By staff reporters Yu Ning, Wen Xiu and Luo Changping

From Caijing Online

 Another top official has been caught in a graft storm that’s swirled for months around Chinese government agencies in charge of foreign mergers and acquisitions.

Xu’s detention was not immediately confirmed by disciplinary officials. But Caijing learned that Xu had not returned to his office as scheduled after leaving for vacation two weeks ago in early December.

Sources close to the investigation said Xu’s name surfaced following the August apprehension of Guo Jingyi, who worked for the Treaty and Law Department at the Ministry of Commerce (MOFCOM). Guo was one of three high-level MOFCOM officials targeted by investigators. Also detained was an official at the State Administration for Industry and Commerce (SAIC).

Xu, 42, joined SAFE in 1989 and spent the past 12 years with the China International Economic and Trade Arbitration Commission. As an arbitrator, he helped settle 16 cases and cultivated close relations with fellow commissioners Guo, Liu Wei and Deng Zhan – all of whom have been implicated in the scandal.

At SAFE, Xu worked as a legal expert. He helped draft key regulations including the Foreign Exchange System Regulations, People’s Bank of China Law, Commercial Bank Law, and a number of rules concerning the foreign exchange process.

A Hebei Province native, Xu graduated from Renmin University with a degree in business law.

Widespread Probe

Since August, virtually every Chinese government regulatory department involved in China’s government-controlled foreign investment procedure has been touched by the investigation into high-level corruption. And the entire foreign investment approval process may be affected by the unraveling probe.

Lawyers who served as brokers for questionable deals have been targeted along with government officials. Around the time of Guo’s apprehension, for example, authorities detained two lawyers -- Zhang Yuzhu, director of the Beijing legal firm Seafront Law Office, and his former colleague Liu Yang.

In late September, authorities arrested Deng Zhan, a former deputy administrator of foreign investment at MOFCOM, on charges of accepting bribes. Du Baozhong, from MOFCOM’s treaty department, was detained in late October. And later Liu Wei, a deputy chief for foreign investment registration at SAIC, was arrested.

Guo and Deng were detained by party discipline inspectors in connection with their roles in approving foreign mergers and acquisitions. Liu was a link in the process who worked closely with Guo and Deng.

The cases of Zhang, charged with commercial bribery, and Deng, who allegedly accepted bribes, have been forwarded to judicial authorities.

The cases reflect the shortcomings of gray-zone rules for approving startups, mergers and acquisitions involving foreign companies. Guo and his lawyer friends allegedly took advantage of these and other regulations for reasons still unclear.