Fri, Jun 23, 2006 - Page 4 News List

Developer held in graft investigation

REAL ESTATE SCANDAL?Beijing Capital Group said its chairman was detained last week for questioning as part of an investigation of a former Beijing official

AGENCIES , BEIJING

One of Beijing's most powerful businessmen has been detained over a corruption scandal involving a sacked vice mayor who oversaw 2008 Olympics construction work, his company's spokesman said on Wednesday.

Liu Xiaoguang (劉曉光), chairman of the state-owned Beijing Capital Group, was called in by the Chinese Communist Party's disciplinary arm over an investigation into ousted Beijing vice mayor Liu Zhihua (劉志華), a group spokesman said.

The Capital Group is a holding company for the Beijing city government that is engaged in large-scale infrastructure, real estate and highway construction, as well as finance and industrial interests. It is one of China's biggest real estate developers with assets totaling 45.2 billion yuan (US$5.65 billion) as of the end of 2004.

A spokesman for Beijing Capital Group surnamed Ning said Liu Xiaoguang had been called in for questioning by the Communist Party's Central Commission for Discipline Inspection on Saturday.

He was detained "to support the investigation work of relevant departments regarding former vice mayor Liu Zhihua," Ning said, insisting that his boss was only assisting inquiries.

"Our leader himself is not involved in this case, he is just helping relevant departments to investigate," Ning said.

Xinhua news agency said authorities detained Liu Xiaoguang at Beijing airport last Friday.

"The investigation could possibly be linked to real estate trading," Xinhua said in a brief report that also drew a link with the ousting of Liu Zhihua.

Liu Zhihua was sacked and placed under investigation on June 11 in the biggest corruption scandal to hit Beijing since former city party secretary Chen Xitong (陳希同) was jailed for 16 years for corruption in 1998.

Chinese President Hu Jintao (胡錦濤) ordered Liu Zhihua's sacking at a secret meeting to prevent political patrons from protecting him, a government source told Reuters yesterday, in a sign Hu was determined to fight graft.

But many analysts said Liu Zhihua's fall was as much about political posturing by Hu ahead of a leadership reshuffle at a crucial five-yearly meeting of the Chinese Communist Party next year as it was about corruption.

Liu, 57, was replaced by another vice mayor who rose through the Communist Youth League, Hu's power base.

"Hu Jintao personally took charge of the case. He presided over a three-day meeting and decided to take out Liu Zhihua," the source who has close ties to Hu's camp said.

"Beijing [government leaders] did not know about it beforehand to prevent [them from] protecting him," said the source who spoke on condition of anonymity.

In other developments, rural migrants worked for a year building Beijing's new subway line -- a signature project for the Olympics -- for just over US$1 a day but were never paid. A Beijing court this week ordered a construction company to pay the 260 workers from Shandong Province their year's wages worth a total 900,000 yuan, the China Daily reported.

The salaries equate to US$1.21 a day for each worker but that was still too much for the government's Beijing Urban Construction Group, which defaulted on its payments to another firm it had subcontracted to employ the workers.

The court ruled on Tuesday that the subcontracting firm must pay the workers their salaries.

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