Why is Bank of China involved in so many dubious activities? After the 1949 revolution, the bank became the financial window for the People’s Republic. Last decade, it formally gave up that specialized role but has remained the country’s main foreign exchange bank. This decade, Bank of China has sold large strategic stakes to foreign banking institutions and shares to the investing public, but the Chinese government still controls its operations. If Beijing deals with a rogue leader or terrorist somewhere in the world, it most always funnels cash through Bank of China, which has operations in about thirty nations. The central government may say that it does not control the bank, but in reality it does.
And that brings us back to the Los Angeles case. “Most of the banks of the world are not doing business with terrorist organizations,” says Federico Castelan Sayre, a lawyer for the plaintiffs in Zahavi vs. Bank of China. Yet referring to Bank of China, he said, “They chose to do so willingly.” Perhaps it is more precise to say that the Chinese government chooses to do business with terrorist organizations and that the country uses Bank of China to implement its reprehensible tactics.
Washington declined to sanction that bank when it was dismantling North Korea’s international banking networks a few years ago. American officials apparently hoped to quietly persuade the bank to rid itself of its Pyongyang connections. It may have done so, but Bank of China appears to have continued with other activities of an even worse nature.
The sensitive Chinese government hates the spotlight on its questionable relationships, and the case in Los Angeles is bound to expose Beijing’s connections to Middle East terrorism. So going after Beijing’s international banker in the California case is essentially an attack on the Chinese government. The stakes, therefore, will be high in California’s Superior Court.