State-owned firms to face closer scrutiny
Two new regulatory bureaus will be set up by the corporate watchdog in the wake of oil scandal
The state assets regulator is to set up two bureaus in an apparent effort to improve monitoring of state-owned companies.
Questions were raised about corporate governance and risk management at these companies after the China Aviation Oil (CAO) debacle last year.
A business budget management bureau and an audit bureau would be set up within the State-owned Assets Supervision and Administration Commission (Sasac), the 21st Century Economic Report said.
'The new organs will start operating after the national work conference on state-owned assets to be held on January 15,' the Guangzhou-based newspaper quoted a commission official as saying.
While it acts as an industry regulator, the commission is also a shareholder of assets in state-owned companies. Under the restructuring programme for the state business sector, it is responsible for selling thousands of small- and medium-sized state-owned enterprises (SOEs) and merging and consolidating the remaining 187 into large business groups.
But by flexing its muscles, the commission might gain the sort of powers enjoyed by the former super-ministry, the State Economic and Trade Commission, analysts said. Sasac was set up in 2003 to replace the economic and trade commission under a reform programme to separate business from government.
But the CAO saga and recent controversies over sales of state assets have caused widespread concerns about the under-valuation of state assets in the process of economic restructuring.
Through the business budget management bureau, Sasac would acquire power in directly managing state enterprises' budgets, the report said.
The audit bureau is designed to strengthen Sasac's power to uphold the responsibility and accountability of senior executives and managers of the big enterprises.
Last August, the commission issued guidelines on the management of auditing enterprises directly under the central government. The new audit bureau would implement the document, the report said.
Experts said setting up the two new bureaus was aimed at improving the supervision and administration of state assets.
Under a reform programme, Sasac will define a method of evaluating the performance of state companies. Last year, it signed performance contracts with 187 SOEs as part of efforts to boost the growth of state assets.
CAO or CAO (Singapore) Corp was recently revealed to have lost US$550 million in speculative trading, making it one of the biggest business scandals in Asia since Nick Leeson lost US$1.4 billion at Barings Bank in 1995.
Analysts said the losses racked up by the company reflected the poor standard of corporate governance within its top management. The CAO saga also highlighted the lack of external supervision from government departments.
Undervaluation and leaking of state assets has become a serious problem amid the restructuring of the business sector.