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how can the discipline inspection and supervision organs coordinate the promotion of corruption control and risk mitigation to ensure the high-quality development of state-owned enterprises? the reporter went to hubei yihua group, which was once mired in a quagmire, for an interview and investigation.

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as night falls, lights shine brightly in yichang, hubei, and the yangtze river flows slowly from west to east through the city. a twin building stands by the river, with the four characters "hubei yihua" shining brightly between the buildings. yihua group is a nationally renowned fertilizer manufacturer and asia's largest polyol production base, known as the "eldest son of yichang's industrial enterprises."

however, such a well-known and old state-owned enterprise was once in deep trouble due to corruption. under the leadership and support of the hubei provincial commission for discipline inspection and the yichang municipal party committee, the yichang municipal commission for discipline inspection and supervision insisted on simultaneously making efforts in clarifying the facts, recovering stolen money and losses, preventing and controlling risks, filling loopholes, and reshaping the ecology. it successively investigated and punished 27 senior executives and backbones including jiang yuanhua, the former party secretary and chairman of yichang chemical industry group, urged yichang chemical industry to improve its institutional mechanisms, and took this opportunity to promote the strengthening of supervision over municipal state-owned enterprises and clear obstacles for the high-quality development of enterprises.

face the problem:

why did a senior executive of a long-established state-owned enterprise commit corruption by relying on the company to eat the company's money?

walking into the yichang city anti-corruption education center, the warning education film about yihua group has been filmed for the third time. the latest film, with black screen and subtitles at the end, lists the senior executives and backbones of yihua group who have been investigated and punished since 2018. this list of more than 20 corrupt officials makes people think: why did such a large-scale collapse of corruption occur in a well-established state-owned enterprise with considerable background and strength?

yihua group was founded in 1977. in the late 1990s, due to the decline in fertilizer prices and poor corporate management, it squeezed a large amount of working capital to start renovation and expansion projects, and was on the verge of bankruptcy. in 2000, its bank account funds were only 10,000 yuan, and its losses were as high as 38 million yuan. after jiang yuanhua took over as the "top leader", with the support of national industrial policies, the group's profitability rose sharply and once grew into an industry leader. faced with the achievements, jiang yuanhua's heart began to swell.

2002 was a watershed in jiang yuanhua's life. in june of that year, hubei zaoyang fertilizer factory entered bankruptcy liquidation procedures due to poor management. after inspecting the factory, jiang yuanhua thought it was profitable, so he joined forces with some senior executives of yihua and some individual bosses to raise funds to acquire zaohua. in october of the same year, jiang yuanhua used his position to transfer 19 people from yihua to form a management team to manage zaohua, and took the opportunity to let zaohua use yihua's human resources, technology, market and other resources in matters such as raw material procurement, technical production, and product sales to produce similar products as yihua, seeking huge profits.

since then, jiang yuanhua and his friends have been unstoppable, gradually developing a huge cluster of private enterprises. from 2002 to 2010, jiang yuanhua copied the zaohua model and successively acquired more than 10 fertilizer and chemical companies, rapidly expanding his private territory. in addition to illegally operating similar products, jiang yuanhua and his relatives and friends also divided shares and dividends in various related companies, and wantonly demanded and accepted bribes, seriously damaging the interests of yihua.

the group's senior executives made money crazily, and their family members "shared the benefits equally". relatives of yihua group's senior executives registered and established companies around yihua, and the companies supplied whatever yihua needed. jiang yuanhua's sister supplied coal to yihua, and his relative duan supplied coal rod machines to yihua. the driver's transportation company monopolized the transportation of hazardous chemicals in yihua. wherever zhang zhonghua, former member of the party committee and deputy general manager of yihua group, took office, his cousin hu followed him there, using his family relationship to obtain projects within zhang zhonghua's management scope and making a fortune.

in the name of all-staff trade, jiang yuanhua also mobilized company cadres and employees to register a large number of trading platform companies to participate in various purchase and sales work of yihua, artificially increasing the intermediate links of purchase and sales. a large number of shell trading platform companies formed a "hidden river" around state-owned enterprises, illegally transferring the profits that originally belonged to state-owned enterprises to personal pockets through platform companies.

since 2001, yihua has opened a large number of personal accounts and deposited corporate funds outside the accounts, with the amount of funds reaching tens of billions of yuan, forming a huge fund pool similar to a "secret fund". these funds were mainly managed by a group of relatives and friends consisting of jiang yuanhua's sister and the wives of senior executives. because they were out of supervision for a long time, it was easy for senior executives to embezzle and embezzle.

