SOEs under graft spotlight

Weak supervision and a desire for benefits can prompt senior managers to abuse their power

Lack of supervision and a strong desire for benefits were blamed for rampant graft cases involving senior managers in major State-owned companies, according to the Central Commission for Discipline Inspection.

In early December, inspectors visited eight SOEs, including China Unicom, Shenhua Group, Dongfeng Motor Corp, China State Ship Building Corp and China Huadian Corp, to collect valuable tips involving corrupt officials.

"Some severe corruption issues involving senior managers were found in those five SOEs," according to the CCDI.

At China Unicom, for example, annual investment on 3G services reached 100 billion yuan ($16.1 billion), and the purchase of infrastructure construction equipment has become one of the worst-hit areas for graft.

In addition, some senior managers in the companies abused their powers to arrange for spouses and children to operate businesses, or they gained benefits for other enterprises in exchange for huge bribes including cash, financial securities, precious gifts and overseas trips, according to the CCDI.

"Their strong desire to obtain high benefits and loopholes in supervision of their intense powers have contributed to the high incidence of such graft cases," said Zhu Lijia, a professor at the Chinese Academy of Governance.

The priority is to establish clean government and use the high salaries to attract more talented senior directors rather than using the high salaries to keep their integrity, he said, adding that integrity should be a basic moral code for each civil servant in the country.

Since November 2012, when the new leadership took office, the central government has conducted a sweeping drive to crack down on graft.

According to the CCDI, more than 70 senior managers from SOEs had been investigated on suspicion of corruption last year, 59 percent more than in 2013.

During the latest inspection of SOEs, initiated in December, 14 senior directors were probed on suspicion of graft, included Xue Wandong, former manager of a petroleum engineering technology subsidiary of Sinopec, and Zhang Zhijiang, former deputy director of China Unicom's network unit.

"Most of the suspects in the SOEs took charge of valuable resources, including petroleum, gas, coal and electricity. There was a lack of proper supervision and this created opportunities for misconduct," said Hao Mingjin, vice-minister of supervision.

zhangyan1@chinadaily.com.cn