Q: It is reported that during the reform of SOEs, some
managers became millionaires or even billionaires by pocketing
large amounts of State assets. Please explain what caused the
losses of State assets and what measures will China take to stop
it.
A: The situation you mentioned does exist, but those are
individual cases. Since the nationwide introduction of property
rights reform in 1993, State assets in small- and medium-sized SOEs
in ordinary economic sectors have been phased out in different
batches. The purpose of the reform is to optimize ownership
structure and improve efficiency.
Yet during the process, supervision loopholes have resulted in a
drain of State assets in certain enterprises. Some managers have
illegally diverted State assets into their own pockets and became
rich overnight.
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Loss of state assets has become a grave problem hampering the
reform and development of SOEs. The major reason is unclear
property rights.
In China, the ownership rights and interests used to be
artificially allocated to local governments at different levels,
departments of the central government and individual enterprises.
State assets were owned and managed by every one and yet no one.
The ambiguity resulted in the misappropriation of State assets by
institutes and individuals. And some individuals have taken the
loopholes it created to their own advantage in the reform of
property rights reform.
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In order to avoid further drain of State assets, the central
government has taken strict measures.
?
First, standardized procedures in reforming SOEs have been
enforced. Regardless of the forms adopted in reform, all companies
should first carry out assets liquidation and hire a qualified
third-party agency to conduct assets assessment. Any sale of State
assets must be approved by their owners and be conducted through
bidding or other market means. When managers want to purchaser
their own enterprises, all assets must be audited to guard against
them from embezzling State assets by using their power.
?
Second, Reform plans and procedures must be made more transparent.
Opinions and suggestions of the congress of employee
representatives must be heeded. Results of liquidation, auditing
and implementation of reform plans must be made public to all
employees.
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Third, State assets administration departments should supervise
assets liquidation and auditing. They must strengthen management of
assets auditing agencies, checking their qualifications and
guaranteeing accuracy of auditing reports. They must also assist
other relevant government departments in the investigation of State
assets embezzlement cases.
Fourth, Criminal charges must be filed against those who
illegally take State assets into their own possession. And the lost
assets must be retrieved.