Petro-China executives face corruption probe.

Petro-China lost $1 billion dollars in market value in one day of trading, as investors bailed  following news that the corruption probe in China had been expanded to include three executives at Petro-China.

http://online.wsj.com/article/SB10001424127887323324904579040200172694292.html

Trading of shares in PetroChina and unit Kunlun Energy Co. KLYCY -8.19%were halted Tuesday ahead of PetroChina’s disclosure that three of the companies’ senior executives were under investigation by the Chinese government for “severe disciplinary violations” and had resigned.

The news followed by a day parent company China National Petroleum Corp.’s announcement that one of its executives was being investigated for the same reason. Neither PetroChina, the country’s largest listed oil company by capacity, nor CNPC have released specifics about the probes, but the term “severe disciplinary violations” often implies corruption investigations in China.

~snip~

Analysts noted that investigations into Chinese state-owned enterprises, or SOEs, operating in the energy sector aren’t unprecedented, pointing to the arrest and resignation of former China Petroleum & Chemical Corp. chairman Chen Tonghai.

Mr. Chen was given a suspended death sentence in 2009 on corruption charges after he admitted to improperly accepting more than $28 million in bribes. In 2010, the company, known as Sinopec, also admitted that one of its employees took bribes from German auto maker Daimler AG.

This news piqued my interest entirely because Petro-China is a stakeholder in several Canadian projects, including heavy investments in Alberta’s oil and gas, as well as Kitimat’s LNG terminal. http://thetyee.ca/Blogs/TheHook/Labour-Industry/2012/12/14/petrochina-natural-gas-nexen/

In recent months, new President Xi Jinping started a very high-profile anti-corruption campaign after declaring corruption to be a threat to the survival of the Communist party.  While allegations of corruption at the executive level are nothing new to the corporate world globally, in China the penalty is potentially lethal.

Case in point, the case of Zeng Chengjie, who had been referred to often in news reports as the Bernie Madoff of China.  He was executed by lethal injection, and Chinese officials didn’t even inform his family prior to the execution. What struck many around the world in this case, including Araminta Wordsworth of the National Post, was the disparity between how Communist party members and officials are dealt with, and how everyone else is dealt with:

Liu Zhijun embezzled more than three billion yuan ($505-million), including $9-million in bribes. Investigators also discovered he owned 16 cars and more than 350 apartments, and supported 18 mistresses. (According to Chinese media reports, these figures represent about one third of what he actually stole.)

Zeng Chengjie, described as the Bernie Madoff of China, raised 3.5 billion yuan ($570-million) from more than 20,000 people, and was responsible for investor losses totaling 620-million yuan.

Both were found guilty, but guess which one was executed? Why Zeng, of course. The self-made businessman found himself unprotected after a clearout of officials who had encouraged him to get into the business in the first place.

Liu was the railways minister and a high-ranking Communist Party official with stellar family connections.

How – or if- the current investigation involving Petro-China and its parent company executives impacts it’s business outlook longterm is unknown, but this latest story highlights two big issues for me.

First,Chinese state owned businesses operating and investing in Canadian resources and infrastructure is still a big catch-point for many Canadions concernd about how that threatens Canada’s ability to control our own resources.

Second, the irony is not lost on me, of the stark contrast between the Chinese Communist Party pushing an anti-corruption probe forward…as superficial as it may be… while Canadian officials and politicians  sit and twiddle their thumbs when the subject of corruption comes up in our own country – with the exception of Quebec’s Charbonneau Commission.

*recent Canada-China news: https://lailayuile.com/2013/08/24/canada-signs-initiative-with-china-to-promote-high-level-military-exchanges/

12 thoughts on “Petro-China executives face corruption probe.

  1. nonconfidencevote

    Hmmmm, the death penalty for cheating millions of investors out of their hard earned life savings.
    What a novel concept.
    I wonder how Canadians would vote in a referendum if the meltdown like the “First City Savings” in Edmonton in the late 1980’s happened again here. (THOUSANDS of people had their live savings wiped out while the top executives moved millions of their personal savings out of Canada).
    And then they had the audacity to claim “innocence”.
    These people are predators, all be it, financial predators. Their actions cause the premature deaths of many, many seniors due to added mental and physical stress.

    I for one, would welcome the death penatly for scum such as these swine that play with millions of people’s lives so that they can have another Ferrari, or a bigger mansion.
    Unmitigated scum.

    Nothing like a possible death sentence to focus one’s attention.

