China: State firms paid half the bribes rail executive Luo Jinbao received

Luo Jinbao

About half of the bribes taken by a former top railways executive came from other state-owned railway companies, prosecutors have said, painting a damning portrait of rampant corruption in the sector.

During the trial of former China Railway Container Transport chairman Luo Jinbao in Heilongjiang last week, it was revealed that several state railway companies showered Luo with cash, cars and luxury goods to win bids and escape punishment for construction code violations, mainland media reported. Payments from companies amounted to half of the 47 million yuan (HK$57.7 million) in bribes Luo is accused of accepting between 2005 and 2010.

In that time, he oversaw preparations for the high-speed line from Shijiazhuang to Taiyuan, and led the Railways Ministry’s bureaus in Hohhot, Inner Mongolia, and Urumqi, Xinjiang .

Ten companies under China Railways and China Railway Construction paid Luo 14 million yuan, in addition to giving him a Land Rover and a luxury watch, The Beijing News reported.

Luo, 56, once told his lawyer, Gao Zicheng, that he dared not refuse such bribes from the railways sector and he feared he might offend the bosses of the companies, the newspaper said.

Luo’s trial was widely seen as a warm-up for a series of graft cases involving former top railways officials, including ousted railways minister Liu Zhijun and former deputy chief engineer Zhang Shuguang.

A source from the railways sector told Caixin Century Weekly that bribing regional bureau chiefs was a common practice for state-owned railway companies as competition for bids was fierce.

“After winning a project, a state-owned company would usually give about 2 per cent equivalent of the total budget to the project manager, or the regional railway bureaus, and it would ask for 5 per cent kickbacks when subcontracting the project to other private construction companies,” the source said.

“It was not surprising for a regional railway head to take a bribe of 47 million yuan under such rules,” the source said.

It was worse after China embarked on a frenzy of high-speed railway construction spearheaded by Liu in 2003.

Luo received 16.5 million yuan and a BMW sedan from Wang Haosheng, a middleman who helped private contractors win railway bids, the magazine reported. Prosecutors also accused Luo of illegally owning a shotgun and 250 shells, which he said he kept for hunting. The Beijing News said Luo turned over more than 27 million yuan, the two cars and two apartment buildings in Beijing and Sanya, Hainan province.

Evidence made public made no mention of Luo’s ties to Liu or Shanxi businesswoman Ding Shumiao.

Mainland media have previously reported that it was Luo who introduced Liu to Ding, who made 800 million yuan on rail projects and reportedly arranged young women to have sex with Liu.

Luo’s lawyer Gao told The Beijing News that his client had only introduced himself to Ding after learning the businesswoman was close to Liu. Luo has reportedly been suffering from severe depression since being put under detention in Shanxi in 2010.

Source: SCMP “State firms paid half the bribes rail executive Luo Jinbao received”

Categories: Crime & Corruption

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