SOE inspections uncover more graft, accelerating reform

China's anti-corruption watchdog has revealed graft found in its latest inspections of State-owned enterprises (SOEs), a campaign which many hope will inspire SOE reform.

The Communist Party of China's (CPC) Central Commission for Discipline Inspection (CCDI) on Thursday started to make public the results of its third round of inspections in 2014, targeting major SOEs.

Issues they found include leaders of energy company Shenhua Group accepting bribes in the coal trade and officials with China Unicom "colluding with contractors or suppliers, using their power to seek money or sex".

Other issues including buying and selling of official positions, wining and dining at public expense, and helping relatives open businesses and obtain illegal profits were discovered in China Huadian Corporation, Dongfeng Motor Corporation and other enterprises.

For the first time, the CCDI's website posted pictures of the inspection teams notifying heads of the firms of the results. The pictures mainly show several inspectors on one side of a table and an enterprise's chief on the other.

The fifth plenary session of the 18th CCDI, which concluded on Jan 14, set the task of inspecting all major SOEs this year, making combating corruption in SOEs one of the priorities for 2015.

Previous inspections over the past two years covered 14 major SEOs, which led to the fall of over 70 SOE executives in 2014.

In fact, investigations into officials implicated in the latest round of inspections had begun way before the inspections' results were made public. As of Jan 7, 12 officials in five companies were being probed for suspected "serious law and discipline violations" or "duty-related crime", euphemisms for corruption.

The list included Hua Zeqiao, former vice-president of China Shenhua Energy Company; Ren Yong, assistant general manager of Dongfeng Motor Corporation; and China Southern Airlines's vice-general managers Chen Gang, Xu Jiebo and Zhou Yuehai.

An official with the CCDI said that the amount of corruption detected among SOE executives during inspection has showed how rampant the problem is and the urgency of the drive against it.

Ren Jianming, a professor with the Public Administration School of Beihang University, said some SOEs have been controlled by corrupt officials as a tool to make illegal gains.

Liu Junhai, a professor at Renmin University of China Law School, said China is strengthening the anti-corruption campaign concerning SOEs in a bid to accelerate SOE reform, which has been progressing slowly.

Some officials and executives of SOEs, which monopolize power to allocate public resources, are taking all possible means to hold onto their power and resisting the set-up of a market-oriented system, he said.

Corruption and abuse of power in SOEs have raised operating costs, impaired the openness of the market, caused huge loss of state assets, and hampered development of the firms.

Gao Bo, deputy secretary-general of the Clean Government Studies Center under the Chinese Academy of Social Sciences, said the anti-corruption drive targeting SOE officials will help push forward China's ongoing broader overhaul of these companies and the economy.

This is particularly important as China is coping with the "New Normal" of slower economic growth, he said.