By staff reporters Ouyang Hongliang and Luo Changping

From Caijing Magazine

A spectacular fire that charred a 30-story building under construction in downtown Beijing may have burned the cover off questionable financial deals tied to China Central Television executives and its new headquarters.

While pursuing criminal charges connected to the February 9 fire that gutted the Television Communication Center -- part of CCTV’s new complex -- investigators have focused on possible financial corruption involving high-level executives.

According to a source, the National Audit Office plans to look into the finances of several retiring CCTV managers as well as the CCTV complex construction project.

At the same time, questions have been raised about the project whose costs ballooned from an initial estimate of 7.7 billion yuan when it was approved by the State Administration of Radio Film and Television in 2005 to the latest price tag of more than 12 billion yuan, not including equipment costs of more than 7 billion yuan.

A key figure for investigators is Xu Wei, the CCTV building construction project director who was arrested shortly after the fire. Xu allegedly approved the Chinese New Year fireworks show at the building site that officials say sparked the flames that spread through the unoccupied building.

Xu, a 20-year veteran of CCTV, was appointed the network’s technical department director in December 2000 and was named construction project director three years later.

Authorities also have looked into Xu’s close friend and old college chum Li Xiaoming, who had served as CCTV’s vice director. Li was questioned by police the night of the fire as well as the next day.

A source said Li, unlike Xu, has not been detained, and was seen at CCTV offices February 24.

Xu also worked as the legal representative of a construction company in charge of the complex project called CCTV Gauging, a joint venture formed in 2003 by CCTV and a building company named Beijing Gauging Consultants Co. Ltd. In this capacity, Xu was handed control of a 20 billion yuan CCTV construction fund.

According to a preliminary investigation, Xu earned a commission of about 80,000 yuan from CCTV’s purchase of fireworks for the February 9 show, which was handled by the San Xiang fireworks company. Caijing learned that a fireworks commission may be as high as 30 percent.

The network said the holiday show cost 1 million yuan, but a source told Caijing the actual cost was about 350,000 yuan. Similar displays cost 300,000 yuan in 2007 and 500,000 yuan in 2008. A source said the same company every year sold the fireworks for CCTV’s shows.

Police investigators found the money used to purchase the fireworks was transferred to an account held by a media technical company called Da Xin Heng Tai, for which Xu was the first legal representative.

Da Xin Heng Tai was set up in January 2006 with an investment of 5 million yuan from CCTV Gauging. It then went through a fishy privatization. On April 12, 2006, CCTV Gauging transferred Da Xin Heng Tai’s stock to another media company called Ying Xiang, which provided CCTV advertisement services, consulting and training. But Ying Xiang withdrew its investment after finishing two CCTV projects and transferred the stock to five of Xu’s close friends, Caijing learned.

According to Da Xin Heng Tai’s public information, the company has managed at least seven CCTV projects and received more than 100 million yuan in payments from the TV network.

Pinning Blame

Xu is one of 20 people arrested so far in connection with the blaze, which killed a firefighter and spread rapidly through the more than 103,000 square meter structure. CCTV blamed the speed of the flames on insulation in the partially completed building.

Xu’s CCTV-hired lawyer is raising questions over who’s to blame. In the lawyer’s opinion, key issues are whether the construction company should take responsibility, whether the fireworks display was based on an order from Xu or someone higher, and whether the fireworks company should be held responsible for an illegal show using illegally transported fireworks.

Nine San Xiang staffers were among those arrested so far. Xu’s lawyer said the company illegally transported fireworks and should take responsibility. Others say CCTV, which hired the company, should be blamed.

A source close to the investigation, who asked to remain anonymous, told Caijing defining responsibility is difficult. But according to the preliminary investigation, the order to launch the display came through official channels, not via an order from Xu – a point supported by the fact that CCTV had arranged four cameras to record the display for use in future TV programs.

The source said investigators so far have been inclined to pin the major responsibility on CCTV, while putting minor blame on others.

The construction company’s culpability is also in question.

According to a fire inspector’s report issued to CCTV before the fire, deficiencies were found in eight of 26 areas probed at the building site. Despite the known risks cited by inspectors, construction company officials did not try to interfere with the fireworks display.

Uncertain Future

The future of the soot-blackened skyscraper, also known as the TVCC tower, is also in question. CCTV released a private announcement to top managers February 13 saying that a network-hired investigation team determined the tower could be repaired.

The outermost walls on the south and north sides were not damaged, the team found, and equipment inside the south and north sides of the tower were unharmed. Moreover, the team said, the building frame is intact.

However, neither fire officials nor the construction company have commented on CCTV’s internal assessment. An architect who asked to remain anonymous told Caijing he is cautious about the announcement because there’s little possibility that outer walls and equipment inside escaped damage entirely.

A source close to the fire department said the six-hour fire may have heavily reduced the building’s strength, which may make it vulnerable to earthquake risks. Another architect said he would tear down the tower, if the choice was hit, since although a repair job could save money, the building could be hazardous.

The TVCC project cost CCTV more than 2 billion yuan. But the building itself is registered as a 3 billion yuan asset, since it included a 241-room luxury hotel and a cinema. The future of each facility is now in doubt.

Meanwhile, CCTV Director Zhao Huayong said the network would continue its plan to relocate offices to the new complex – which includes other buildings untouched by the fire -- as scheduled.

Zhao, 61, should have retired last year according to Chinese regulations. He is currently overseeing the post-fire aftermath of CCTV.

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