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    1. Laila

      Interesting take on that.

      Unfortunately, the Canadian justice system often fails to take regular crime seriously, let alone the white-collar sort. That indeed, is the issue. They know even if they get caught it’s very unlikely to result in anything too serious.

      Look at our Senate trough feeders.

      Like

  2. oceantor

    Maybe the law of Perjury should be applied to our Politicians with a minimum of 10 years if caught lying. I believe if that were to happen, we would have a just Society. Viva, Viva Le Revolution! Eh

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    1. Laila

      I’ve always said we need the oaths of office strengthened and make every politician sign a contract with specific terms set out. But that is neither here nor there in the case of executives and corruption, or high level public servants. It takes two for corruption to occur in most cases.

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  3. Julie

    Quite sometime back in an article in the Tyee. The China trade deal a, 31 year ball and chain on Canada. The Canada, China FIPA deal? I signed the petition against Harper’s FIPA deal with China. There is also Harper’s Omnibus Bill, that permits China to sue Canada if, anyone tries to block China’s huge inroads into this country.

    Chinese buying up Canadian farmland
    June 22/2013
    foxnews.com

    Harper mulls massive Chinese project in our High Arctic
    12/27/2012
    huffingtonpost.ca

    China owns much more of Canada than that. The oil sands, Nexen, mines, and?
    China investment corporation eyes BC forests, spells FIPA danger.
    Dec 14/2012
    ancientforestpetition.com

    If all of that is accurate? That is a crime against Canada and the Canadian citizens.

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  4. luigi

    Harper has basically sold Canada to the Chinese in this FIPA deal, which legally binds our hands in the event of a dispute.
    What scares the hell out of me is the fact that Harper, and people like Pat Bell here in BC, were and are promoting the tar out of China as the be all and end all of new markets for Canadian raw resources. They are placing a huge dependence on China as the prime nation to do business with. So we are shipping resources there in ever-increasing quantities.
    But here’s the thing. As seen repeatedly in newscasts, the Chinese economy is a false one, built on falsehoods. Look at the hundreds of cement skyscrapers that have been built there which sit absolutely empty. Jobs were created for the sake of creating jobs, but now those jobs are gone and there is no one to buy the units in all of those buildings.
    Canada, I believe, should be extremely wary of depending on China as a stable marketplace. It is anything but, and the Chinese economy will come crashing down at some point. The fallout here will be immeasurable. I mean if China is such a great place, why are its people who can afford it flocking to countries such as ours? And why is there such widespread investment in good old Canada?
    As far the corruption noted in your article, Laila, the world is run by corrupt powerbrokers who control the strings attached to governments around the planet, no matter what stripe, be it democratic, communist, what have you. The game of politicians now seems to be grab all you can while the candy store is still open. Oaths of office are mouthed, not put into practice. They are meaningless prattle that give the appearance of democracy.

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  5. e.a. foster

    it would not be unreasonable to conclude the corruption has flowed over to Canada. We just haven’t gotten the information. The “investigations” into corruption in China is a nice way to get rid of those who oppose you and send a message to your enemies. This culture does not stop at the border of China, nor do the Chinese have exclusive rights to coruption.

    We know Quebec certainly has enough of it but then they are having an investigation. What goes on at the national and various provincial levels, well we don’t know and most likely never will. You just have to wonder why China and Canada are signing all these agreements and who is getting what out of what. We have Stevie slime talking about the chemicals being used by Assaid in Syria but on the other hand, we have stevie slime signing agreements with China, who supports the Syrian government. If the slimers had any moral compass they would simply back away from all these agreements with China. Will then, NO. Why? Some body is making money,. It is just human nature. We have seen how well human nature has worked with stevie’s senate appointments. Now if we could only have a good look at the books for the PMO and the commons, etc.

    Like

    1. Laila

      Nothing has ‘flowed over’ to Canada, it was here already.

      I agree that the corruption probe in China is more likely than not to be a PR exercise since the police state still enforces vastly different punishments to state connected executives than they do non state connected executives.
      Anyone who thinks the political/private corruption is limited to Quebec needs a bucket of ice water over their head. There is ample reason to investigate further in BC and other provinces. As you state in a round about manner… follow the money.

      Good of you to assist in pointing out that the Chinese government,whose defence minister just met with Canadian AND American officials, is a supporter of the Assad regime. Rather puts Canada in an awkward position now, doesn’t it?

      Like

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