By staff reporters Luo Changping and Ouyang Hongliang

The fertile province that raised national heroes Mao Zedong and Zhu De, and which contains significant reserves of rare minerals and coal, has now become a testing ground for China’s effort to step up supervision of government disciplinarians.

Disciplining the discipliners is a new focus in Hunan Province in the wake of an investigation and subsequent conviction of a Communist Party official who, while keeping cadres in line, allegedly orchestrated a broad system of extortion and bribery that infected his local government.
 
Indeed, as the corruption trial of Zeng Jinchun got under way in April in Hunan’s capital Changsha, the party’s Central Committee for Discipline Inspection in Beijing was announcing its intent to survey discipline committee members nationwide while writing new disciplinary policies.

In Beijing’s eyes, the case of Zeng -- a former top-ranking party secretary for the discipline inspection agency in the city of Chenzhou -- underscored the need to strengthen the self-policing mechanism and prevent cadres from falling into the trap of corruption.

The party’s central committee was alarmed by the audacity and scope of corruption in Hunan, which had a major impact on business-government relations.

Zeng’s arrest in September 2006 also led to changes in the supervision of discipline officials in Hunan. In a first for China, provincial authorities in 2007 took steps to actively regulate the conduct of discipline committee members. That’s when a new party secretary for the Hunan discipline inspection arm, Xu Yunzhao, announced the formation of an oversight committee, whose sole function is to monitor provincial and local discipline committees.

Zeng was not the first discipline committee secretary nailed for corruption in China. In Hunan alone, two additional instances of secretaries who used their positions to solicit bribes have been recorded recently. One involved the deputy secretary of the provincial discipline committee.

Untouchable

Zeng has pleaded guilty to most charges. During his three-day trial, prosecutors accused him of accepting 31 million yuan in bribes from 45 named individuals and 9.6 million yuan from unknown sources.

Not included in the charges, however, was any mention of Zeng’s additional holdings, including 40 million yuan in untraceable cash variously recorded as “gifts” or “investment income.”

From 1997 until his arrest, Zeng served simultaneously as a member of the Standing Committee of the Chenzhou Communist Party, the local party’s deputy secretary, and as secretary of the discipline committee.

Investigators said he openly solicited bribes while forming a close-knit coterie, which included Chenzhou’s deputy mayor and several high-ranking local party members.

How did he get away with it? Easily. In the party structure, each discipline committee plays a lead role in investigating corruption and other illegal activities by party members. No law enforcement agency can override its authority.

An official with the Hunan discipline committee told Caijing, “There is very little oversight of low-level committees by their superiors. The secretary (as head of the committee) is in a power vacuum.”

In an interview with Caijing before his arrest, Zeng bragged that 35 companies were under the discipline committee’s special protection in Chenzhou. Each one was immune to law enforcement investigations of any kind.

Mining Cash

Rich in mineral resources, Hunan is a miner’s delight, with significant amounts of coal and the world’s largest deposits of tungsten and antimony. But Zeng didn’t have to dig to reach his treasure. Any mining operation could get Zeng’s protection – for a steep price.

From 1987 to ’92, Zeng served as chief of the local Bureau of Land Resources. The bureau oversaw all land transactions and mining projects. Zeng’s position gave him a prime opportunity to learn the value of Chenzhou’s minerals and the amounts mine bosses would pay for extraction rights.

One corruption incident dates to 1999, when private mine operators were allowed to work as excavation subcontractors for state-owned Agate Mine. During open bidding processes for contracts, mining operators paid bribes to Zeng, Chenzhou party secretary Li Dalun and Mayor Zhou Zhengkun.

Sometimes the scheme hit bumps. In one case, sharp disputes over mining rights pitted mining operator Pai An, who was patronized by Li Dalun, and rival miner Hong Da, from whom Zeng received bribes. During a so-called “mediation” process, Zeng received payoffs from Pai An including 240,000 yuan and HK＄ 60,000 in cash, company stock worth 1.88 million yuan and two rings valued at 256,000 yuan.

At a meeting organized by Zeng in July 2004, a resolution was announced in the Pai An-Hong Da dispute. That’s when Hong Da’s owner Shou Qingwen gave Zeng the largest bribe of his career -- 7.1 million yuan. In addition, Pai An stock yielded 3.64 million yuan in dividends in 2005 alone for Zeng and his son, Zeng Feng, who together hold 20 percent of the company’s shares.

The owner of the Yi Zhang mine, Huang Shengfu, was the most notable figure among Zeng’s benefactors. Huang illegally leased mining rights from the Three Plum Flowers Mine and, in December 2000, was detained by Zeng’s Chenzhou Discipline Inspection Committee. But the detention was short-lived. After Huang and his brother, Huang Shengwen, slipped Zeng a tidy 500,000 yuan, the mine boss was freed and allowed to continue mining at Three Plum Flowers.

Zeng and his family members received a total 2.44 million yuan from the Huang brothers to grease the wheels of officialdom. From 2001 to ’06, Zeng repeatedly appealed to local officials on behalf of the Huangs to reduce electricity charges and taxes, and implored them to either slash or cancel fines for violations of environmental and mine safety standards.

In a separate case, another mining boss paid Zeng 2.35 million yuan for help with mining rights at four sites, bypassing the normal regulatory procedure.

Hunan’s resources not only made it possible for Zeng to exploit his political power, but also gave birth to a network of political corruption. At the center of the network was Zeng, whose authority to discipline party members at the city-level and below quieted dissent.

Fan Jiasheng, head of the local party propaganda bureau, quashed any negative publicity about mine accidents. Other officials provided assistance from behind their desks at the land bureau.

Similar networks of corruption formed around other high-ranking party members in Chenzhou. Each network, however, operated separately and steered clear of the others. Party secretary Li, who also served as deputy mayor for urban planning, reigned over the construction industry. Zhou, the mayor, restricted his activities to mining wealth from state-owned assets.

Zeng’s Undoing

A potent weapon in Zeng’s arsenal of practices was “shuang gui,” or “double regulation,” a system for investigating and detaining party members. Zeng used shuang gui to make money, maintain control and silencing opponents. A party member subjected to a corruption investigation needed only to pay Zeng 100,000 yuan to avoid charges. Party members who refused to submit to Zeng, however, were investigated by the discipline committee.

Zeng used shuang gui detentions against non-party members as well. A striking case of this practice occurred in November 2000 when, under Zeng’s order and without official charges, the Chenzhou discipline committee detained three local businessmen. The suspects -- Li Minzhu, Yang Shouheng and Guo Sanyong -- were neither party members nor government employees.

After 27 days in detention, Yang escaped. Guo was released after 49 days after paying the committee 40,000 yuan in cash and signing a 46,000 yuan promissory note. Li was held for 50 days before paying 120,000 yuan in “fines” and signing an 80,000 yuan promissory note. Later, Li was told that he and his company would be protected from future shuang gui if he paid 500,000 yuan to the discipline committee every year.

Li’s experience, however, led to Zeng’s undoing. Li was a member of a contingent of Chenzhou business owners who were not satisfied with the payoff system, and he consistently fought to expose the corruption.

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