Dirty coal

By Ling Yuhuan Source:Global Times Published: 2012-10-29 1:20:04

A coal mine in Taiyuan, Shanxi Province  Photo:CFP
A coal mine in Taiyuan, Shanxi Province Photo:CFP



A county government has announced an investigation into the sale of a 200 million yuan ($32 million) State-owned coal mine for less than one-five hundredth of its value to the brother-in-law of a local official in Shanxi Province.

The investigation by the Baode county government comes five years after the sale, and was announced last Thursday after the details were exposed by an investigative report published in the Legal Weekly last week.

The Balougou coal mine was sold for 375,000 yuan in November 2007 by the local Economic and Trade Bureau to Zhang Huaibao, brother-in-law of Li Xinsheng, who once served as the head of the local mine bureau and the local Administration of Work Safety, and two other buyers. Xi was assigned as vice director of the Xinzhou Coal Industry Bureau in Shanxi in 2010.

A woman who once worked at the mine said that Zhang and the other two buyers were the major shareholders of the mine before the auction, with a 70 percent stake. The miner asked that her name be withheld.

The price of the mine skyrocketed to 260 million yuan when Zhang resold the mine two years later to Shenda Jinbao Coal Corporation.

"The mine is worth over 300 million yuan nowadays," Jiang Shuofu, legal representative of Shenda Jinbao Coal Corporation, told the Legal Weekly.

At the time, the transactions sparked speculation about corruption among many coal miners.

However, several miners' efforts to report the incident were completely ignored by local authorities, the anonymous miner told the Global Times on Friday.

Chen Qiang, director of the publicity department of Baode county government, told the Global Times on Friday that the government had not received any report or discovered anything unusual in the two transactions - until the Legal Weekly published its report.

Fishy assessment and auction

The starting price of the auction was set at 373,000 yuan in 2007 by the Shanxi Tianhua Financial Counseling and Assessment Corporation. It determined the mine's assets were about 35.6 million yuan and its debts around 35.26 million yuan.

Shanxi Tianhua assessed that the mine could produce merely 30,000 tons of coal every year. The miner who requested anonymity said the annual output of the mine was about 900,000 tons in 2005.

According to an online introduction to the Shenda Jinbao Coal Corporation, whose major asset is the Balougou coal mine, the company has a reserve of 111.14 million tons of coal and can yield 1.2 million tons every year.

"It is quite unusual that a coal mine with such a large reserve was assessed at such a low price, especially in 2007, when coal's price was rather high," said Li Yuwei, former deputy director with the Consulting and Research Center of the Ministry of Land and Resources.

According to a document by the local Yusheng auction company, which carried out the Balougou auction, there were three bidding parties in the 2007 auction. Information on the other two parties was not revealed. The company posted a notice on the auction for three days, the document said.

Auction law stipulates that the notice of an auction should be released at least seven days in advance, Feng Yujun, a law professor with the Renmin University of China, told the Global Times Friday, adding that the auction was apparently conducted in a secretive "black box."

Local officials speak out

The assessment and the 2007 auction were manipulated by the local Administration of Work Safety, the Legal Mirror quotes local officials as saying.

"In fact, people in charge of the assessment and auction were all picked by the administration," an anonymous official was quoted as saying by the Legal Weekly.

"The coal mine was auctioned by the Economic and Trade Bureau in name only. In fact, how to assess the mine and how to transform the State-owned mine to a private one are all decided by the coal bureau," said Gao Aibin, director of the executive office of the Economic and Trade Bureau.

According to the miner, Gao was suspended from his position for revealing information to the Legal Weekly, but Gao denied this when reached by the Global Times. He declined to say more.

Zhai Nailin, chairman of the labor union under the local coal bureau, said the director of the coal bureau headed the Administration of Work Safety before 2010, the Legal Weekly reported.

Li Xinsheng fiercely denied accusations that he had used his influence to help his brother-in-law Zhang in the auction. Li, who once served as the director of the local Administration of Work Safety and the local coal bureau, told the Legal Weekly that he had nothing to do with the transactions because he was transferred to another post from the coal bureau when the mine was sold in 2007.

Zhang Xiaoting, vice general manager of the Yusheng auction company, denied to the Global Times on Friday there was anything wrong with the auction.

The phone number on the assessment company's website went unanswered as of press time.

Huge loss of national assets

In fact, this is not the first time that State-owned property was sold at an incredibly low price. A state-owned coal mine in Pinglu District, Shuozhou, Shanxi Province, estimated by experts to be worth at least 315 million yuan, was sold for 10,000 yuan to a person in March 2008 by the local economic trade bureau, the Xinhua News Agency reported.

A tract of land worth over 27 million yuan was sold to a person at the price of 6.7 million yuan in April by officials in the Forestry Bureau in Suixi county, Zhanjiang, Guangdong Province, according to the Nanfang Daily.

"The collusion between officials and businessmen has resulted in huge loss of State-owned property," said Zhu Lijia, a professor with the Chinese Academy of Governance. "Such collusion will seriously impair the credibility of the government, and will also further widen the gap between the rich and the poor," he said.



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