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SOE execs under graft scanner
By Xie Yu and Xin Zhiming (China Daily)
Updated: 2010-01-08 07:52
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Appointment system blamed for failure to check abuse of power
The country's top anti-graft watchdog pledged yesterday to target corrupt executives of State-owned enterprises (SOEs) after dozens were netted last year.
"We will push ahead with investigations and try to curb corruption in SOEs in restructuring, mergers and acquisitions, property transactions and construction projects," Vice-Minister of Supervision Qu Wanxiang told a press conference.
The watchdog will particularly focus on cases involving executives and those in senior positions, said Qu, also a Standing Committee member of the Central Commission for Discipline Inspection (CCDI), the Party's anti-corruption organization.
Bribery and the illegal practice of setting up "small coffers" - keeping fund inflows off account books - will be severely dealt with, he said.
Qu sounded the warning when asked to comment on ministerial-level SOE executives, who were convicted or investigated last year for taking bribery or other crimes.
Kang Rixin, former general manager of China National Nuclear Corporation (CNNC), has been under investigation for alleged grave discipline violations since August.
Chen Tonghai, former chairman of oil giant Sinopec, was sentenced to death, with a two-year reprieve, in July last year for taking almost 200 million yuan ($29.4 million) in bribes.
Zhang Chunjiang, former vice-chairman of China Mobile, is alleged to have falsified accounts involving 20 billion yuan.
Over the past three decades, the government has been trying to introduce modern corporate management in SOEs, but has faced problems with a lack of adequate supervision over managers.
Lin Yueqin, an economist at the Chinese Academy of Social Sciences, told China Daily that the rising corruption cases among SOE executives "stem from the current appointment system".
Executives of SOEs, especially in monopoly industries, are mostly appointed by the central authorities, he said.
A large number of SOE executives used to hold positions in the Party or government before being appointed. "Given their background, these executives tend to abuse power because even the board cannot check their authority," he said.
Media reports have said that Chen Tonghai once approved a 200-million-yuan investment after just 40 minutes of talks with a company.
"I am not exaggerating, you see the loss of 20 billion yuan caused by Zhang Chunjiang. They are selling the nation," Lin said.
Officials from the State-owned Assets Supervision and Administration Commission (SASAC), the authority in charge of SOEs, also echoed Lin's opinion.
"It is complicated we cannot effectively supervise some bosses of major SOEs as they are directly appointed and managed by the central authorities," a SASAC official, who did not want to be named, told China Daily.
But he stressed that SASAC is trying to tackle the problem by giving a bigger say to members of the board in companies chosen in a pilot program.
"Bosses in these companies cannot make major decisions without the board's nod, and the majority of the board members are hired by the SASAC from outside the company," he said.
It is also important to push ahead with information disclosure and transparency of the SOEs, Lin said.
A report by Faren Magazine, overseen by the Ministry of Justice, reported 31 SOE executives were found to be involved in criminal cases last year, involving an average of 110 million yuan.
