China Graftbuster Says Executives Traded Sex for Deals

Executives from six state-owned Chinese companies have been cited by Chinese authorities for wrongdoing, including seeking sexual favors for contracts, funneling cash to relatives and using public money to fund banquets and overseas trips.

China United Network Communications Group Co., Shenhua Group Corp., China Huadian Corp. are among those whose executives have been cited by Communist Party discipline inspectors for seeking money and sexual favors in exchange for contracts.

The findings come amid President Xi Jinping’s two-year anti-corruption campaign to bolster his power base and curb the graft that he’s warned could erode the party’s legitimacy. More than 80,000 officials have been punished for breaking party rules, the watchdog commission said last year. The party’s disciplinary watchdog, which didn’t announce any immediate punishment in yesterday’s statement, urged all companies to increase their capacity to crack down on violations.

Some officials at China United, the parent of the country’s second-largest mobile-phone operator China Unicom (Hong Kong) Ltd., were found to have colluded with contractors and suppliers and misused their position to seek money and sex, according to a statement posted on the website of the Chinese Communist Party’s Central Commission for Discipline and Inspection yesterday.

Officials at Shenhua, a coal-mining and trading group, abused contract approval authority to seek bribes while some executives at energy utility China Huadian allegedly traded party positions for promotions and allowed state-asset profits to pass to private enterprises, according to the statement.

Overseas Travel

At China State Shipbuilding Corp. officials were found to have sought illegitimate gains for family members through business transactions and overrun budgets, while some Dongfeng Motor Corp. executives used public funds for overseas travel and banquets, according to the anti-graft investigators.

“It’s a routine graft investigation, more like they are trying to nab whoever they are able to spot,” Lin Boqiang, a director of the Energy Economics Research Center at Xiamen University, said by phone.

Shares of China Unicom fell as much as 2.6 percent, and were down 0.9 percent at HK$12.76 at the midday trading break in Hong Kong, while Dongfeng Motor Group Co. declined 1.4 percent to HK$11.06.