February 28, 2021

Mine Deal Puts New Scrutiny on China’s State Industries

The Zhongshe mine and two others, in Shanxi Province in northern China, are at the center of unusually public accusations of mismanagement and corruption afflicting one of the nation’s flagship state conglomerates, China Resources. Critics say that the $1.6 billion purchase was vastly overpriced and illegal and that large sums may have been squandered or, as some are claiming, improperly diverted.

Leaked documents about the deal, and a court case in Hong Kong, have shed an unusually harsh light on the usually secretive workings of a major state-owned company. The disputed deal raises a stark question: Are China’s economy and resources held hostage by privileged state corporations and their executives, who can use influence and gain access to easy credit in ways that undermine long-term growth?

The dispute has become a chief exhibit in a debate in China about the wisdom of investing so much of the nation’s money in state-owned companies, especially when China’s economy has slowed. For the Communist Party leadership, the case distills concerns about the grip that state-owned conglomerates exert.

The problems for China Resources began in 2010, when its affiliates as well as a partner state company agreed to pay 9.9 billion renminbi ($1.6 billion) for the three coal mines and related assets, according to documents submitted to a Hong Kong court. The seller was a businessman, Zhang Xinming, a man with a reputation as a swashbuckling gambler, who also gained a 20 percent stake in the new joint venture.

The deal appeared to give China Resources a foothold in the coal industry here in Shanxi, the hub of China’s coal industry for more than a century and close to the energy-hungry cities and factories on the coast. But the company’s monthly business operations statements show that since the mines changed hands in 2010, the mines have not produced any coal.

“Legally speaking, this was a totally abnormal transaction,” said Chen Ruojian, a lawyer with the Duan Duan law firm in Beijing. Mr. Chen is helping to represent the minority shareholders in Hong Kong, where the subsidiary behind the deal, China Resources Power Holdings, is listed on the stock exchange.

“It’s impossible to understand why they’d do this — pay so much for mines with expired exploration licenses,” he said. “State-owned companies have all sorts of problems, but we think it’s rare to have something as stark as China Resources.”

Political unease over the case grew after two Chinese journalists made accusations of corruption about the deal, and one singled out Song Lin, the chairman of the parent conglomerate, China Resources.

The Web site of People’s Daily, the Communist Party’s newspaper, has reported that the party’s discipline unit has received an accusation of corruption against Mr. Song and other senior executives at China Resources and is processing the complaint. Mr. Song has not been detained or charged with any wrongdoing, judging from the reports on the company’s Web site of his various public appearances. China Resources has denied wrongdoing and has hinted it might take legal action against Chinese journalists who have raised corruption accusations.

China Resources “is a major global player,” said David Zweig, a specialist in Chinese natural resource companies at the Hong Kong University of Science and Technology. If the claims about the coal mines are proved true, he added, “it would show that these companies can be ripped off or tricked. It doesn’t bode well for the globalization or professionalization of these companies.”

China Resources traces its roots to the days of Mao Zedong’s revolution, when it was established in 1938 in Hong Kong to raise money and buy military supplies to support Communist forces.

By 2012 it was China’s 18th-largest state-owned industrial company by sales, with revenue of $52 billion. Its wide-ranging products include medicine and beer, coal and real estate. Its chairman, Mr. Song, holds the same government rank as a vice minister.

The controversy over the coal deal has made China Resources a lightning rod for criticism of all state-owned enterprises, which produce about two-fifths of the nation’s economic output.

Keith Bradsher reported from Zhongshe, China, and Chris Buckley from Hong Kong.

Article source: http://www.nytimes.com/2013/08/08/business/global/mine-deal-puts-new-scrutiny-on-chinas-state-industries.html?partner=rss&emc=rss

High-Speed Trains in China To Run Slower, Ministry Says

The new line, once set to run at up to 236 miles per hour, will instead run trains at 186 and 155 miles per hour, the ministry announced.

That puts the line at the same speeds that the ministry had announced in February for eight other trunk lines on the network, which is still being built. Those trunk lines originally were set to run at a top speed of 217 miles per hour, slightly slower than the Beijing-to-Shanghai route.

