Zhang Dejiang

Heads likely to roll over fund scandal

PUBLISHED : Friday, 06 April, 2007, 12:00am
UPDATED : Friday, 06 April, 2007, 12:00am


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Guangzhou plays down social security account losses but probe launched

Guangzhou is trying to play down its 1 billion yuan social-security fund scandal but an investigation is under way that is expected to cost some leaders their jobs.

A government insider said a gag order was placed on newspapers after they reported on Tuesday that Mayor Zhang Guangning had told a group of lawmakers that the government would inject 500 million yuan into the fund, half the amount diverted to risky investments.

'I was going to write an analysis on the case for [a local newspaper] and they told me that night they would not need it,' the insider said.

The director of the social security funds bureau, Cui Renquan, excused the government, saying the funds were misappropriated 'due to historical reasons'. He issued a statement on Wednesday after a day's silence, saying no funds had been misappropriated since 2000.

The insider said: 'An investigation should be going on now. Someone will have to bear responsibility. This is the problem of the direct operators. It may not have anything to do with the party and government.'

Foreign media have speculated that the scandal will be costly for Guangdong party boss Zhang Dejiang's political ambitions. In 2004, the social security funds bureau first admitted the scandal, which resurfaced last year when the government reported that only half the money was recoverable.

Chen Weiqiu, a city information officer, said he was not sure if the case involved Guangdong leaders. 'We have dealt with two people from the Guangzhou government,' he said.

But a source at a Guangdong government think-tank said provincial leaders were not involved.

'This is Guangzhou's problem, not Guangdong's. Guangzhou's leaders have to take responsibility because they are directly involved with the funds. If he [Zhang Dejiang] were to be blamed, then Beijing leaders must be blamed,' he said. 'Besides, the misappropriation happened before he arrived in Guangzhou.'

Mr Zhang arrived in Guangzhou as party boss at the end of 2002.

The insider said that even if Guangzhou leaders were involved, it would not affect governor Huang Huahua , who was Guangzhou party boss from 1998 to 2002, and Guizhou governor Lin Shusen , mayor from 1997 to 2003.

He said Mr Huang usually went along with what Mr Lin proposed.

Guangzhou's case differed from Shanghai's, which cost former party boss Chen Liangyu and several officials their jobs, he said, pointing out that Mr Chen personally directed the misuse of funds.

The funds were diverted from 1993 when the labour ministry approved their use for investment but the approval was rescinded the next year. They continued to be invested in violation of the order until the end of 1999.

Guangzhou party secretary from 1991-1998 was Gao Siren , director of the central government's mainland's liaison office in Hong Kong, while Li Ziliu was mayor from 1991-96.

Missing and misused

Embezzled in Shanghai (amounts in yuan) 3.2b

Misused in Guangzhou 1.02b