MAC/20: Mines and Communities

In north China, corruption rules the coal mines

Published by MAC on 2010-08-30
Source: AFP

In north China, corruption rules the coal mines

Robert Saiget


28 July 2010

BEIJING - In China's coal-rich Shanxi province, the source of much of the fuel that powers the energy-hungry nation, there is an oft-repeated saying: "To make money, all you have to do is dig a hole."

Hao Pengjun, a former county mine bureau chief and Communist Party official, apparently followed that advice -- and then took it too far.

In April, Hao was jailed for 20 years for graft and tax evasion after allegedly amassing 305 million yuan (44.7 million dollars) in ill-gotten gains -- a cautionary tale about the corruption endemic to the industry, experts say.

"In Shanxi, collusion between the government and the mines is widespread," Chu Ren, a retired coal industry expert at the Shanxi Academy of Social Sciences, told AFP.

"The money Hao Pengjun made was about average for a guy in his position. If you do not pay off government officials, there is no way you will open a mine."

China's vast coal mining industry is notoriously accident-prone due to lax regulation, corruption and inefficiency as mines rush to meet soaring demand.

Hao, 60, ruled the mining industry in Shanxi's Pu county for a decade, serving as county mining chief, mine safety head, coal industry head and, from 2006 onwards, the Communist Party boss of the county's coal industry.

According to state media, he not only flouted regulations barring officials from owning and operating coal mines, but also made sure his mine remained open when neighbouring pits were shut down under a province-wide safety crackdown.

Reports said it also appeared Hao was taking kickbacks from other Pu county mine bosses, with millions of yuan unaccounted for.

Instead of paying taxes, mine operators sometimes pay off officials to turn a blind eye to safety violations or to obtain permits to extract more coal or expand the scale of their mining operations, Chu said.

Hao's wife Yu Xiangning, the former head of the county civil affairs department and the accountant for the family mine, was jailed for 13 years. Her brother Yu Xiaohong, who ran their private mine, was given a 12-year sentence.

The trio were convicted of corruption, evading 18.7 million yuan in taxes and misappropriating public funds. They were collectively fined a total of 320 million yuan, and their money and property were confiscated.

According to Xinhua news agency, investigators found 120 million yuan stashed in scores of bank accounts belonging to Hao and his relatives.

The family also owned 35 apartments, mostly prime real estate in central Beijing, valued at another 160 million yuan.

The government has touted his case as part of its 2009 overhaul of the Shanxi coal mining industry, an effort to weed out graft and end a spate of fatal accidents -- the result of an unabashed drive for energy profits.

But experts say Hao is a sacrificial lamb, and his conviction is only the tip of the iceberg.

"It was only a matter of ill chance that Hao Pengjun was investigated," Tian Zhaoshu, a coal industry expert at the Shanxi Finance and Economics University, told AFP.

"Most of the corrupt officials have not been investigated because they are good at concealing their crimes. They use relatives to indirectly operate mines and rake in profits."

Tian said it was unlikely that corruption in the industry would be stamped out unless China placed checks on the power of local officials.

Pu county, with vast coal reserves and a population of about 100,000, is in scandal-prone Linfen prefecture, home to some of the worst coal mine accidents in China and recently infamous as one of the most polluted places on earth.

The investigation of Hao was launched in September 2008 after 277 people were killed when a hillside mining waste pond burst, burying an entire village in sludge. Local mine operators were arrested and blamed for the disaster.

The calamity prompted sweeping reforms that have led to thousands of small mines being shut down or merged with large state-run conglomerates.

The charges and the sentences meted out to Hao have become a topic of anger in China's Internet chatrooms, which cite death penalties given to other corrupt officials who amassed far smaller fortunes than Hao.

"His luck was no good -- what is pitiful is that there are so many with good luck. What is even funnier is that luck can be bought by money. High-level leaders are the gods of good fortune," said one user of a chatroom.

During his trial, Hao fingered more senior officials -- accusations that were struck from the record by the presiding judge.

"There are reasons that I have fallen so low," numerous state press reports quoted Hao as saying at his trial, accusing the county's Communist Party secretary of demanding a huge bribe from him as the judge cut him off.

The Pu county government refused to comment on the case when contacted by AFP.

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