News / Economy

    Businessmen, Politicians Targeted in Sichuan Corruption Probe

    FILE - Policemen stand guard in front of the court building in Beijing.
    FILE - Policemen stand guard in front of the court building in Beijing.
    Police in China's southern province of Sichuan have detained at least a dozen business executives over the past 18 months in an on-going investigation into their dealings with alleged corrupt government officials.  Analysts say the arrests are part of President Xi Jinping's crackdown on graft in a province plagued by an unholy alliance between top cadres and businessmen.

    It started with businessman Dai Xiaoming. As chairman of the Chengdu Industry Investment Group, Dai headed what Chinese media called “the most important financial platform in the city of Chengdu," Sichuan's capital.

    Dai was taken away for questioning in August 2012.

    Corruption probe

    A year-and-a-half later, three high level officials as well as at least a dozen other businessmen in Sichuan face corruption probes.

    The crackdown highlights President Xi Jinping's new strategy to combat corruption, which the Chinese media has likened to an earthquake: when local leaders are targeted, the intricate network of tutelage they allegedly created falls with them.

    King Twun Tsao, a professor at the Chinese University of Hong Kong, said the strategy also serves the leadership's purpose of dismantling local interest groups and opening up the economy.

    “Anti corruption is a good way to gather support from ordinary people to consolidate power, but at the same time he [Xi Jinping] needs this kind of reform package,” he noted.

    Apart from his business profile, Dai Xiaoming also held official posts in the local government.

    He was officially charged with corruption in October 2013. According to the prosecution he had received over $2 million in bribes as well as gift cards and business favors.

    Li Guangyuan, another fallen businessmen in Sichuan, is  a member of the current legislature. In July, he was detained by police for “serious disciplinary violations.”

    Li was the chairman of Sichuan Electric Star Cable, a company that, according to media reports, developed quickly because of Li's connections with local politicians.

    Eight months after it was officially set up as a cable manufacturer, the firm had sales revenues worth more than $32 million. With the help of provincial authorities, Li was able to secure contracts with state owned enterprises, including oil giant China National Petroleum Corporation.

    Apart from his business success, Li was famous for his charity work, a reputation he shared with another local businessman under investigation Liu Han.

    When a massive earthquake hit Sichuan in 2008, the school Liu Han built on the quake's epicenter remained intact while other schools in the area collapsed killing thousands of children. 

    Common practice: Business, government relations

    Chinese University of Hong Kong political science professor Willy Lam said such relationships between business executives and government officials are not unusual.

    “This is quite a common practice for provincially based businessmen to curry favors with the political leadership by being active in philanthropy, by being active in local affairs, so that many are members of the provincial people 's congress or the political consultative conference. This is an investment in political connection to buy protection,” said Lam.

    But if questionable dealings between business leaders and politicians are widespread in China, analysts have questioned why Sichuan has been singled out.  Some, such as professor Willy Lam, the motives are political. “In the Chinese tradition there is a close connection between corruption investigation and power struggles within the communist party leadership," he explained. "So the dominant leader using corruption to embarrass or marginalize or even incriminate their political enemies.”

    Three names re-appear in the reports about the executives under probe: Sichuan senior officials Li Chongxi, Li Chunsheng and Guo Yongxiang.

    They are the three high level officials - the so-called “tigers” - who have been detained.

    Despite an already lengthy investigation, their cases have not been transferred to the judiciary, fueling speculation that party discipline organs might be after an even bigger tiger.

    Former politburo standing committee member Zhou Yongkang, now 70 years old and retired, has close links with the Sichuan politicians who are under investigation.  He also has ties with the oil industry.

    According to Hong Kong media reports, Zhou is currently under house arrest. And the probe in Sichuan, as well as that against executives in the oil sector, are seen as a possible preamble to Zhou's official indictment.

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