Corruption claims force internal probes at S.O.E.s

PUBLISHED : Wednesday, 08 August, 2012, 12:00am
UPDATED : Wednesday, 15 August, 2012, 11:11pm


A number of major mainland state-owned enterprises (SOEs) have been ordered to conduct internal investigations into claims that corruption might have affected up to a dozen railway projects.

Construction problems have surfaced recently in many rail projects across the country, according to China Economic Net, a mainland business news portal.

Regulatory authorities have ordered the companies to fix problems on 12 rail lines. The firms have also been temporarily banned from bidding for further railway contracts.

The 12 problem lines include the Wuhan-Guangzhou high-speed railway, which will link up with Hong Kong in 2015; and the NingboTaizhou-Wenzhou high-speed railway, where a deadly high-speed-train crash occurred in July last year.

Zheng Tianxiang, a transport professor at Sun Yat-sen University in Guangzhou, said the pace of high-speed-rail development had been too rapid, 'so there will be quality problems'.

'Systemic problems and corruption have not been resolved. With inadequate supervision, it's easy for problems to arise,' he said.

Richard Di Bona, who runs a Hong Kong transport consultancy, said it was likely that quite a few of the problems dated back to the regime under former rail minister Liu Zhijun.

'They are now coming to light,' he said. 'Under Liu, it was all about speed of construction. They accelerated some high-speed-rail projects. It creates the risk of quality problems if you do things too quickly.'

Liu was sacked for suspected corruption in February last year and is expected to face trial soon.

Three weeks ago, the State-owned Assets Supervision and Administration Commission (Sasac) also ordered five major state-owned infrastructure companies to investigate their activities and report on whether there were any illegal or anti-competitive practices in their railway projects, Xinhua reported.

The five companies are China Railway Group (listed in Hong Kong and Shanghai), China Railway Construction Corporation (listed in Hong Kong and Shanghai), China Communications Construction (CCC, listed in Hong Kong and Shanghai), Power Construction Corporation of China and China Energy Engineering Group.

Sasac ordered the five SOEs to rectify alleged problems in their bids for railway projects, including bid rigging, illegal subcontracting and illegal transfer of work to other parties.

The order followed the National Audit Office's discovery of several irregularities in the Beijing-Shanghai high-speed railway, the most expensive and longest project of its kind in the country.

The office found that 54 technical specialists of Sinohydro, a Shanghai-listed Power Corp subsidiary, weren't qualified to work on the Beijing-Shanghai high-speed railway, while CCC and China Railway Group were guilty of 312 million yuan (HK$382 million) of illegal subcontracting. And China Railway Group began work on some projects involving the high-speed line even before the tendering began, the office found.