"during jiang yuanhua's tenure at yihua, there were four prominent problems: illegal operation of similar businesses, large-scale related transactions, intercepting state-owned enterprise profits in the name of all-employee trade, and privately setting up off-book accounts. these four 'viruses' grew and spread along the company's organizational structure, laying the hidden dangers for large-scale collapse-style corruption," said yang yuchao, deputy secretary of the yichang municipal commission for discipline inspection and deputy director of the supervisory commission.

dig deep and investigate:

we will continue to rectify the prominent problem of relying on enterprises to eat up enterprises, and resolutely eliminate the "worms" who are wantonly developing their "family businesses" by relying on state-owned enterprises.

in april 2017, the 7th inspection team of the hubei provincial party committee forwarded the clues of problems found in yihua group during the inspection to the provincial commission for discipline inspection. according to the arrangement, the yichang municipal commission for discipline inspection set up a special case team to conduct preliminary investigation and found that jiang yuanhua and some senior executives had serious corruption problems.

the task force investigated several senior executives of yihua and obtained a lot of clues about jiang yuanhua's problems. in early 2018, jiang yuanhua was dismissed and the provincial commission for discipline inspection and supervision upgraded the investigation.

from the group's "top leader" to many company executives, and then to relevant close relatives and business associates, an anti-corruption campaign involving a large number of people, a long time span, and a large amount of money is being carried out in depth in yihua.

"the investigation found that jiang yuanhua was a typical example of corruption who used state-owned enterprises to develop his 'family business'. the degree of specialization and complexity of his behavior was quite rare." ye jingyuan, deputy section chief of the 10th investigation and inspection office of the yichang municipal commission for discipline inspection and supervision, introduced that in order to cover up his illegal operation of similar businesses, jiang yuanhua negotiated in the name of yihua when acquiring zaohua. after the acquisition, the management team transferred from yihua also went through nominal resignation procedures. the huge profits gained from zaohua were also transferred to him and related senior executives through numerous cover-ups.

the task force started the investigation by finding that its property expenditures clearly exceeded its legal income, and followed the clues to uncover abnormal behavior such as dividends from zaohua by jiang yuanhua and other executives. they then discovered that the funds for the acquisition of zaohua were misappropriated from yihua, and that the executives transferred to zaohua had falsely resigned to avoid risks. in addition, zaohua fully utilized yihua's human, technical, market and other resources in procurement, production, and sales.

"jiang yuanhua's plan is to reap the benefits while avoiding legal risks. he spared no effort to cover up for himself, but also left more traces in the process of covering up." xia guangqing, a member of the special task force and head of the discipline inspection and supervision group of the yichang municipal commission for discipline inspection and supervision stationed in the municipal intermediate people's court, said that the discipline inspection and supervision organs kept a close eye on his capital chain, power chain, event chain, and circle of friends, and conducted in-depth investigations into the problems hidden behind the abnormal phenomena, quickly identifying the problems, making a splash, creating deterrence, and demonstrating determination.

as the former deputy secretary of the party committee and executive deputy general manager of yihua group, wang zaixiao also took advantage of the company to eat up the company and enrich himself at the expense of the public. he used his power and influence to frequently greet the senior executives of the group's subsidiaries, and provided convenience for his brothers and sisters in engineering contracting, mineral material supply, hazardous chemical transportation, payment settlement, etc., relying on yihua to build the wang family business.

the task force first identified the problems in wang zaixiao's family business projects in terms of engineering contracting, mineral material supply, and hazardous chemical transportation. they then sought out senior executives of related companies to investigate and collect evidence, and verified that he had used his official influence to profit for his relatives and friends and engaged in large-scale related transactions.

upon investigation, jiang yuanhua seriously violated the party's political discipline, the spirit of the central committee's eight regulations, organizational discipline, integrity discipline, mass discipline and life discipline, and was suspected of bribery, embezzlement of public funds, misappropriation of funds, insider trading, illegal operation of similar businesses, and abuse of power by state-owned company personnel. he eroded state-owned assets in various ways, and the amount involved was huge. in september 2018, jiang yuanhua was "double-opened". in april 2022, jiang yuanhua was sentenced to life imprisonment and all his personal property was confiscated. more than 20 senior executives including wang zaixiao were "double-opened" and sentenced to fixed-term imprisonment ranging from 2 to 22 years.

"under the circumstances of weakened party leadership, lack of party building, and ineffective comprehensive and strict party governance, violations of laws and disciplines became the norm in yihua, and the problem of relying on the company to eat the company continued to breed and spread, destroying the company, corrupting the team, and corrupting the work style." wang dazhen, secretary of the party committee and chairman of yihua group, said that the party organization conducted a thorough investigation into corruption in yihua, concentrated on cleaning up the prominent problems of relying on the company to eat the company, completely saved yihua, and corrected the company's course.

promoting reform and governance:

urge municipal state-owned enterprises to investigate and rectify the case and prevent senior executives of state-owned enterprises from seeking improper benefits through similar businesses and related transactions.

since the acquisition of zaohua, jiang yuanhua and others have been operating the "enterprise" while deliberately making money for the "family business". they are not thinking about how to maintain and increase the value of state-owned assets, but want to take advantage of the reform to turn yihua into a private enterprise "run by the family".

