bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Toh Han Shih

A flurry of anti-graft probes on the mainland is set to increase in scale and reach.
Tougher enforcement of rules will be the main weapon used by increasingly sophisticated corruption investigators, say lawyers and risk analysts, who believe the multibillion-dollar boom industries of recent years - real estate, mining and potentially aviation - could be the principal targets of probes.
Peking University's Founder Group and China Southern Airlines are the latest to have been caught up in the crackdown on corruption, with several of their executives grilled or placed under investigation.
"The type of investigations we are seeing is going to continue," said Sammy Fang, a partner at US law firm DLA Piper. "You will get much more of that, maybe on a different scale.
"The number of cases will increase. More agencies will be involved."
Fang also said the crackdown that began at the end of 2012 would continue during the rest of President Xi Jinping's first five-year term.
"In the past one-and-a-half years, the authorities have become more sophisticated in their approach in tackling bribery and corruption," he said.
While multinationals like British drug giant GlaxoSmithKline were investigated last year, more domestic firms will find themselves the target of graft busters this year, according to Fang. "A lot of these investigations are not publicised," he added.
Founder Securities, a Shanghai-listed subsidiary of Founder Group, yesterday posted on the Shanghai exchange website a notice confirming that group chairman Wei Xin, chief executive Li You, president Yu Li and vice-president Li Guojun (a younger brother of Li You) assisted with investigations on Sunday.
In recent days, China Southern has announced four of its senior executives were dismissed and placed under investigation for "job-related crimes".
But the focus on domestic companies does not mean multinationals can breathe easy.
"All the signs are that tougher enforcement against foreign companies will continue on both the corruption and competition fronts. Recent state media criticism of foreign companies' alleged tax avoidance, and multiple references to environmental protection in the plenum may portend more activity by the State Administration of Taxation and the Ministry of Environmental Protection," warned Andy Gilholm, an analyst at Control Risks, on the risk consultancy's website.
Xi aims to increase central control over local governments through new circuit courts above the provincial level to keep in check provincial governments' influence on local courts, and local branches of the Central Commission for Discipline Inspection (CCDI) are now required to report not only to local officials but also further up the CCDI hierarchy, according to Gilholm.
There was no specific sector that stood out more than others as a target for mainland authorities in the war on corruption, said Julian Russell, a director at Hong Kong consultancy Pacific Risk. But among the sectors that might be particularly vulnerable were natural resources.
"Natural resources are owned by the state," he said. "There is a lot of competition to get licences from the government, and lots of pressure to give bribes. The amounts involved are also huge."
Last year, anti-corruption investigators targeted the so-called Shanxi gang of officials and businessmen who built their fortunes on coal in the province.
Former security czar Zhou Yongkang and his son Zhou Bin, who are under arrest for suspected corruption, have also been closely connected to the energy industry. Zhou Yongkang was formerly a top executive in state-owned conglomerate China National Petroleum Corp, where heads have been rolling in connection with his case.
Zhou Bin's business was built on the oil sector.
"The Chinese authorities have generally focused their investigations on sectors where power has been concentrated in the hands of a small number of state-owned enterprises. Aviation is one such sector," said Daniel Roules, a partner at US law firm Squire Patton Boggs.
That, coupled with the billions of dollars coming into aviation, makes it a sector to watch out for. Boeing forecasts China will need more than 6,000 passenger jets worth US$870 billion in the next 20 years.
Road and rail transport as well as construction and real estate could also be targeted in the coming months, said Roules.
Beijing spent 405 billion yuan (HK$510.6 billion) on railways in the first eight months of last year. The sheer scale of money pouring into this sector makes it prone to graft, as was evident in railway minister Liu Zhijun's dismissal in 2011 and his subsequent arrest.
In Asia, the traditional industries vulnerable to corruption tended to be property and construction, said Fang.
Local governments have become overly dependent on income from property sales to boost their income, spawning a cosy relationship between developers and provincial bosses.
As Beijing looks to crack down on graft, the property sector, which is estimated to account for more than 15 per cent of the mainland economy, is expected to increasingly find itself in the cross hairs of the anti-corruption brigade.


China puts Ma Xingrui protege Guo Yonghang under investigation for corruption

Former defence exec Tan Ruisong given death sentence for ‘exceptional’ corruption

Senior Chinese financial regulator and ex-graft fighter Zhou Liang under corruption probe

Chongqing mayor under investigation as China’s anti-corruption crackdown gathers pace

Xi Jinping's anti-corruption campaign

Scale and reach of anti-graft probes set to increase

China Southern Airlines is among the latest to have been caught up in the crackdown on corruption. Photo: Bloomberg

Business

China Business

More mainland companies could find themselves targets of graft busters as the multibillion-dollar boom industries of recent years are investigated


A flurry of anti-graft probes on the mainland is set to increase in scale and reach.


Scale and reach of anti-graft probes set to increase

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}More mainland companies could find themselves targets of graft busters as the multibillion-dollar boom industries of recent years are investigated

More mainland companies could find themselves targets of graft busters as the multibillion-dollar boom industries of recent years are investigated