Corruption=Dead!

Remember this face! Chen Liangyu, former Deputy Secretary of the CPC Shanghai Municipal Committee and mayor of Shanghai has been brought down because of the huge corruption and misappropriation of one-third of the city's $1.2 billion social-security fund.

China's official media have described it as Shanghai's biggest financial scandal in many years. It allegedly involves the misappropriation of one-third of the city's $1.2 billion social-security fund. Since the scandal was uncovered in July, the director of Shanghai's Municipal Labour and Social Security Bureau, Zhu Junyi, and a district government chief, Qin Yu, have been sacked. Mr Qin happens to be a former top aide of the city's party chief, Chen Liangyu, who is also a member of the ruling Politburo. Several prominent people in the business world are being questioned. On September 5th Chinese media said Wu Minglie, the chairman of one of Shanghai's biggest property developers, New Huangpu Group, had been detained.

According to Chinese press reports, the fund lent money that was used to invest in risky toll-road and real-estate projects. In theory, social-security funds should mainly be invested in treasury bonds and bank deposits, which yield very low returns. The government has been cautious about allowing funds to be put into stocks because China's capital markets are still rather rough and ready. It also fears that any loosening of controls could encourage abuses by local officials. But a lack of transparency in the management of funds, combined with pressures to make up pension deficits, still result in frequent wrongdoing. Xinhua quoted an official as saying that 16 billion yuan ($2 billion) had been embezzled from the funds since 1998.

Corruption=Dead. Good job CPC!


Quoted texts are from Economist.com