Mesopotamia

China party chief sacked in graft scandal(转)

By Geoff Dyer in Shanghai

Published: September 25 2006 07:23 | Last updated: September 25 2006 21:58

China’s President Hu Jintao moved decisively to cement his political authority and that of the Beijing central government in economic affairs by on Monday sacking Chen Liangyu, the Communist party secretary in Shanghai, for alleged crruption.

A scandal involving the Shanghai pensions system erupted into a national political power struggle after Mr Hu used the allegations to dismiss Mr Chen. As a member of the national politburo, from which he has also been suspended, Mr Chen is the most senior Chinese official to be dismissed for corruption in at least a decade.

By dismissing Mr Chen, Mr Hu has moved to strengthen his position before the Communist party’s annual meeting next month and a party congress in 2007 to decide the next generation of leaders. But Mr Hu risks causing ructions among other senior leaders.

The official Xinhua news agency announced, in an unusually strong statement, that Mr Chen had been sacked because of his role in mismanagement of the Shanghai pension fund.

“Comrade Chen Liangyu has been involved in the misuse of social security funds by the Shanghai Bureau of Labour and Social Security,” the Xinhua statement said.

He was accused of illegally enriching relatives, protecting staff who broke the law and “creating malign political influences”. Mr Chen has been detained under a form of house arrest while under investigation.

As well as extending Mr Hu’s political authority over regional officials, who enjoy considerable autonomy, the move also sends out a strong anti-corruption message. Some analysts said the dismissal of Mr Chen also represented an attack on the allies of former president Jiang Zemin, who had served as mayor of Shanghai.

Steve Tsang, a Chinese politics expert at St Anthony’s College, Oxford, said: “The move is meant to consolidate Hu’s position and show it to the country. This means showing that even Shanghai’s boss cannot avoid his authority.”

Mr Chen, as well as being the senior official in Shanghai, China’s commercial capital, was a leading figure in the so-called Shanghai gang that was close to Mr Jiang. 

Although Mr Hu has been less generous than Mr Jiang to Shanghai since he came to power in 2002, he had not openly confronted the Shanghai clique before Monday.

Mr Hu was reported to have tried to move Mr Chen to another job last year, only for Mr Jiang to intervene to keep him in the Shanghai party secretary post. Han Zheng, the mayor of Shanghai, is to take over temporarily as party secretary.

The corruption scandal revolves around the misuse of the city’s pension fund, an area in which Shanghai had been expected to set an example of good management.

A team of more than 100 investigators was sent from Beijing at the end of last month to look into a Rmb3.2bn (£212m) loan in 2002 to a then unknown company called Fuxi Investments. The loan amounted to a third of the fund’s assets.

The chief executive of the company and two senior Shanghai officials – Zhu Junyi, head of the pensions bureau, and Qin Yu, a former personal aide to Mr Chen – have been detained as part of the investigation.