By Chris Buckley and Benjamin Kang Lim
BEIJING (Reuters) - "We can't keep a lid on this," China's disgraced leader Bo Xilai was reportedly told by his police chief when the murder scandal now engulfing Bo's family first began to unravel.
With a once-in-a-decade leadership handover months away, the Communist Party's elite must be thinking the same thing as they confront the first very public turmoil at the centre of power in more than 20 years.
Revelations about the former Chongqing party chief issued by the government on Tuesday, and above all that his wife Gu Kailai is suspected of murdering British businessman Neil Heywood, have upset China's carefully staged power succession, turning it into a drama that could still claim victims.
"We're all watching a big drama performed by the top level of the party," said Dai Qing, an investigative writer in Beijing and the adoptive daughter of a People's Liberation Army marshal. "Act one is over, and we're waiting to see what happens next."
President Hu Jintao and other leaders now face a quandary - how to prevent rifts among the leaders even as they manoeuvre for possible gain from Bo's dismissal from the Party's Central Committee and its Politburo.
That, and especially how it was handled, has exposed divisions within the ruling elite.
Former officials and other sources close to the leadership said these were often ideological, and overlapped with open feuding between left-wing and liberal groups.
Left-wing supporters of the charismatic Bo defended him as the instigator of a much-needed new and improved path for China. But those pushing for Bo's fall were alarmed by his sweeping crackdown on organized crime, which brought allegations of widespread abuse of power, and by his nostalgia for the songs and culture of Mao Zedong's era.
The differences among the elite carry risks of destabilizing the government just as the Party grapples with mounting pressures on the world's second biggest economy and waning public confidence.
Signaling the concern that the upheaval could spread, an editorial in the People's Daily admonished officials to close ranks before a congress late this year that will bring in a new elite to replace Hu and his team.
Bo was an abrasive politician whose anti-crime campaign and populist vows made other leaders appear as if they were failing to meet the public's basic needs.
Dai said that while leaders will remain united for now, most of them were relieved by his ouster.
But she said broader worries will fester about whether leaders can keep a tight ship while tackling needed economic and political reforms.
"There'll be a smooth 18th Party Congress without Bo Xilai. The central leadership has achieved unity for that," she said.
"But then we have to see act two," she added. "There are certainly still rifts, because each of them (leaders) has his own interests and interest groups to take care of."
The turmoil in the secretive Chinese leadership is the most dramatic since 1989 in the aftermath of the bloody crackdown on democracy protests in Beijing.
A CHALLENGE FOR PROPAGANDA MACHINE
Explaining the gulf between Bo's campaign for clean-living socialist virtues, praised by some central leaders and admired by many ordinary citizens, and the allegations about his family's private conduct will be a challenge for China's propaganda machine.
It will be all the more difficult because Bo is a "princeling", the party's equivalent of royal blood because his father, Bo Yibo, served alongside Mao Zedong before and after the revolution.
Before the government's announcement, officials across the country were briefed about the allegations in a series of internal meetings that aired more detailed and damning allegations, said sources told about the briefings. The sources declined to be named, citing communist party rules.
The allegations focus on events leading from Heywood's death to a confrontation between Bo and his then public security chief Wang Lijun in late January. That prompted Bo to strip Wang of his duties and led Wang to flee to the U.S. consulate in Chengdu, a city about 300 kms (190 miles) from Chongqing.
Even before their clash, Wang's relationship with his long-time patron, Bo, had soured over months into deep distrust, said one source who knows both men.
According to accounts previously reported by Reuters, Wang feared that Bo, keen to preserve his chances for a spot in the next central leadership, would abandon him after central authorities began probing Wang's past, possibly with the aim of uncovering information about Bo.
Wang, apparently seeking to protect himself, gathered information about Bo and Gu, said a separate source. He ordered his men to bug the phones of Chongqing officials and secretly recorded his face-to-face conversations with his boss.
He tried to use the evidence to pressure Bo to support him, but Bo refused. About a week before his flight to Chengdu, Wang confronted Bo with his suspicions about the death of Heywood, a business consultant who was instrumental in Bo's son attending Harrow, an exclusive private school in England.
"Wang told Bo that four officers refused to sign off on a report about the death, because they suspected it was poisoning," said a source who knows Bo and his family, citing accounts from officials about the case.
"We can't keep a lid on this," Wang told Bo, according the source, citing the officials' accounts.
Days later, Bo removed Wang from his role as police chief and, "after Wang Lijun's secretary, driver and the people conducting bugging disappeared, he feared for his life and went to Chengdu," another source said.
Bo, 62, and his wife haven't been seen in public since his removal was announced on March 15 as party chief of Chongqing. At a news conference days before his removal, Bo rejected as "filth" and "nonsense" unspecified allegations about him, his wife, and son, Bo Guagua, who studies at Harvard University.
The Party leadership must now navigate this minefield of accusations and potential criminal charges in the run up to its 18th congress, which ushers in a new generation of leaders.
"For the leadership to be doing this, they must really feel they have no choice," said Kerry Brown, head of the Asia Programme at British think tank Chatham House, referring to Bo's removal.
"It is incredibly potentially risky and divisive, happens at the worst possible time, and really throws a spanner in the whole works."
The leaders have agreed on ridding the roster of Bo, but they are less likely to find accord on how to move ahead, said a Beijing editor with close links to serving and retired officials.
"In handling this incident, there have been tensions over whether to take a gentler or tougher approach (toward Bo), whether to go slower or faster," said the editor, who spoke on condition of anonymity citing restrictions on comments to reporters.
"All sides are committed to stability; nobody wants a public rift over this," said the editor. "But the complications will come if, say, Hu tries to take advantage of this incident to take greater control of selecting successors."
One critic of the government's handling of Bo, a former official who spoke on condition of anonymity, said: "Hu Jintao told everyone not to stir up a fuss, but all this is doing is stirring up a fuss."
In one sign of the Party's unease, a source with ties to top leaders said the Communist Party was considering a proposal to delay the opening of the party congress to "shorten the transition period" between when the new leaders take their party posts and when they take their state posts in March 2013. The source spoke on condition of anonymity.
Vice President Xi Jinping seems virtually certain to succeed Hu as topmost leader, and Vice Premier Li Keqiang's rising profile also indicates he is clear favorite to succeed Wen Jiabao as premier.
But there could strong disagreements as the party decides the rest of the line-up and allocates power among its factions, said Wu Si, chief editor of "Yanhuang Chunqiu" (China Through the Ages), a Beijing magazine that features essays from reformist retired officials.
"The rules for establishing the new array of power at the top have not been settled," said Wu. "The old rules don't apply and the new ones are a work in progress."
(Additional reporting by William Maclean in LONDON; Editing by Don Durfee and Jonathan Thatcher)
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