According to detailed survey made by the anti-corruption bureau of
the Beijing Procuratorate, the 730 bribery cases that occurred in
state-owned enterprises between 1997 and 1999 reveal a manifest
increase in the quantity and intensity of abuse of power by
enterprise leaders.
Loopholes in the SOE Transition
During the current transitional period in SOE restructuring,
wrongdoers have been able to take advantage of contract holding to
serve their own interests. They exploit state assets to engage in
business, siphoning off whatever profits have been gained while
dumping debts onto the enterprise. Exploiting the chances offered
by asset reshuffling and debt-to-equity switches, some managers
have illegally bought legal person’s shares for themselves with
state money. Others take the opportunity to illegally share or
intentionally undervalue state assets to make profits.
Lack in Effective Surveillance
In
this particular stage of system transition, the state has allowed
the enterprises to assume control and make their own decisions.
However, the relevant surveillance system has not yet been built
up. This offers some wrongdoers chances to expand their individual
power without limit and subsequently lead to the abuse of power for
profit.
Internal Divergent Practices
Paying no attention to financial management regulations, some
working units keep their own secret “banks” to evade taxes. Since
only one or two people control these secret “banks”, they become an
easy target for money-related actions involving an abuse of
power.
To
prevent abuse of power, the Beijing Procuratorate has listed seven
pieces of advice for SOEs to follow.
First, democratic management should be given full play. To achieve
this a democratic operational mechanism must be established,
workers’ representative conferences regularly held and
representatives’ opinions fully appreciated.
Second, the financial management system must be improved, strictly
adhering to the Accounting Law. Emphasis should be placed on both
financial management and assets management in production and
operation.
Third, ban the existence of secret banks.
Fourth, prevent asset loss in the process of contract holding,
paying special attention to task contracts, assignment of
accountants and auditors and bonus returns for contractors.
Fifth, practice a system of regular position flow in some key
posts.
Sixth, various inspection departments and personnel within the SOEs
should be assigned, be directly responsible to and supervised by
the superior inspection department, instead of being controlled by
the enterprise leadership.
Last, combined efforts of the Procuratorate and the SOEs are needed
in order to build up a case transfer system.
(CIIC 12/21/2000)