Illegal Stock Ownership by Officials Affects Mine Safety

July 7, 2006 12:00 am Last Updated: July 7, 2006 12:00 am

Several key Chinese government agencies recently ordered government employees and lead personnel at government-owned enterprises to liquidate their stocks in coal mines. Currently, 620 million yuan of stock has been sold.

In August 2005, several key governmental agencies including the Chinese Communist Party Central Commission for Discipline and Inspections, Ministry of Supervision and the Chinese State Department announced that they would rectify the issue of government employees and lead personnel at government-owned enterprises investing in coal mine stocks. The new regulations required that these people sell the stocks by September 22, 2005, and notify the local agency's supervision or human resources staff. Those who did not report by the deadline would be fired.

However, according to media controlled by the Chinese Communist Party, there are at least 5,700 officials who continue to own investments in mines exceeding 700 million yuan in value. Sun Huaixin, deputy director of the Office of Supervisions at the Commission for Discipline and Inspections, said that 144 officials have been penalized for hiding and keeping private investments in mines.

Professor Hu Xingdou from the Beijing Institute of Technology said that the central government has always banned the involvement of officials in commercial activities, but has lacked effective measures to curb them.

Hu said, “We have produced many such regulations, including banning officials to engage in businesses or have more than one title, but the officials often hide from the supervision personnel. They have stocks in mines or other enterprises. How can this be detected, monitored or the officials punished? There are no detailed and effective regulations on these issues.”

Hu believes that a good system must have effective monitoring and regulations. Otherwise, the system is in vain, or considered just for show. Hu emphasized the importance of the role of the media and the public in such monitoring.

Hu said, “China is so big, and there are so many officials. There are probably tens of millions of government officials. If we only rely on the government's internal monitoring, the auditing departments, or the offices of discipline and inspections, then it would be very difficult to detect the corruption problems. As a result, the problems would worsen. So a basic measure to solve the problem is to open up media monitoring, instead of tightening it.”

According to the Chinese government's official media, the central government has tried to restrict government officials from owning mine stocks for fear that the officials would only be interested in the profits of the mines and disregard miners' safety.

Cai Chongguo, China Labor Bulletin's Paris representative, said that officials owning stocks is only one cause of the frequent mine accidents in China. “We should not think that if officials no longer owned any more stocks, then the problem of mine safety would be resolved. That's a fantasy. Officials owning stocks is merely one of the many problems, and is one that has a temporary solution.”

Cai also said that besides owning stocks, there are many other ways for local officials to gain profit from the mine owners. “Many local officials, actually most local officials don't own stocks. Instead, they extort high bribes by controlling safety certificates and mine permits.”

“Some officials also have their families and friends own stocks. You can't track it at all. The officials may not have money, but the mine owner would periodically deliver money to them. Besides, they use all kinds of power for extortion. Every safety inspection, overall inspection, transportation, and production process, including the application and renewal of licenses and permits, is used to solicit bribes. There are many ways for mine owners and the local government to engage financially,” said Cai.

Therefore, Cai thinks that one cannot rely on the ban of government officials to own mine stocks to disengage their financial interests in the mines. To truly solve the problem, the local government must increase the transparency of its operation, allow the workers to form unions, and truly allow the People's Congress and the Political Consultative Meetings to play a role in monitoring.