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    Ex-CNPC chief caught in cross hairs of Beijing’s anti-graft campaign [Gas in Transition]


Fresh corruption probes against an ex-chairman of CNPC and other high-flying industry veterans could mark the start of a new cycle in China's decade-long crackdown on graft in the energy sector.

by: Shi Weijun

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Ex-CNPC chief caught in cross hairs of Beijing’s anti-graft campaign [Gas in Transition]

A new round of anti-corruption investigations targeting current and former officials in China’s NOCs has sowed fears of a fresh crackdown on the country’s oil and gas sector, more than a decade after an unprecedented campaign launched shortly after Xi Jinping became president ensnared dozens of senior industry officials and executives.

Wang Yilin, the former chairman and Chinese Communist Party (CCP) chief of state-owned CNPC, was placed under investigation, according to a one-line statement published in early February by the Central Commission for Discipline Inspection (CCDI), the party’s top corruption watchdog. Wang is suspected of “serious violations of discipline and law”, a common euphemism for corruption in China.

Wang served as CNPC chairman from April 2015 until his retirement in January 2020, when he was replaced by incumbent Dai Houliang. Wang moved to the top job at CNPC from smaller offshore-focused peer CNOOC, where he had been chairman since April 2011. Prior to the CNOOC appointment Wang was a vice president at CNPC.

CNPC, China’s largest state-owned oil and gas company, is one of the largest energy conglomerates in the world. Its Hong Kong- and Shanghai-listed subsidiary PetroChina reported net profit of 46.38bn yuan ($6.44bn) over the July-September quarter 2023, an increase of 21.08% year/year.

In China company chairmen have greater control than CEOs over the firm’s strategy and business decision-making, meaning such investigations into potential wrongdoing could have serious ramifications.

Separately, NGW understands that Chinese authorities have detained Qi Meisheng, chairman of CNOOC’s gas and power group, as part of an investigation into potential corruption. Qi was reportedly detained during a CNOOC internal meeting in late January and his apprehension is linked to the investigation into Wang. Besides Qi several other high-ranking CNOOC officials, who formerly held top leadership roles within the company, were also arrested.

The gas and power subsidiary of CNOOC manages its parent company’s LNG import business along with gas infrastructure and power stations. CNOOC imported 26.69mn t of LNG in 2022, which was equivalent to 42% of the 63.44mn t that flowed into China for that year.

Also in January the Supreme People’s Procuratorate, which deals with corruption cases, ordered the arrest of former CNPC deputy general manager Xu Wenrong for suspected bribe-taking. The case is now under review.

Neither are NOC officials the only targets being purged in China’s sprawling domestic energy sector. The day before Wang Yilin’s arrest was confirmed, the CCDI said Li Guangchang, a senior adviser to the science and technology committee of China National Nuclear Corporation (CNNC), had been placed under investigation.

Li took on the adviser role at CNNC in 2021 after serving as director of the company’s nuclear fuel department. He joined a handful of figures in China’s nuclear sector suspected of corruption recently, which included Zhong Hongliang, the former chairman of CNNC Shaanxi Uranium Enrichment, and Wu Xiujiang, former party chief and chairman of CNNC Environmental Protection.


Xi’s graft crackdown

In a twist of irony Wang was one of 130 CCP members appointed in November 2012 to the CCDI – the same watchdog that is now scrutinising him nearly a dozen years later. Wang’s appointment to the graft buster coincided with the CCP’s 18th National Congress in Beijing that crowned Xi Jinping as the party’s new general secretary.

After he took power Xi launched a massive anti-corruption crackdown that aimed to root out dishonest officials ranging from top-ranking “tigers” to low-level “flies”. The campaign snared many officials and sectors – including the energy industry – and continues to this day as it has become a central plank of the system of governance for China’s leader.

Beijing stepped up its campaign against the energy industry between 2013 and 2015. Senior former CNPC executives were particularly targeted for graft, but Sinopec, Sinochem and CNOOC officials did not emerge unscathed.

The multiple arrests in the past several weeks come after President Xi warned businesses last month that China was preparing to intensify its anti-graft crackdown. Energy was identified as one of the sectors in the crosshairs, along with finance, healthcare and infrastructure.

