China is auditing the State Grid Corp of China, the utility said in the wake of a magazine report that one of the most senior executives in the world’s largest utility was under investigation.
Caixin, a well-respected Chinese business magazine, reported this week that Zhu Changlin (朱長林), head of the State Grid’s North China operations, is under investigation, leading industry and government sources to believe that State Grid could be next in line in the government’s campaign against graft.
It was unclear whether the probe into Zhu, which could not be independently verified by reporters, is related to the audit.
In a statement via its microblog on Thursday, the State Grid called the audit “routine.”
“This economic accountability audit is a routine audit arranged according to our systems,” the statement said, without giving further details.
The statement added that State Grid is one of 14 major state-owned enterprises, including seven energy-related companies, being audited.
Industry sources told reporters that State Grid Corp — which transmits and distributes power to 1.1 billion people across close to 90 percent of China — is the central target of this round of audits.
The goal of the audits into State Grid and other organizations is unclear, but Chinese industry officials said it is unlikely that auditors will emerge empty-handed.
“They [auditors] will definitely uncover a bunch of problems, big or small, from an audit of any big state-owned enterprises,” a senior Chinese power industry official said.
The audit, which started last month, has sparked investor concerns that Beijing may consider breaking up State Grid’s monopoly.
Shares of State Grid subsidiaries that produce power equipment, including Henan Pinggao Electric Co Ltd and XJ Electric, have fallen sharply in the past month, as they rely on State Grid’s spending on ultra-high-voltage power transmission projects to bring in revenue.
Investors are also worried about an investigation into State Grid chairman Liu Zhenya (劉振亞), a strong proponent of the controversial ultra-high-voltage technology.
Liu says the technology would revolutionize long-distance power transmission and help resolve China’s geographical energy imbalance, but critics say the technology is costly and untested, and could make the system vulnerable to blackouts.
Chinese President Xi Jinping (習近平) has vowed to target powerful “tigers” as well as lowly “flies” in a fight against corruption that he says threatens the party’s existence.
“It’s beating [gongs] in the mountains to stun tigers,” another source said, invoking a Chinese proverb.
PetroChina and its parent firm, China National Petroleum Corp are at the center of one of the biggest corruption investigations into the Chinese state sector in years.
In March, the chairman and the president of Three Gorges Corp, the company that built the US$59 billion project for the world’s biggest hydropower scheme, stepped down, but the pair have not been accused of any wrongdoing.
The party’s antigraft watchdog published a scathing report in February this year, saying some Three Gorges officials were guilty of nepotism, shady property deals and dodgy bidding procedures. The dam was funded by a special levy paid by all citizens.
Analysts say a central purpose of the anticorruption campaign may be to consolidate Xi’s power and remove opposition.
“It is a way to strengthen control... We cannot expect that Xi Jinping will take action against corruption only because he wants to make things clean. There is a hidden agenda,” Hong Kong-based political analyst Johnny Lau (劉銳紹) said.
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