Sinopec (HKG:0386), China’s largest state-run oil & gas company, was accused by the Central Commission for Discipline Inspection (CCDI) of nepotism and accepting kickbacks. It seems the Communist Party has finally gotten tired of corruption and incompetence in state owned enterprises (SOEs), basically calling Sinopec corrupt.
The watchdog group said on Saturday that Sinopec must stop “power-for-money dealings” and prevent the loss of state assets”. According to a statement on the CCDI’s website, several executives of the company are suspected of accepting bribes in the areas of sales, supply, joint-ventures, international operations, and construction.
The agency also said that family members of top executives used their connections by having their own companies chosen as contractors and partners of Sinopec.
Beijing is focused on stamping out corruption in both the public and private sectors. Inspections and auditing of strategic firms, especially state-run businesses, have been more frequent over the past several years.
Premier Li Keqiang has vowed to fight corruption, saying that China will show “zero-tolerance” for corrupt executives and officials regardless of “how senior his position is”.
“Corruption is a natural enemy of the people’s government,” said Li. “We must put the exercise of power and the use of public money under institutional checks.”
Does this mark a major change for the Chinese economy, and will other countries follow suit? Only time will tell.