The reduced speeds stem from sweeping changes the ministry has made since the rails minister, Liu Zhijun, was fired on corruption and mismanagement charges in February. Some critics had charged that Mr. Liu built a high-speed-rail empire that was both too costly for average riders and marred by shoddy, quick construction that, at a minimum, might require lower speeds.

The ministry’s new leaders sent safety inspectors to the Beijing-to-Shanghai line, and this month it was pronounced safe for use. But in recent days, the Railway Ministry and rail security officials had warned that the high-speed lines face other hazards, from inadequately secured tracks to mines built near the lines, that pose potentially serious risks.

Vice Minister Hu Yadong told reporters Monday that the trains could run at the higher speed, but the reductions would have broad benefits, making it easier for more traditional, more affordable trains to operate and saving on maintenance and power.

Rail officials also said they had scrapped plans for luxury compartments and would offer cheaper classes of service. The new line will halve the 10-hour rail trip between the country’s great metropolises, but even the lowest ticket price of about $63 nearly equals the net monthly income for rural residents.

The policy used “the satisfaction of the people as the basic requirement for evaluating railway work,” Mr. Hu said.

The plans, developed as China’s economy took fire, include nearly 8,100 miles of high-speed rail lines and some 11,000 miles of traditional railroad lines, at a cost of $750 billion.

In the past few months, some foreign companies that sold China its high-speed technology said the trains were not designed to operate at 215 miles per hour. The ministry said that Chinese engineers had improved on the foreign technology and that the trains were safe at the higher speeds.

China depends on mass transit to a high degree, but many trains are overcrowded and filthy, and hundreds of millions of people face days of misery annually as they head to their hometowns and villages for the Lunar New Year.

Even as the Rail Ministry announced the policy changes, it was the subject of a rare protest in tightly controlled central Beijing. More than 100 demobilized soldiers and their families traveled 750 miles, from the northeastern city of Harbin, to gather at the ministry’s fortress-like headquarters and chant accusations of corruption in hiring.

They said that the ministry had reneged on promises of jobs, rigging tests in favor of better-connected candidates.

“We love China!” the protesters shouted. “Give us our jobs!” The protesters, many of them wearing T-shirts saying “I am from a military family,” said they had tested for the jobs but that the results were rigged.

Michael Wines contributed reporting, and Shi Da contributed research.

Article source: http://www.nytimes.com/2011/06/14/world/asia/14china.html?partner=rss&emc=rss

Media Decoder: Publisher of ‘Three Cups of Tea’ to Conduct Review

Viking, the publisher of “Three Cups of Tea,” said in a statement on Monday that it would review the book and its contents with the author, Greg Mortenson, after a CBS News report that called into question the accuracy of part of the book.

Mr. Mortenson’s memoir, an account of his work building schools in Pakistan and Afghanistan, has sold millions of copies.

“Greg Mortenson’s work as a humanitarian in Afghanistan and Pakistan has provided tens of thousands of children with an education,” Carolyn Coleburn, a spokeswoman for Viking, said in a statement. “ ‘60 Minutes’ is a serious news organization and in the wake of their report, Viking plans to carefully review the materials with the author.”

The statement was a strong signal that Viking, an imprint of Penguin, is not convinced of the accuracy of Mr. Mortenson’s book. In several high-profile cases in recent years, publishers of nonfiction have been forced to retract or apologize for memoirs that have been found to be partially or totally fabricated.

A report on “60 Minutes” on Sunday questioned a central anecdote of “Three Cups of Tea”: in 1993, Mr. Mortenson stumbled across the small village of Korphe in northeast Pakistan after failing to summit K2, the world’s second-highest mountain. Mr. Mortenson wrote in the book that after the villagers there nursed him back to health, he vowed to return and build a school.

Mr. Mortenson has defended the information in the book, but has also said that it was based on a “compressed version of events.”

The CBS report also suggested that Mr. Mortenson’s charitable organization, the Central Asia Institute, was plagued by mismanagement and inappropriate spending.

Article source: http://feeds.nytimes.com/click.phdo?i=b9f04bed1592a1ba6b1994e3385a48f9