Thursday, 5 September 2013

China hunts tigers in corruption crackdown

The ultimate test for the ongoing crackdown on corruption by China President Xi Jinping is aptly captured in his own campaign phrase: “Hitting tigers as well as flies.” One year on, what tigers could he catch?

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Guanyu 道 said...

China hunts tigers in corruption crackdown

Aides of former Politburo member in the crosshairs

Shu-Ching Jean Chen in Hong Kong
05 September 2013

The ultimate test for the ongoing crackdown on corruption by China President Xi Jinping is aptly captured in his own campaign phrase: “Hitting tigers as well as flies.” One year on, what tigers could he catch?

After the arrest of Bo Xilai, speculation pointed to a far larger figure behind the scenes. This was Bo’s rumoured accomplice in a failed coup attempt to seize power from Mr Xi: Zhou Yongkang, who served as one of the nine members of the Communist Party’s top leadership, the standing committee of the Politburo.

All issues involving former or current Politburo members are said to be settled internally, and quietly. Eyebrows were thus raised by the arrest on Sept 1 of Mr Zhou’s top corporate lieutenant, Jiang Jiemin, announced in a terse statement on a new website (www.ccdi.gov.cn) which was launched that day jointly by the corruption-busting arms of the Communist Party and the central government: the party’s Central Commission for Discipline Inspection and the Ministry of Supervision.

Mr Zhou not only once presided over China’s entire domestic security and intelligence networks, but also exerts enormous power in his corporate power base, the oil industry.

His grip on China’s oil and gas sector is considered second to none except Zeng Qinghong, a protégé of former president Jiang Zemin and another former Politburo standing committee member. Mr Zhou is also known as a protégé of ex-president Jiang.

Before his arrest, Jiang Jiemin (no relation to the ex-president), had climbed to the pinnacle of China’s state-controlled economic apparatus, having served as head of the powerful State-Owned Assets Supervision and Administration Commission (SASAC).

SASAC is the ultimate owner and caretaker of China’s state-owned enterprises except banks, in charge of the nation’s largest 140-plus state-owned enterprises (SOEs) and various offshoots at the local levels. More than 60 per cent of these state-owned assets are now listed on the stock markets, according to the SASAC website.

Before that, from 2006 until March this year, Jiang was chairman of China’s largest oil group, China National Petroleum Corp (CNPC), parent company of the listed PetroChina - the world’s fifth-largest oil company whose hefty market capitalisation once made it the most valuable company in the world.

Mr Zhou, Jiang’s mentor, also served as chairman of CNPC in the late 1990s.

Following Jiang’s arrest, unnamed managers at state-owned enterprises were quoted as criticising his vainglorious management style as he set unrealistic performance targets for the SOEs to increase their assets by over 8 per cent and profits by over 10 per cent.

The evidence against him, however, may come from his reign at CNPC during which the oil giant undertook an aggressive string of expansion and exploration projects both abroad and at home, including becoming the largest foreign oil company operating in Iraq.

A few days before Jiang’s arrest, four of his former top aides at PetroChina and affiliated Kunlun Energy were caught all of a sudden in an abrupt corruption investigation. Some were prevented from travelling to Hong Kong to present company mid-term financial results published a few days earlier. They included PetroChina’s top geologist and the head of Kunlun Energy.

This week, another oil-related Hong Kong-listed company, Wison Engineering, announced his controlling shareholder Hua Bangsong was asked to assist investigations by “relevant authorities” in China. More might be in the offing.

To see the investigation of Mr Jiang and CNPC over “grave violations of organisational discipline” as targeting the oil-and-gas sector is not the full picture. President Xi’s moves could see him win popularity and public confidence.

Guanyu 道 said...

China hunts tigers in corruption crackdown

Aides of former Politburo member in the crosshairs

Shu-Ching Jean Chen in Hong Kong
05 September 2013

The ultimate test for the ongoing crackdown on corruption by China President Xi Jinping is aptly captured in his own campaign phrase: “Hitting tigers as well as flies.” One year on, what tigers could he catch?