“While there had been an overwhelming victory in the decade-long anti-corruption push, the situation remains complex,” Xi said. “In the face of such [a] complex situation, there can be no stopping, slacking or compromising on anti-corruption.”

Beijing will “deepen the rectification of corruption in power-concentrated, capital-intensive and resource-rich sectors,” Xi said. The CCP will “punish the ‘corruption of flies and ants’ to give the masses a greater sense of gain,” he added.

The recent arrests are the latest related to the energy sector since 2021, when officials from PetroChina and CNPC came under probes. Tang Xin, chief coordinator and head of the production operation department of CNPC’s Changqing Oilfield subsidiary, was detained in January 2021, with investigators raiding his home and discovering piles of cash allegedly obtained from bribes. 

Then in October 2021 Ling Xiao surrendered himself to the CCDI for suspected “serious disciplinary violations” after resigning from his role as a vice president at PetroChina a month earlier. Ling had been a PetroChina veteran long responsible for the company's gas pipeline and marketing business, and previously worked for decades in the energy-rich Xinjiang region of western China.


Longstanding energy-sector corruption

But it is the detention of Wang Yilin this month that stands out. As a former chairman of CNPC, Wang is the highest-ranked oil industry official to come under scrutiny since Zhou Yongkang, who served as CNPC’s general manager from 1996 to 1998.

As China ramped up its anti-graft crackdown on the energy sector in 2013-2015, a series of investigations later led to the high-profile downfall of Zhou, the country’s onetime national security czar who built up an extensive graft network in the oil industry as he worked his way up into power. At the height of his dominance Zhou controlled police forces, spy agencies and court systems in China.

Zhou was finally jailed for life in mid-2015 after being convicted of abuse of power and accepting bribes of 130mn yuan. His downfall sent shockwaves through elite Chinese politics as he had retired as a member of the Politburo Standing Committee, who were previously thought to be untouchable. Months later, his protégé Jiang Jiemin, a former chairman of CNPC, was sentenced to 16 years in prison on similar charges.

Other energy industry officials caught by the unrelenting dragnet included Nur Bekri, one of the few ethnic Uyghur officials from Xinjiang in the Chinese government who headed the National Energy Administration (NEA) until his detention in 2018, and his predecessor Liu Tienan who led the NEA during 2011-2013. Both were sentenced to life in prison for corruption-related offences.

From the 18th CCDI in November 2012 – to which Wang was elected as a member – to the end of April 2022, China’s anti-corruption watchdogs had investigated 4.4mn cases nationwide and punished 4.7mn people. Disciplinary agencies handled more than 723,000 cases of violations of rules for improving party and government conduct, with more than 644,000 people punished.

The anti-corruption purge took a toll on China’s energy sector, as fear of more probes paralysed decision-making and investment across CNPC, CNOOC and Sinopec. The three NOCs spent $3bn on mergers and acquisitions in 2014, down from $22.2bn in 2013 and $34bn in 2012.

China’s energy sector is not the only industry under suspicion from investigators. Last year the Chinese military was rocked by major corruption scandals after Xi launched a sweeping purge of the armed forces. Former defence minister Li Shangfu was fired after just months on the job and reportedly put under investigation for alleged corruption related to equipment procurement.

Foreign media reported US intelligence believed Li’s was in response to the discovery of widespread corruption in the military – including in the Rocket Force, which manages the expanding nuclear arsenal.


Wang the oilman

Wang, the former CNPC chairman now in the crosshairs of graft busters, is an oil industry veteran. He started his career in 1982 at the Xinjiang Petroleum Administration Bureau at the age of 26 after graduating from what is now known as the China University of Petroleum.

When CNPC was reorganised in 1998 into an integrated group with businesses spanning upstream, downstream, oilfield services and engineering, the Xinjiang Petroleum Administration Bureau became one of its subsidiaries.

A year later CNPC created the PetroChina Xinjiang Oilfield subsidiary and appointed Wang as the first general manager and party secretary. He then served in various roles at CNPC from 2003 onwards before moving to lead CNOOC in 2011.