The story is that Bo's factional enemies in Beijing have evidence of his and Wang Lijun's personal corruption as well as their persecution of Falun Gong members when they worked in together in Liaoning Province.
Bo used to be the mayor of Dalian, the capital of Liaoning province. However, because he carried out Zhang Zemin's orders to persecute Falun Gong so effectively, he was rewarded with promotion to province chief. Wang Lijun's reward was to become head of the police. Both men are implicated in a policy of harvesting organs from unwilling Falon Gong donors. Bo has international law-suits against him on this matter, and Wang Lijun has received a scientific award for his supervision of the 'technical' side of harvesting.
Bo's political enemies are not interested in justice though. They just want to use this information to damage his chances for promotion to the Standing Committee.
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But when Bo realised that his enemies wanted to damage his prospects with these revelations, he cut Wang Lijun adrift in order to save his own skin. He demoted him and wrote to the central government apologising for not vetting him and his history carefully enough before inviting him to Chongqing. In response, Wang Lijun threatened to expose Bo's corruption and human rights abuses.
After Wang Lijun learned that his driver and some other staff had been arrested and tortured (one 'suicided'), he feared that Bo intended to assassinate him. This is why he bolted for the US Consulate in Chengdu, taking evidence against Bo with him. He was followed by the mayor and a large posse of police vehicles and armoured cars. The Consulate was surrounded and nearby streets were blocked off.
However, Wang Lijun was unable to get what he wanted; i.e., the safety of political asylum. It appears that the US government did not want this matter to become an international incident just before Xi Jinping's (the putative next president of china) visit to the USA. Neither did it want to be seen to be taking sides in what was regarded as an internal matter.
Instead, the USA contacted the central government and arranged for his arrest by Beijing security personnel rather than the Chongqing police. A safer option for him. Beijing pulled rank, and the Chongqing cordon returned to base. This is how Wang Lijun was able to walk out of the Consulate "of his own volition''.
Bo has since resigned as Party Secretary of Chongqing (his replacement is Zhou Qiang) and is now in Beijing. Wang Lijun's revelations have wounded him, and he appears to be out of the running for a place in the Standing Committee (he has been offered a lower status post).
But he will never be charged with corruption because there is an unspoken rule that corruption investigations should never touch this level of power. The leadership group is above the law, such as it is.
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The law is something to be manipulated for your own ends. For example; in 1998, Chen Xitong, the former mayor of Beijing, was jailed, putatively for corruption but actually because Jiang Zemin's faction wanted him out of the way. In 2008, Shanghai's Mayor Chen Liangyu was jailed, ostensibly for corruption, but really because Hu Jintao wanted to weaken the Jiang Zemin's faction.
Nevertheless, Bo's career prospects remain open. One source says that as a result of his Chongqing investigation into corruption, Bo has damaging evidence against at least three members of the current Standing Committee. This gives him a lot of leverage. As everybody here knows, the rot goes all the way up to the top.
If this is true, then Bo is still a major player, regardless of his apparent demotion. We don't know what will happen to Wang Lijun however, because he is lower down the pecking order. Maybe Bo's factional enemies will protect him, or maybe they won't. It is always possible that Wen Qiang's (the corrupt Chongqing police chief) final words to WangLijun before he was executed may come true: "My today is your tomorrow".
Information for this article has been gleaned from local Chongqing people, and overseas Chinese China-watchers. A media ban on this topic remains in place in China.
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