After the arrest of Bo Xilai, speculation pointed to a far larger figure behind the scenes. This was Bo’s rumoured accomplice in a failed coup attempt to seize power from Mr Xi: Zhou Yongkang, who served as one of the nine members of the Communist Party’s top leadership, the standing committee of the Politburo.

All issues involving former or current Politburo members are said to be settled internally, and quietly. Eyebrows were thus raised by the arrest on Sept 1 of Mr Zhou’s top corporate lieutenant, Jiang Jiemin, announced in a terse statement on a new website (www.ccdi.gov.cn) which was launched that day jointly by the corruption-busting arms of the Communist Party and the central government: the party’s Central Commission for Discipline Inspection and the Ministry of Supervision.

Mr Zhou not only once presided over China’s entire domestic security and intelligence networks, but also exerts enormous power in his corporate power base, the oil industry.

His grip on China’s oil and gas sector is considered second to none except Zeng Qinghong, a protégé of former president Jiang Zemin and another former Politburo standing committee member. Mr Zhou is also known as a protégé of ex-president Jiang.

Before his arrest, Jiang Jiemin (no relation to the ex-president), had climbed to the pinnacle of China’s state-controlled economic apparatus, having served as head of the powerful State-Owned Assets Supervision and Administration Commission (SASAC).

SASAC is the ultimate owner and caretaker of China’s state-owned enterprises except banks, in charge of the nation’s largest 140-plus state-owned enterprises (SOEs) and various offshoots at the local levels. More than 60 per cent of these state-owned assets are now listed on the stock markets, according to the SASAC website.

Before that, from 2006 until March this year, Jiang was chairman of China’s largest oil group, China National Petroleum Corp (CNPC), parent company of the listed PetroChina - the world’s fifth-largest oil company whose hefty market capitalisation once made it the most valuable company in the world.

Mr Zhou, Jiang’s mentor, also served as chairman of CNPC in the late 1990s.

Following Jiang’s arrest, unnamed managers at state-owned enterprises were quoted as criticising his vainglorious management style as he set unrealistic performance targets for the SOEs to increase their assets by over 8 per cent and profits by over 10 per cent.

The evidence against him, however, may come from his reign at CNPC during which the oil giant undertook an aggressive string of expansion and exploration projects both abroad and at home, including becoming the largest foreign oil company operating in Iraq.

A few days before Jiang’s arrest, four of his former top aides at PetroChina and affiliated Kunlun Energy were caught all of a sudden in an abrupt corruption investigation. Some were prevented from travelling to Hong Kong to present company mid-term financial results published a few days earlier. They included PetroChina’s top geologist and the head of Kunlun Energy.

This week, another oil-related Hong Kong-listed company, Wison Engineering, announced his controlling shareholder Hua Bangsong was asked to assist investigations by “relevant authorities” in China. More might be in the offing.

To see the investigation of Mr Jiang and CNPC over “grave violations of organisational discipline” as targeting the oil-and-gas sector is not the full picture. President Xi’s moves could see him win popularity and public confidence.

Guanyu 道 said...

Unlike former president Hu Jintao, Mr Xi can afford to act tough on corruption. He is not affiliated to political factions and is a princeling, to boot.

David Zweig, a long-time China watcher and associate dean at the School of Humanities and Social Science at Hong Kong University of Science and Technology, thinks Mr Xi understands the grave consequences posed by widespread corruption. “He has been working to get the mandate and is really going after corruption in China,” Mr Zweig says.

He thinks the president has also linked restructuring the economy to tackling the so-called “vested interests” which have been added to China’s anti-corruption lexicon.

Jiang is considered the tiger’s “legs” that need to be cut off before catching the tiger itself, Mr Zweig says, citing a popular quote of Mao Zedong.

Meanwhile, Chinese reporters have been trying to find out the whereabouts of Mr Zhou’s son, Zhou Bin, a long-time resident in the US.

The tiger hunt is still on.