China says state-owned firms riddled with corruption, nepotism

BEIJING - Reuters

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China’s top graft-busting agency has lambasted the country’s powerful state-owned industries as being riddled with corruption and nepotism, saying the origins of the problem could partly be traced back to the chaos of the Cultural Revolution. 

As part of President Xi Jinping’s battle against corruption, anti-graft inspectors have over the past few months visited dozens of strategic central government-owned groups, where top executives hold the rank of deputy ministers. 

In a statement reported by most state media on July 14, the Communist Party’s Central Commission for Discipline Inspection said the inspections had found certain leaders abusing their power and helping relatives for corrupt purposes. 

“Some people embezzled state assets under the name of carrying out reforms, while others tried to corrupt senior officials, using illegally obtained state resources,” it said. 

“Some are still breaking the rules, spending vast sums on luxurious holiday homes and taking their wives and children out golfing on the public dime,” the watchdog added. 

Leaders at some state firms are ignoring party promotion procedures, deciding themselves who to promote, and “forming cliques”, it said in the statement, which was issued on July 13. 

It said that the problem of nepotism could in part be traced back to the end of the Cultural Revolution more than 30 years ago, when many of the educated youth who had been “sent down” into the countryside came back to the cities to work, and were often placed with family members in state-owned firms. 

“This created the problem left over from history of a concentration of family members,” the watchdog added. 

It did not name specific companies or executives. 

The statement praised the role of the state-owned sector in China’s landmark economic reforms since the late 1970s, but said they had to fall in line. 

“Leaders have forgotten that they are managing state firms under the party’s leadership,” it said. “State-owned firm are not excluded from efforts to strictly manage the party.” 

Beijing has been expected to unveil a master plan to reform the powerful sector, but it one has yet to be published. 

Xi has warned that the problem of official graft is serious enough to threaten the Communist Party’s legitimacy and has vowed to go after powerful “tigers” as well as lowly “flies”. 

Graft-busters have gone after business leaders and politicians alike. 

Senior executives at automaker China FAW Group Corp, Baosteel Group and China National Petroleum Corp have all been put under investigation for corruption this year.