Probe of ex-railways chief nets senior official

PUBLISHED : Wednesday, 02 March, 2011, 12:00am
UPDATED : Wednesday, 02 March, 2011, 12:00am

The corruption investigation of former railways minister Liu Zhijun has claimed his right-hand man, a pioneer of China's high-speed railway.

Zhang Shuguang, the second most senior engineer at the Ministry of Railways, had been suspended from duty and was under investigation, Caixin, a mainland financial news magazine, reported on its website. It quoted a ministry announcement on Monday night.

Even before Liu became minister in 2003, Zhang had been the subject of an internal investigation, but nothing happened, Caixin reported. But when Liu became the minister, Zhang was promoted through various posts to his other position as head of the ministry's Transport Bureau. Last month, Liu was dismissed as both minister and the ministry's Communist Party secretary, and is under investigation for serious breach of discipline.

'Zhang's case is definitely linked to Liu. Zhang's suspension signifies that a reform of the Railways Ministry is at hand,' said CCB International analyst Dr Eliza Liu. 'More people in the ministry may be implicated. Normally in corruption cases, when the head is investigated, authorities will also investigate his senior officials.'

A British railway executive with knowledge of the matter said: 'A lot of officials at the Railways Ministry are watching their backs and are worried.'

Another outcome from the downfall of Liu and Zhang could be that some high-speed railway projects would be delayed after the National People's Congress this month, Eliza Liu said.

Liu Zhijun earned the nickname 'Leaping Liu' for pushing high-speed rail on the mainland. Zhang also played a leading role in the development of the network, which is the world's largest at more than 8,000 kilometres. The ministry's plan is to spend 3.5 trillion yuan (HK37 trillion) to expand the national high-speed rail network to 16,000km by 2015.

'The fact that the second most senior engineer was suspended means this is more than just changing the leadership. Perhaps there are deeper problems in the Railways Ministry. There could be more reforms ... ahead,' Kim Eng Securities equity analyst James Koh said.

Sheng Guangzu, former head of China Customs, replaced Liu in both posts last month. 'Sheng must be a politically reliable figure to be brought into the Railways Ministry at a difficult time like this,' Eliza Liu said.

After graduating from university in 1968, Sheng spent more than 30 years in the Railways Ministry.

In 2000, when he was Railways vice-minister, Sheng was transferred to China Customs, which was then embroiled in the Xiamen Yuanhua smuggling scandal.

That year, 84 people were convicted of crimes in the US$6.4 billion smuggling scandal in the port city of Xiamen, Fujian, many of whom were customs officials.

Zheng Jian, chief planner at the Railways Ministry, declined to comment.