijing reforming its economy and becoming more open to the outside world? Is that why you bought into being a part of this, and partnering with Whitney?

In the early days, everything was looking up in China. They were joining the WTO, which was fantastic. You buy an asset and sit on it and it will jump by multiples in a few years. There was more freedom. So there was this very sunny side of things. 

Recognizing the kinds of people she was dealing with, including at the time the wife of the the country’s premier, who she introduced you to, and who traveled with you overseas, didn’t this seem risky?

Not in the early days. In those days I had this “wow factor” working on me. Everything was like new. I wrote in the book about how I was transforming myself. I was like a bright eyed kid who goes into a room with wonder. Everything was like, “Wow, so this is how it works.” That’s how you interact with people. It was just so different. There were concerns, but they only came into play later in our relationship. 

In the book, you mention that first dinner with Zhang Beili, the wife of the then Premier Wen Jiabao, whom you called Auntie Zhang. Did you ever meet Wen Jiabao, or other top leaders? It’s clear from the book that Whitney had those relationships, but I wondered whether you were in those meetings with leaders like Wen or Wang Qishan…

Obviously Auntie Zhang, we saw her all the time. It was like she was a close relative. We’d see her at dinner; we’d go on trips with her, so we’d see her even more than a close relative. Wang Qishan I met only a couple of times. And as far as ministers, some we’d see a lot, they were like friends, and others not so often, just occasionally. But yes, she [Whitney] was the relationship builder. She was stitching the network together. 

Have you ever met Wen Jiabao?

Yes, I met Wen Jiabao, but just casually.

In the book, you describe how you and Whitney partnered with the family of a sitting premier, and gave shares of Ping An to the wife of the premier. How common would you say this is, for businesspeople to collaborate, partner or do business with the families of the political elite?

It’s every case, if you want to get too close to a person, it’s every case. They [business elites in China] all do this. They hire princelings [the relatives of Chinese leaders].

So you’d say it’s very common….

No. It’s not even that it’s common; it’s a necessity.

[W]hat happened in Hong Kong just broke my heart, seeing what the CCP has been doing to it… Seeing the news and seeing young people bracing for tear gas and trying to defend their dignity and liberty… So I said, “Maybe with my book I can tell the world about the CCP and what really happened behind the curtain, behind closed doors.”

One of the symbols of such deal-making was your decision, with Whitney, to acquire a stake in Ping An and share that with the family of the prime minister. You write that Cosco, a state-owned firm, approached Whitney about buying its shares. But a former aide to Ping An’s chairman, Ma Mingzhe, says that Ma invited the premier’s wife to visit Ping An’s headquarters in Shenzhen, before the deal. Is it possible that Ping An executives knew about this deal?

Honestly, he [Ma Mingzhe] welcomed us going in. But he wasn’t the one who initiated it.

Another key player in helping Wen Jiabao’s family get access to Ping An shares, according to my research, is a Hong Kong businessman named Zheng Jianyuan. He shows up in corporate filings alongside the family. What was his role in this transaction, one that netted the family a fortune in Ping An stock?

We found our own financing [for Ping An shares] and Zheng Jianyuan provided financing for the Wens. We didn’t have much interaction with Zheng. But he was related to the same deal. He was providing financing for them. He was the middle man for them to get financing.

And who is he?

He’s related to the New World Group and Cheng Yu-tung. 

There were other major investors in the Ping An deal, and among the earliest investors were Morgan Stanley and Goldman Sachs, along with Zheng Jianyuan and your Great Ocean group, or Taihong, the company Whitney set up and used to aid the Wen family. Would it have been clear to other investors what was really going on with that deal, that two businesspeople were bringing in the family of the prime minister of China in what would be a hot IPO in 2004?

Hindsight is 2020. At the time, nobody noticed this was going to be a 10X investment [an investment that increases in value tenfold]. Everybody was just like, it’s a safe bet. You had a major shareholder like Goldman sell their stake. In fact, if you look back at that period one of the hottest industries was the trust industry, but then everyone went bust. So it’s not like these deals were all money printing machines. At the time we invested there was still a lot of debate, so we were thinking: should we invest or not? It wasn’t a sure thing.

Can you tell us a little about the mechanics of the elite families getting into these deals. Do you pay them in shares, onshore or offshore? Do they get paid in cash?

A lot of the time, they got shares. That’s where the big money was, right? You reported on Wen Ruchun [the daughter of Wen Jiabao] getting paid to broker investment banking deals. But that was small in comparison. 

In general, not specifically about the Wen family, but was it that the families of political elites approached businesspeople seeking deals or were the businesspeople pursuing the families? 

Oh, it was always the companies. You know all these families have agents, or trusted lieutenants, so to speak. And these trusted lieutenants want to make money for themselves too. For some families it’s the chauffeur who is the trusted agent, for others it’s a lover or a friend. There are many different ways they can do it. And the companies are meeting with all these agents.

As we know with the premier’s daughter, Wen Ruchun, she had an alias in doing her consulting deal with JP Morgan. She was using the alias while studying in the U.S.: Lily Chang. Do the relatives of China’s political elite get paid in their name or through so-called “white gloves,” or people who put shares in their own name, to disguise the payments?

 They never hold things in their own name; it’s always a relative or someone else.

In the book, you say that you do not believe Wen Jiabao was aware of these dealings with his family. Many people find that hard to believe. Can you explain why you think that’s the case?

