China's graft-busters hit more SOEs

Wang Qishan (2nd R), a member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee and secretary of the CPC Central Commission for Discipline Inspection, addresses a conference on the work of central-level Party inspection in Beijing, China, Feb. 11, 2015. (Xinhua/Ma Zhancheng)

The first round of disciplinary inspection in 2015 will cover 26 centrally-administered state-owned enterprises (SOEs), China's chief graft-buster said on Wednesday.

They will include the National Nuclear Corporation, National Petroleum Corporation, Huaneng Group, State Grid Corporation and China Mobile, said Wang Qishan, secretary of the Communist Party of China's (CPC) Central Commission for Discipline Inspection (CCDI).

SOEs have played an important role in China's public ownership economy and made great contributions to economic and social development, Wang said. However, problems have been uncovered in the administration of many SOEs through inspection, audits and petitions, Wang added.

Some CPC committees at SOEs failed to run the Party properly and some officials disobeyed the law to seek promotion via bribery. Problems have also been found in cadre selection, selling and buying positions and forming of cliques, Wang said.

Some officials of the SOEs abused their power, broke procurement and bidding rules, sought benefits for their offspring and ignored the anti-graft "eight point" regulation.

"All these problems show poor awareness of the CPC spirit and responsibilities," Wang added.

Inspectors have been told to find new ways to check up on key people, and key issues, spotting problems of universal significance in conduct, personnel selection and appointments, not just corruption.

NO STONE UNTURNED

The first round will take 13 teams, each covering two SOEs. The number of enterprises under scrutiny is almost double those of previous tours.

All major SOEs will be inspected this year as a precursor to SOE reform. Previous inspections led to the fall of over 70 executives in 2014.

Executives of energy company Shenhua Group were found to have accepted bribes. China Unicom's chief "colluded with contractors and suppliers, using their power to seek money or sex".

WEEDING IT OUT

Inspections will begin immediately after Spring Festival.

In the past two years, the inspectors have visited all of China's provinces, regions and municipalities. Previous inspections revealed power-money deals between Party and government officials and heads of SOEs. If the corruption is not weeded out in these enterprises, it will be next to impossible to stop in Party and government circles, according to Xin Ming of the Party School of the CPC Central Committee.

"The key to the campaign lies in whether the ties between SOEs and officialdom can be severed and whether graft-busters are brave enough to hit the special interest groups," said Zhuang Deshui, head of clean government research at Peking University.

REAP AND SOW

Cleaning up SOEs must be good for the enterprises as China copes with slower growth. Corruption and abuses of power raise operating costs, impair the openness of the market, cause huge losses, and hamper development of the firms.

Buying and selling of official posts, entertaining at public expense, and various forms of nepotism were all discovered in the Huadian Corporation, Dongfeng Motor Corporation and other enterprises.

Ren Jianming of Beihang University, describes SOEs as de facto ATMs for corrupt officials with the most adverse of effects not just on the businesses themselves, but on society as a whole.

Apart from corruption, this round will also touch on the problem of how to stop state-owned assets from losing value. Zhuang blames many of these big losses on expansion overseas, which is difficult to police.