China Three Gorges Says Government Finds Favoritism in Bidding

China Three Gorges Corp., the state-owned operator of one of the world’s biggest hydro-power projects, said a government investigation found favoritism in awarding construction contracts.

Managers allowed friends and family members to be involved in projects, the company said in a statement to its website yesterday. Others violated rules around extravagant spending, owning several apartments and purchasing higher-standard cars than allowed. The statement didn’t name individuals.

Construction of the Three Gorges Dam on the Yangtze River began in 1994. Now one of the world’s largest power stations, it has attracted controversy for its environmental impact and the displacement of the local population.

China’s new government, led by President Xi Jinping, launched a nationwide anti-corruption campaign last year, which has toppled senior officials including former Chongqing party chief Bo Xilai and the former head of China’s state-owned assets watchdog and ex-chairman of PetroChina Co., Jiang Jiemin. The violations at Three Gorges were reported after a review conducted by a central government team from October to December, according to the statement.

“The investigation has revealed a lot of problems in our regulation and management,” Cao Guangjing, chairman of Three Gorges, said in the statement. “We will follow instructions and suggestions from the investigation team to get those problems fixed.”

The company’s 2012 revenue was 36.1 billion yuan ($5.95 billion), with a net income of 12.2 billion yuan, according to data compiled by Bloomberg. China Yangtze Power (600900) Co., its Shanghai-listed unit, declined 1 percent to 5.96 yuan as of 10:36 a.m.

To contact the reporter on this story: Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Jason Rogers at jrogers73@bloomberg.net

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