Power chief in southwest probed for asset-stripping

PUBLISHED : Friday, 05 September, 2008, 12:00am
UPDATED : Friday, 05 September, 2008, 12:00am

The chairman of Guizhou's biggest power company is being investigated for alleged involvement in the stripping of state assets, influential financial magazine Caijing reported yesterday.

Xiang Dehong , of the Guizhou Jinyuan Group, has been placed under shuanggui - an internal disciplinary measure which confines Communist Party members to house arrest and makes them confess their wrongdoing.

'It happened all of a sudden and was directly overseen by the top-level Central Commission for Discipline Inspection,' the mainland magazine quoted an anonymous senior official in the power sector as saying.

Caijing quoted another source, from the Chinese Electricity Enterprises Union, as saying that Mr Xiang was detained because his company had breached state regulations by transferring state assets to private hands.

'It's way beyond a personal case of corruption,' the source told the magazine.

Mr Xiang, 60, has spent his entire career in the electricity business. Before heading Jinyuan - a de facto private power producer - he served as general manager of Guizhou Province Power Corp, a state-owned power company in the southwestern province that was transformed into the Guizhou Grid Co six years ago during power industry reforms.

Before the reforms, a single power operator controlled everything from generation to transmission. The monopoly was broken up in 2002 with the distribution of power assets between two grid firms and five major generating groups. The Guizhou Grid Co belongs to one of the two grid firms, Chinese Southern Grid Co.

Jinyuan was set up in 2000 by Mr Xiang with little fanfare when he was still running the state power operator. The past few years have seen the company land one lucrative project after another and become the province's fastest-growing power operator, accounting for more than one-third of Guizhou's generating capacity, according to Caijing.

Though Beijing has suspended the transfer of state power assets to employees, Jinyuan has developed into an employee-controlled entity - the overwhelming majority of its shares are owned by its employees and outside investors. Among the outside investors were employees of the Guizhou Grid Co and well-placed members of local commercial regulators and the provincial government, the magazine said.

Complaints from other power operators that Jinyuan had preferential access to the distribution network have been rising. But the provincial government had publicly praised Jinyuan's efforts to 'contribute to the provincial economy and strengthen the Communist Party leadership' on several occasions, Caijing reported.

Jinyuan was able to explode into a power juggernaut in the province, owning six subsidiary companies, each of which had gained a firm foothold in almost every aspect of the electricity network.