"the investigation and handling of a series of corruption cases in yihua has strengthened the party's leadership over state-owned enterprises." zhan xueshi, member of the standing committee of the yichang municipal party committee, secretary of the municipal commission for discipline inspection and acting director of the supervisory commission, said that by benchmarking the spirit of general secretary xi jinping's important speech on the reform and development of state-owned enterprises, strengthening case investigation and handling and using cases to promote reform, the direction of state-owned enterprise reform and development has been calibrated.

the investigation of cases continues, and the deterrent effect of not daring to be corrupt is continuously strengthened. after the centralized case handling was completed, the yichang municipal commission for discipline inspection and supervision designated a special department to follow up and investigate other clues of yihua’s problems, especially those who continued to commit crimes against the wind after the jiang yuanhua case. under the high-pressure anti-corruption situation of state-owned enterprises in the city, zhang zhonghua, feng jiaxin, and other former deputy general managers of yihua group who still did not stop were filed for investigation.

the fundamental purpose of investigating and handling corruption cases in state-owned enterprises is to promote the healthy development of enterprises. through investigating and handling a series of corruption cases in yihua, the discipline inspection and supervision organs have conducted a comprehensive investigation into the problem of relying on enterprises to eat enterprises, held relevant personnel accountable, carried out reform and governance through cases, and promoted relevant departments to strengthen supervision of municipal state-owned enterprises, and resolutely eradicated the soil and conditions for the breeding of corruption.

in response to the problems exposed by the case, such as illegal operation of similar businesses and related transactions, the yichang municipal commission for discipline inspection and supervision urged yihua group to comprehensively revise its management system, promptly stop previous wrong practices through abolition, modification and establishment, establish correct guidance, strengthen the awareness of discipline and rules, and guide enterprises to manage in accordance with discipline and law. the commission for discipline inspection of yihua group strengthened supervision and discipline, urged the party committee to strictly implement democratic centralism, conduct collective research on major issues, and strengthen the prevention of corruption risks throughout the entire industrial chain and the entire process.

after investigating a series of corruption cases in yihua, the yichang municipal commission for discipline inspection and supervision suggested that the municipal party committee carry out special inspections on municipal state-owned enterprises. so far, it has carried out special inspections on 11 municipal state-owned enterprises in two rounds. it also suggested that the municipal state-owned assets supervision department urge all state-owned enterprises in the city to compare the problems exposed in the yihua case, learn from them, investigate and rectify them, and correct mistakes in a timely manner.

in view of the fact that inspections, case investigations, and special inspections have found that managers of state-owned enterprises such as yihua have invested in private enterprises and participated in production and operation for profit, which poses a great risk to integrity, the yichang municipal commission for discipline inspection and supervision has promoted the cleanup of violations such as similar operations, related transactions, and shadow companies, and jointly with the municipal party committee organization department and the municipal state-owned assets supervision and administration commission issued the "measures for preventing conflicts of interest among leaders in the operation and management activities of municipal state-owned enterprises (trial)", emphasizing that leaders of municipal state-owned enterprises shall not use their official convenience to seek benefits for themselves, their spouses, their children and their spouses, and other persons with specific relationships through similar operations or related transactions. after the cleanup, more than 200 managers withdrew all their shares from related private enterprises.

the case exposed the lack of supervision in the state-owned enterprise sector. yichang city explored the implementation of a joint cooperation mechanism of "office, group, local and enterprise", with a supervision and inspection office contacting municipal state-owned enterprises, a dispatched disciplinary inspection and supervision group carrying out counterpart supervision, an investigation and review office responsible for case guidance, and relevant local disciplinary inspection and supervision committees cooperating to form a joint force; 7 disciplinary inspection committee secretaries were selected for municipal state-owned enterprises and appointed as supervisory commissioners to strengthen the leadership of disciplinary inspection work in key municipal state-owned enterprises, formulate and implement the "interim measures for the selection and management of discipline inspection committee secretaries of municipal state-owned enterprises", "interim measures for the assessment and evaluation of the performance of discipline inspection committees of municipal state-owned enterprises", "opinions on strengthening disciplinary review of municipal state-owned enterprises", etc., and hold special training courses to improve the supervision and discipline enforcement capabilities of disciplinary inspection and supervision cadres in state-owned enterprises.

source | central commission for discipline inspection and national supervisory commission website