Tue, Aug 22, 2006 - Page 11 News List

Shanghai Electric probe takes toll

AP , SHANGHAI

The chairman of Shanghai Electric Group (上海電氣集團) and two of its directors have resigned "for personal reasons" amid an investigation into alleged misuse of public funds, the company announced yesterday.

Wang Chengming (王成明), 58, left the company on Friday, Shanghai Electric said in an announcement that was posted on the Web site of the Hong Kong Stock Exchange.

It said Han Guozhang (韓國璋) and Zhang Rongkun (張榮坤), both executive directors, had also resigned "for personal reasons."

The announcement came amid reports that central Communist Party investigators had settled in for an extensive probe into allegations of financial abuses that were linked to one of Shanghai Electric's pension funds.

The company has sought to distance itself from the scandal, which also resulted in the dismissal of the head of the city's Labor and Social Security Bureau for alleged bribe-taking.

Last week, the city's top Communist Party official, Chen Liangyu (陳良宇), urged vigilance against graft, branding the allegations as "severe violations of state financial discipline."

Suspended

Trading in Shanghai Electric's shares was suspended on Aug. 14, when the industrial equipment maker said that Wang, Han and Zhang were detained on suspicion of violating unspecified Communist Party rules and regulations.

As is typical with such affairs, the government and the company concerned have disclosed few details, and rumors are flying that the allegations also could involve higher-level officials.

Investigators from Beijing were using the Hengshan Moller Villa Hotel, a landmark downtown guest house, as the operations base for their probe, the newspaper China Business reported yesterday.

Staff at the hotel said the facility was closed for renovations and that rooms would not be available for several months to come.

There was no sign of construction or other work at the hotel. Its gates were closed, and security guards urged onlookers to move along.

Shanghai Electric said it had appointed its deputy secretary-general, Xu Jianguo (徐建國), as Wang's replacement as chairman both of its parent company and its Hong Kong-listed subsidiary.

Three gorges supplier

The company, a state-run manufacturer of generators, elevators, boiler-turbine units for power plants and reactor components for nuclear power plants, is a supplier to major projects such as the Three Gorges Dam.

The company said the investigation and management changes had not affected its operations or finances.

"The investigations don't involve the assets and funds of the listed company," Xu told reporters at a news conference in Hong Kong.

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