Zhou Yongkang

CNPC graft investigation sheds light on 'Shengli gang'

Corruption probe reveals how a powerful group of executives formed a network and wielded enormous clout in the state oil sector

PUBLISHED : Tuesday, 03 September, 2013, 12:00am
UPDATED : Tuesday, 03 September, 2013, 8:40am

The corruption investigation of Jiang Jiemin, a former chairman of China National Petroleum Corporation (CNPC), and several other senior officials at the state-owned energy firm has shed light on how powerful executives dubbed the "Shengli gang" carved out their network in Shandong early in their careers.

Jiang spent more than two decades from 1972 at the Shengli oilfield, the second largest on the mainland, and eventually became deputy director of the Shengli Oilfield Company.

He is now director of the State-owned Assets Supervision and Administration Commission, (Sasac) - a cabinet agency that oversees the 100 largest state-owned enterprises.

Jiang, who crossed paths briefly with the former senior party leader Zhou Yongkang at the oilfield in the late 1980s, enjoyed a rapid career path at CNPC, serving as its chairman from 2006 until March this year when he was appointed to head Sasac.

The probe into Jiang's dealings stretches back to his days at the Shengli Oilfield, as the South China Morning Post reported yesterday citing sources close to the Central Commission for Discipline Inspection, the party's top anti-graft watchdog.

The disciplinary investigation targeting Jiang comes days after four senior CNPC officials were put under investigation for corruption, including Li Hualin , a deputy head of the corporation and vice-president of its Hong-Kong-listed arm, PetroChina.

Li worked briefly at Shengli Oilfield, now a subsidiary of Sinopec, early in his career.

The Shengli gang has come under scrutiny for the enormous clout its members wielded in the state oil sector, and analysts say that Zhou could be its most prominent member as he was party secretary and director general of the Shengli Petroleum Administration from 1989 to 1990.

As the Post reported on Friday, Zhou - who retired from the Politburo's powerful standing committee in November - faces his own inquiry for corruption.

Zhou spent more than three decades in the state oil sector before entering the inner circle of the Communist Party in 2007, and many who had professional dealings with him at the Shengli Oilfield went on to benefit from those associations with rapid promotions through their careers.

Guo Yongxiang , a former deputy governor of Sichuan who has been under investigation since late June, was one of Zhou's favourite aides at Shengli. Guo, 64, followed Zhou to CNPC in the early 1990s, then to the Ministry of Land Resources from 1998 to 1999 when Zhou was minister, and again to Sichuan where Zhou served as the province's party secretary for three years until 2002.

According to China Business Journal, the Shengli gang's fortunes began to turn after the detention of Tao Yuchun , the former general manager of CNPC-affiliated Kunlun Natural Gas Utilisation Company in the first half of this year.

The journal reported yesterday that the investigation of Tao turned investigators' attention to Jiang and other senior officials at CNPC.

Hu Xingdou , a political commentator, said the rise of the Shengli gang was not surprising given the degree of nepotism in the state oil sector.

"Investigations into graft often implicate groups because oversight is terribly flawed or non-existent," Hu said.