China Probes State-Assets Head as Anti-Graft Push Widens

Photographer: Daniel J. Groshong/Bloomberg

Former PetroChina Co. Chairman Jiang Jiemin, pictured, is the highest-profile official investigated since Chinese President Xi Jinping took over the ruling party in November, vowing to crack down on graft which he said threatened its six-decade hold on power. Close

Former PetroChina Co. Chairman Jiang Jiemin, pictured, is the highest-profile official... Read More

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Photographer: Daniel J. Groshong/Bloomberg

Former PetroChina Co. Chairman Jiang Jiemin, pictured, is the highest-profile official investigated since Chinese President Xi Jinping took over the ruling party in November, vowing to crack down on graft which he said threatened its six-decade hold on power.

China’s corruption watchdog opened a probe into the director of the state-owned assets overseer, pursuing the highest profile official since Xi Jinping took over the Communist Party last year with a pledge to fight graft.

Jiang Jiemin, head of the State-Owned Assets Supervision and Administration Commission, is under investigation for alleged “serious disciplinary violations,” the Ministry of Supervision said yesterday. He is also the former chairman of state-owned China National Petroleum Corp., the country’s biggest oil producer.

By pursuing Jiang, the leadership is widening graft investigations after Xi warned that corruption threatened the Communist Party’s six-decade hold on power. Focusing on the state-owned companies Jiang oversaw and China’s oil industry may give Xi, who became president in March, and Premier Li Keqiang greater impetus to push through changes at a key party economic policy meeting in November, said Willy Wo-Lap Lam of the Chinese University of Hong Kong.

“Xi probably emerges more powerful than ever,” Lam, an adjunct professor of history, said by telephone. “Xi and Li will subject these huge conglomerates to more intense scrutiny, -- this is a way to impose some sort of discipline.”

The probe comes less than a week after a court in eastern China wrapped up ousted Politburo member Bo Xilai’s five-day trial on bribery, embezzlement and abuse-of-power charges. On Aug. 30, the South China Morning Post reported that Zhou Yongkang, a CNPC general manager in the 1990s who was a member of the Politburo Standing Committee until last year, is also being investigated. Jiang and Zhou’s career paths overlapped in 1989-1990.

Graft Investigation

Also last week, four officials at CNPC and its Hong Kong-listed unit, PetroChina Co., were removed from their posts as part of investigations by China’s graft watchdog.

Jiang no longer appears under the leadership section on SASAC’s website and articles detailing a visit he made to Aviation Industry Corp. were removed.

When Xi took over the party last November, he warned that corruption posed a grave threat to the party. Since then, state-owned media have praised the government’s targeting of both “tigers and flies” -- party cadres across the power spectrum.

An investigation of Zhou, which hasn’t been confirmed, would indicate that Xi has amassed enough power to push through economic policies aimed at maintaining 7 percent annual growth, including controlled financial liberalization and more competition for state-owned companies, said Arthur Kroeber, Beijing-based managing director of GaveKal Dragonomics, an economic analysis firm.

“A takedown of Zhou, who was usually seen as a proponent of state enterprises and political repression, would make clear that Xi does have the power to push through difficult changes,” Kroeber wrote in an Aug. 30 note.

Vice Chairman

Other officials under investigation by the discipline commission include Liu Tienan, vice chairman of the country’s planning agency, who was fired in May and expelled from the party in August. Li Chuncheng, a deputy party secretary of Sichuan province, was put under investigation in December, the official Xinhua News Agency reported at the time.

Zhou held the top party post in Sichuan from 1999-2002, when Li Chuncheng served in top posts in the provincial capital, Chengdu.

Bo was removed from his post as party secretary of Chongqing in March, 2012 after his police chief in the municipality fled to a U.S. consulate with evidence that his wife, Gu Kailai, murdered a British businessman. The verdict from his trial will be announced at a later date, Xinhua said at the end of his trial on Aug. 25.

Jiang was head of state-owned CNPC until earlier this year. All four of the officials targeted in the probe last week worked at CNPC during Jiang’s chairmanship.

Gaining Speed

“This announcement suggests the anti-corruption campaign is picking up speed,” Nomura Holdings Inc. said in a research note yesterday. The investigation into Jiang “shows the new leadership is on track to establishing its authority, which is a necessary condition for implementing tough structural reforms,” Nomura said in the note.

Jiang and Zhou’s paths crossed in the oil industry, where they worked for more than three decades. Both served in top Communist Party posts at the Shengli oilfield in the eastern province of Shandong from 1989-1990, where Jiang began his career in 1972, according to their official biographies.

Oilfield Positions

After working in oilfield positions in Shandong and the western province of Qinghai, Jiang became an assistant to CNPC’s general manager in February 1999, when he led a team preparing for PetroChina’s initial share sale.

PetroChina rose 1 percent to HK$8.52 at 9:33 a.m. in Hong Kong. Kunlun fell 0.4 percent to HK$11.26.

Jiang was deputy governor of Qinghai in the early 2000s before returning to CNPC as a deputy general manager. He was appointed general manager in November 2006 and became chairman of PetroChina in May 2007, according to the company’s website. Jiang was appointed to the newly created post of CNPC chairman in November 2011, it said.

He was the only head of a state-owned energy company selected as a full member of the Communist Party’s 205-strong central committee in November.

To contact the reporters on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net; Michael Forsythe in Hong Kong at mforsythe@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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