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China probes top official in latest anti-graft push

Chairman of PetroChina Jiang Jiemin releases the company's annual results at a news conference in Hong Kong March 19, 2008. REUTERS/Garrige
Chairman of PetroChina Jiang Jiemin releases the company's annual results at a news conference in Hong Kong March 19, 2008. REUTERS/Garrige

By Chen Aizhu and Ben Blanchard

BEIJING (Reuters) - China is investigating the head of its state assets regulator, a former top energy executive, for "serious discipline violations", the government said on Sunday in what appears to be a deepening crackdown on corruption and push for reform.

A brief government announcement said Jiang Jiemin was "suspected of serious discipline violations", shorthand the government generally uses to describe graft.

The investigation was being carried out by the ruling Communist Party's anti-graft watchdog, the Central Commission for Discipline Inspection, the statement said. No other details were given.

President Xi Jinping has made fighting pervasive corruption a key theme of his new administration, vowing to go after "tigers", or senior officials, as well as lower-ranking "flies".

Jiang was promoted to head of the Assets Supervision and Administration Commission (SASAC) in March, from his previous post as chairman of energy giant China National Petroleum Company (CNPC).

SASAC is a ministerial-level body run by China's cabinet, and is directly responsible for more than 100 state-owned companies.

The announcement about Jiang, much anticipated by industry insiders, comes after the government announced last week that four of CNPC's top executives were under investigation for alleged wrongdoing.

Those investigations were announced shortly after the close of the trial of Bo Xilai, once a rising political star who is now awaiting a verdict on charges of graft, bribery and abuse of power.

Jiang had been expected to take a major role in reforming China's sprawling state sector as the Communist Party seeks to allow private investment into important sectors of the economy, such as energy, transport and finance, over the next five years.

Economists warn that China can no longer delay freeing such sectors from government control, especially if it wants its economy to keep growing by between 7 and 8 percent a year.

But reform of state-owned industries has run into opposition from vested interest groups threatened by the prospect of competition and conservative elements in the party uncomfortable with more economic changes.

The Communist Party will hold a meeting in November to discuss deepening reforms as leaders look to set China's economic agenda for the next decade.

"It seems apparent to me that the government has faced a strong level of opposition from vested interests in the state sector as it's tried to push forward changes, and I think the discipline body has essentially tried to put the foot down and start taking action," said Duncan Innes-Ker, senior China analyst for the Economist Intelligence Unit.

"It probably means reform will be able to move a bit faster, but one has to worry that it resembles the old-style purges of people who have disagreed with the party line," he said.

"MASSIVE EXPANSION"

Senior industry analyst Chen Weidong said CNPC was targeted because it represents one of China's biggest monopolies.

"The company has grown so rapidly over recent years through massive overseas expansions, and these activities are all in the name of 'shouldering state responsibility' but not putting economic returns as a key concern," Chen said.

By using a handful of state giants, China has achieved desirable results like securing energy supplies for the world's top consumer and established its prominence in the global market, but Beijing has realized this is no longer sustainable.

"CNPC's problems have accumulated for too long and become too big," said Chen, adding that Beijing may also want to use the CNPC case as a warning for others before the party's November meeting.

CNPC is the parent of Hong Kong-listed PetroChina, Asia's top oil and gas producer and the world's most valuable listed energy company after Exxon Mobil.

The other four CNPC officials under investigation are Li Hualin, a deputy general manager of CNPC; two vice-presidents of PetroChina, Ran Xinquan and Wang Yongchun, and PetroChina chief geologist Wang Daofu.

The government has not detailed the accusations against them. It was also unclear if they or Jiang have lawyers.

Jiang, 58, who became general manager of CNPC in 2006 and chairman in 2011, is known in the industry as a man that aims for "big-ticket" deals and political status.

He rose to prominence with the support of Zhou Yongkang, who retired earlier this year from the elite Politburo Standing Committee, where he was China's domestic security chief.

On Friday, Hong Kong's South China Morning Post newspaper said China's senior leadership had agreed to open a corruption investigation into Zhou.

The government has not commented on whether Zhou, who was also an ally of the now disgraced Bo, was being investigated.

It would be an unprecedented move to investigate Zhou, as the unwritten rule in the party has always been that current and retired Standing Committee members are immune from prosecution.

(Additional reporting by Jenny Su; Editing by Paul Tait)

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