I think a lot of people, especially on the mainland, have this idea that the entire system is corrupt and Wen Jiabao is a great actor, he won the Oscar, right? It’s not the case. The reason I said that, in some cases the politicians would come to a business dinner with their relatives or whoever was doing business with, and say, “Do that for me.” But in our situation, we could never lean on him. Wen Jiabao never came once. Whitney and I sometimes complained about it. Auntie Zhang never had that backing. He never came out and said, “Support these guys.” Auntie Zhang would just drop hints, “These are good business people.” One reason is she doesn’t have the full backing of her husband. So she always dropped hints but she never came out directly and said things. But we do know his secretaries well, and I wrote about that in the book.

Once you’re in the Politburo Standing Committee, you’re beyond reproach. The only ones who have gotten punished have been because of political infighting. 

Why didn’t anything ever happen to Auntie Zhang or Wen Jiabao? If what you say is true, she at least may have violated the law?

He was the premier. Once you’re in the Politburo Standing Committee, you’re beyond reproach. The only ones who have gotten punished have been because of political infighting. 

There’s a startling footnote in the book, in which you write that in 2005, the Chinese Communist Party paid $12 million to each family of a national leader. I’ve never heard that. Can you explain?

Actually, it’s a rough estimate of what it costs to take care of some of the retired families in a given year, for the house, nannies, bodyguards, drivers, their jets, travel, medical and all that.

Speaking of bodyguards, it is startling that you are traveling inside China and even overseas with the wife of a sitting premier and she has no security detail. Why?

She never felt the need to have bodyguards. And one reason she never appeared in public with her husband was because she didn’t want her face to be known, so she can have all this freedom to roam around. 

In going through the records of the Ping An deal, and others, I noticed that between the key company and the relatives of the premier, there were often five or six or seven layers of shell companies, many of them seemingly just with no operating structure, just perhaps making it difficult to see the ultimate beneficial shareholder. Why is that? Why so many investment vehicles to hold what would appear to be a secret stake in Ping An or another firm?

Several reasons. One obvious one is to shield the identity. But a lot of these also have to do with taxes. Sometimes you’re moving a company around to different regions that have different tax schemes or special treaties. So sometimes you’re moving things around to save on taxes. 

In the book, you write about the piece I wrote for the New York Times on the wealth of the prime minister’s relatives. Take us back to that period, in October 2012. What happened after the Times published the story? It’s clear, neither you nor your ex-wife, Whitney, were approached by investigators. No anti-corruption investigators showed up at your door. Is that right? And what was the reaction of the Premier?

Of course, it was a big story at the time. Everybody knew about it. And Wen Jiabao was extremely upset. He was talking about divorce, and talking about going to a monastery after retirement, and all that. He’s a person who cares about his reputation. And so when it got out there he was really, really upset with the family. 

And it was said that in the aftermath, the family returned some of the money back to the state. Is that true?

That’s what I heard.

Is there any truth that Xi Jinping may have saved Wen Jiabao, or protected him?

I mean, it was just a political decision at the top level. It’s not about him [Wen Jiabao], right? There was a Bloomberg article about the family of Xi Jinping, and the New York Times article. So they saw that as an attack on the establishment and just closed ranks.

Finally, can you talk about the call you got on the eve on publication, that weekend? You wrote this book dedicating it to your ex wife, Whitney Duan. You had not heard from her in four years, almost to the day of her disappearance. You believed she was being held by the state but could not be sure. And then, just days before publication, Whitney calls you. Tell us what happened?

What happened was, I woke up Sunday morning. I woke up very, very early. On Friday, a story about my book came out in the Financial Times and the Wall Street Journal. And I wake up at like 5:30 am. My phone is off at night, while I’m asleep. I turned it off. And when I turned it on my cousin and my mom left me a message saying Whitney called them during the middle of the night. And she sounds OK. She’s reachable. She asked me to call her back. So I called her back, like 6 o’clock in the morning. I’m sure somebody was sitting across for her. We all know that for sure. She keeps telling me that’s not true, but come on, her life has been like death for four years. And then you come out and say all of a sudden you’re back and you can call anyone in the world? That’s not China. So we talked and I think she spent about 10 minutes with our son and then she talked to me separately and so we had a discussion.

 What was that discussion like?

Most of the discussion was about her asking us to stop publication [of the book].

And the reason she said that was this could be dangerous for you?

No. She asked one of those rhetorical questions: “What would happen to our son if something happened to you?” It’s the kind of rhetorical question where the answer is too obvious, right?

Were there other calls?

A second one where she said, “So if you’re not stopping the launch can you at least delay the launch?” And then she said, “Don’t slam the motherland. Don’t slam the party.” You know all those CCP slogans. And then she left me a message with more party slogans. 

How are you feeling post publication? I’m sure it was a difficult book to write, but you said to me that one of the things you wanted out of this is to find her, to hear from her and to know what happened. Now, at least you know where she is and you’ve talked with her, and your son has too…

Yes, in a sense, it’s a step forward. At least we know she’s alive, and relatively free. I don’t know how free she actually is but she’s reachable. My son just called her yesterday, again. I want to make sure my son gets to talk to his mom at least once a week. So she’s reachable. So all that is happening is a step forward. But it’s also difficult for me and her to communicate, because I don’t know if what she’s saying is something that somebody is telling her to say. Or is this something she believes. I don’t know. There’s no way we can talk if all she’s giving me are slogans. Or she’s not because she wants to praise the handler listening on the line. And so I don’t know, you know, which one is rich, so it’s impossible to communicate. So I’m trying to avoid some things, and just have her talk to our son. They can talk about how he’s doing in school and those kinds of things. 

I hate to ask such a question, but given what you’ve described in the book, do you feel safe?

If you do this to the CCP I don’t think anybody would feel safe. But now, it’s out of my control.

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