Probe Into Electricity Chief May Foreshadow Downfall of Former Powerful Party Official

June 25, 2015 6:52 pm Last Updated: June 26, 2015 10:35 pm

An investigation into the head of China’s largest state-owned electric utilities company could signal the beginning of the end for the Chinese regime’s powerful former vice chairman.

Liu Zhenya, the chairman of State Grid Corporation of China, is allegedly being investigated by the Central Commission for Discipline Inspection (CCDI)—the Communist Party’s anti-corruption agency—according to an exclusive report from overseas Chinese news website Bowen Press.

Liu Zhenya, president of China's State Grid Corporation, gives a speech during a signing ceremony at the Portuguese Finance Ministry in Lisbon on Feb. 22, 2012. (AP Photo/ Francisco Seco)
Liu Zhenya, president of China’s State Grid Corporation, gives a speech during a signing ceremony at the Portuguese Finance Ministry in Lisbon on Feb. 22, 2012. (AP Photo/ Francisco Seco)

News of Liu’s purge follows the CCDI’s recently concluded inspection of the State Grid Corporation of China, a company ranked seventh on Fortune Magazine’s 2014 Global 500 list. Top leaders in the firm were found to have abused their positions and accepted bribes to enrich themselves and their families, state-run People’s Net reported on June 17. Five executives—Zhu Zhanglin, Guan Shouzhong, Ma Linguo, Yan Fulong, and Wu Zhouchun—have been arrested, according to Bowen Press.

Shortly into his tenure, Xi vowed to rid the Party of “tigers and flies”—official language for corrupt officials of all stripes—in a sweeping anti-corruption drive. Analysts of Communist Party politics view Xi’s campaign as an attempt to root out a powerful Party faction controlled by former Party leader Jiang Zemin.

The investigation into State Grid Corporation of China and its leader also appears to bring Xi a step closer to the removal of a shadowy powerbroker in Chinese politics, Zeng Qinghong, of whom Liu Zhenya has long been a prominent protégé. Zeng is a former Politburo Standing Committee member, and the right-hand man of Jiang Zemin. Rumor, speculation, and official hand-tipping about Zeng possibly being next on the anti-corruption hit list have trickled out of China for over a year now.

In 2000, Zeng, then the head of the Organization Department of the Communist Party’s Central Committee—a powerful, secretive Leninist agency that determines Party appointments—promoted Liu to deputy manager of the State Grid Corporation of China.

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Liu never forgot his political patron. Five years later, he sold Shandong Luneng Group, a large state-owned energy and real estate firm, to Zeng Qinghong’s son Zeng Wei, and his friend, for $600 million (3.7 billion yuan), according to a seminal 2007 report from Chinese financial magazine Caijing. Shandong Luneng Group was then valued at $17.7 billion, with a net worth of $12 billion.

For over a year now, overseas Chinese media, and sometimes media in China, have hinted or reported that Zeng has been subject to a form of low-key, Party discipline; has had his movements restricted; or is already being investigated. Zeng’s prolonged absence from the public eye at key events has lent weight to the reports.

Top Party officials are rarely dethroned overnight. The case of recently purged former security czar Zhou Yongkang is instructive as to what might befall Zeng Qinghong.

First, Zhou’s allies in the oil sector, most notably former PetroChina Chairman Jiang Jiemin, were taken in one after the other on corruption charges. Zhou was then arrested in July 2014, and his son, Zhou Bin, was detained in August. On June 11 this year, a video of a gray-haired Zhou confessing his crimes in a closed-door trial and being sentenced to life imprisonment was broadcast on state media.

If confirmed, the purge of Liu Zhenya may mean that bigger “tigers” await arrest, including Liu’s powerful political patrons.