Friday, March 05, 2010

Ryan Pyle Blog: Grand Corruption


It appears that China may be full of corruption. I know, I was shocked as well. But what is even more surprising is that on the front page of the China Daily, the main government mouthpiece, the editor put the mug shots of 4 dodgy bastards who used to be in charge of State Owned Enterprises (SOE) that have been caught for corruption. Let's push through the list and see what we come up with.

First, the headline is "Rampant Corruption". I love that.

The first man on the list is the once invincible Zhang Chunjiang; aged 50. He was the Vice-Chairman of China Mobile, the world's largest mobile phone company, and apparently he falsified accounts that involved some RMB 20 billion ( USD 3 billion) when he was the head of another giant SOE named China Netcom. The best part about this was that after is blatant corruption at China Netcom he was rewarded with the role of Communist Party Official of China Mobile, meaning he had almost no role. I hold shares of China Mobile on the Hong Kong Stock Exchange and I find the company structure, the management and the politics involved in the company to be grossly lacking morals. Come on shareholders. Rise up!

The second man on the list is Chen Tonghai; aged 61. This dodgy dude was sentenced to death for taking over RMB 200 million (USD 30 million) in bribes. He was the former Chairman of Sinopec, one of China's largest oil companies, and one of the countries most powerful SOE's. I also own some shares of Sinopec on the Hong Kong Stock Exchange. Is it not unbelievable that publicly listed companies have Chairman and directors acting so blatantly against shareholder value?

The third mug shot on the front page of the China Daily belongs to Kang Rixin; aged 56. He is a dead ringer for Chairman Mao; but actually he is the former General Manager for the China National Nuclear Corporation; meaning that he is in charge of building all of China's Nuclear power plants. Classy. He somehow misappropriated RMB 1.8 billion (USD 2.5 billion). It's amazing that China can still champion it's legal system and system of SOE's when it appears everyone is just in the business to help themselves.

The last, but surely not the last, is Wang Yi; aged 52. He was the Vice President of the China Development Bank and he was expelled from the party for taking some RMB 10 million (USD 1.5 million) in bribes. Seems to be the least worst.

A few notes. One, everyone knows this happens and executives of SOE's are essentially the same as political figures. It's obscene that the government can claim any moral high ground when basically all of these companies executives are politically placed. Sure, the odd fat cat is knocked off his perch; but for every corrupt executive that gets nailed there must be hundreds that get missed. What boggles my mind is the newspapers and the media never seem to know where all the money went and nobody seems to be working "around the clock" to account for all his assets. Is that offside? Shouldn't be. Everything from his Ferrari to his diamond studded dog collar should be auctioned off. Corporate China is a mess and nobody wants an independent legal system where lawyers can go after these high rollers. A sad state of affairs.

Ryan Pyle

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Ryan Pyle