China's new leaders exert control over oil company

AP News
Posted: Sep 02, 2013 12:58 AM
China's new leaders exert control over oil company

BEIJING (AP) — China's new leaders are asserting their authority over the country's biggest company with a corruption investigation that has netted five former and current top oil executives, including the latest — the former chairman of the company.

The announcement by the Ministry of Supervision on Sunday of an investigation into Jiang Jiemin, director of the Cabinet's commission that runs state companies, marks the latest high-profile corruption case to be launched after China's new leader Xi Jinping took power in November.

The investigation into Jiang, who was previously chairman of the country's biggest oil company, China National Petroleum Corp., comes after similar probes were announced over the past week into four executives at the state-owned company.

The widening probe into top oil executives comes as reports say China's top leaders have endorsed a corruption investigation into Zhou Yongkang, a former security czar who was perceived as being influential in the oil sector. Zhou built his career in the state-run oil sector, rising to becoming general manager of CNPC.

Ahead of a key Communist Party meeting in November that in years past has been a platform for the announcement of economic programs, the administration of Xi, China's president, and Premier Li Keqiang, appears to be making a stab at tackling the powerful interest groups many experts say have hamstrung the government.

Such vested interest groups are linked to state industries that benefit from monopolies, low-cost bank loans, free land and other favors — and are therefore opposed to the market reforms experts say China needs to prevent growth from stagnating.

The crackdown on China's biggest company — also the second-largest oil company in the world — signals the new administration's determination to exert control over the powerful sector, said Cheng Li, a Brookings Institution scholar.

The leadership wants to show "that they've got a certain degree of consensus in the party's highest levels. That's not so easy to get, but they did," Li said. "There's also a clear message that Xi Jinping and Li Keqiang want to undermine these vested interest groups therefore to pave the way for more market-oriented reform."

Chinese authorities said Sunday that Jiang is being investigated over suspected serious disciplinary violations. The vague term is often shorthand in official Chinese announcements for allegations of corruption by a government official or manager of a state company. Jiang left his post as chairman of CNPC in March to head the Cabinet's Assets Supervision and Administration Commission.

"The leadership is acutely aware that they must reel in the opposition or disarm it. They have gone on a concerted anti-corruption quest, which appeals to the general public, but is also a way of eliminating the opposition," Lombard Street Research said in a recent report. "A lot of the big state firms' senior managers sit on the Central Committee and they will need to be brought into line or discredited."

Jiang is the first current member of the ruling Communist Party's Central Committee, which includes the country's top 200 officials, to have fallen since the party's generational handover in November. Two other officials who are also under investigation were alternate members of the committee.

Authorities have announced a series of investigations into senior and lower level officials as President Xi Jinping has made a crackdown on corruption and extravagant, wasteful work styles a key feature of his first few months in power.

A general manager at state-owned phone company China Mobile was detained last month in connection with suspected discipline violations.

In July, former railways minister Liu Zhijun was given a suspended death sentence for bribery and abuse of power.

Last Monday, a high-profile corruption trial wrapped up for Bo Xilai, former party boss of the megacity of Chongqing.