Increasingly daring mainland press challenges China's Enrons

PUBLISHED : Saturday, 26 March, 2005, 12:00am
UPDATED : Saturday, 26 March, 2005, 12:00am

The story had everything but sex - the head of one of the world's biggest banks allegedly accepting a US$1 million bribe on one of the most exclusive golf courses in the United States.

It was another scoop for the bi-weekly Caijing, which described in painstaking detail the charges against former China Construction Bank (CCB) chairman Zhang Enzhao.

The report appeared just three days after the CCB's March 16 announcement that Mr Zhang had resigned from his post 'for personal reasons'.

It revealed that Mr Zhang had been detained by police on March 10 at his luxury villa in western Beijing, and that his wife had been detained the same day at an airport in Shanghai. Aware they were under suspicion, the couple was said to be preparing to flee the country.

Caijing is the benchmark of China's fast-growing and increasingly daring business press. It is the most popular, followed by the weekly Economic Observer and the twice-weekly 21st Century Business Herald. In the past two months, two more business dailies have been launched.

The proliferation of such publications shows that the business media can survive commercially, even under the watchful eye of the Communist Party.

It is bad news that sells. The latest issue of Caijing covers the hot stories of the day - a controversial management buyout of a state winemaker, a stock brokerage close to bankruptcy, Shanghai's property bubble and the appointment of a Welsh-born former journalist as Sony's new chief executive.

The increasingly outspoken business press plays an important role in China's transformation to a market economy. The Economic Observer has been campaigning for a level playing field for private companies and an anti-monopoly law, while the Business Herald has been tracing the flow of 'hot money' into the country and the theft of assets by the bosses of state-owned enterprises.

Their activism is remarkable considering that they operate in a minefield of censorship and control as dangerous today as it was five or 10 years ago. One newspaper journalist described his guidelines: 'We are banned from reporting about political leaders, public protests and certain government policies. Issues involving land policy and relocation of people are also very sensitive.

'We are allowed to report about the Hong Kong property market but few people are interested in it. Reporting of the campaign for universal suffrage in Hong Kong is banned. We can use reports only from Xinhua.'

Business scandals can be reported when the government feels the time is right. The scandal surrounding Mr Zhang and the downfall of his predecessor, Wang Xuebing, also for corruption, were published in the mainland media only after the government realised that it could no longer be kept hidden.

Mainland journalists knew about the cases for months but could not publish until they received approval from above. In both cases, the trigger was a lawsuit in the US.

In 2003, Caijing reported the rise and fall of Chau Ching-ngai, a Shanghai developer at the centre of a land scandal who was sentenced to three years in prison last year for stock-market fraud and falsifying documents. According to the Shanghai rumour mill, he has been released on medical parole. But you will not read that in the Shanghai press, which cannot report the case.

On Tuesday, the party propaganda department issued a directive ordering journalists to support the leadership of the Communist Party, promote unity and stability and strictly protect party and state secrets.

It is a warning to mainland journalists not to take any independent initiative or do investigative reporting, on of pain losing their jobs or even facing prison.

All this makes the Caijing story on Mr Zhang even more admirable. With a rank of vice-minister, he was exactly the person it is hardest to write about.

CCB is one of the big four state banks. With 410,000 employees and assets of 3.08 trillion yuan, it is among the world's 30 largest banks. It is pursuing a foreign listing this year to raise up to US$10 billion.

Caijing has been one of the few publications to look at the far-reaching implications of the scandal. In an editorial, it argued that a CCB listing was unthinkable until it had resolved its internal management and corporate governance failings - otherwise it runs the risk of becoming a Chinese Enron.

It is hard to underestimate the damage that has been done to the reputation of the mainland's state banks, of which CCB was supposed to be a model. In December 2003, CCB and Bank of China received capital injections of US$22.5 billion each and allowed to pursue an overseas listing.

After the scandal surrounding his predecessor, whose crimes were linked to a stint at BOC, the government picked Mr Zhang because it thought he would be a safe pair of hands.

Unlike Wang, a flamboyant high-flier who had worked in London and New York, Mr Zhang did not graduate from university, had worked in the bank since 1964, does not speak English and has no foreign experience.

If the country learns anything from these scandals, Caijing should take a good part of the credit.