By staff reporter Li Qiyan

Xiang Dehong, board chairman of Guizhou’s largest power producer, Jinyuan Group, has been detained by the Communist Party’s disciplinary arm in a scandal involving the loss of state assets.

Caijing learned that Xiang, 60, has been under informal detention by party officials since September 1. A source from the China Electricity Council told Caijing that the authorities are probably suspicious about the loss of state-owned assets in the operation of Jinyuan, an employee-held company. But the source said the scandal wasn’t Xiang’s personal problem. 

A senior source from China’s electricity industry called the Central Disciplinary Committee’s action “abrupt.” Xiang went to work as usual last week, but was detained on the morning of September 1, the source said.

Xiang Dehong was formerly the director of the Guizhou Provincial Power Bureau, which later became Guizhou Electric Power Co., of which Xiang was appointed general manager.

In 2000, Xiang established Guizhou Jinyuan Group, which is owned by power sector employees. Xiang’s position as a government official had brought huge business advantages for Jinyuan. In 2002, Jinyuan received power generation assets from the former National Electric Power Co. during a nationwide industry reform that broke up China’s former power monopoly. Over the next few years, Jinyuan grew into Guizhou’s largest power producer.

In late 2003, the Chinese government issued new regulations to restrict employee ownership of power companies, in an effort to prevent the loss of state-owned assets. Xiang Dehong soon resigned from his position in Guizhou Electric Power Co. But a huge amount of employee shareholding has remained in Jinyuan.

In March 2008, the government regulated employee shareholding in power companies even further and required relatives to dissolve their shares.

A source close to Xiang told Caijing, “Xiang believed Jinyuan’s development model is right, and that there is nothing wrong with it.”