Investigation into alleged graft at telcos

09:40, May 31, 2011      

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Chinese authorities have launched a large-scale investigation into the country's three largest State-owned telecom carriers on suspicion of corruption, after a series of dismissals of top-level executives and financial scandals rocked China Mobile Communications Corp, Chinese media alleged.

The Party's top anti-corruption watchdog, the Central Commission for Discipline Inspection, has dispatched investigation teams to China Mobile, China Unicom Ltd and China Telecom Corp Ltd, reported.

The website said the investigation, targeting mid-level management and above, will wrap up in early June. Executives are said to have been ordered to hand-in their passports during the investigation period.

The investigation is unprecedented, as all telecom carriers in China will be put through a corporate review to ensure these companies are financially healthy, Economy & Nation Weekly, the financial magazine run by Xinhua News Agency, quoted people familiar with the situation as saying.

In addition, the National Audit Office is undertaking a three-year audit (2010-2012) specifically to look into the financial situation of Chinese telecom carriers.

In March 2010, Li Xiangdong, general manager of China Mobile's wireless music unit, was apprehended while trying to flee to Canada with millions of yuan, according to allegations in the Beijing Morning Post.

China Mobile's press relations department declined to comment on Monday, citing company policies.

In December 2009, Zhang Chunjiang, then vice-president of China Mobile, was discovered to have "severe economic problems", according to the Chinese authorities.

However, the single, biggest corruption case in the industry is said by some observers to lie in the rise of the data business, or value-added service sector.

The rise of data business has brought huge revenue for external service providers in recent years and certain executives from the data business are tempted to collude with external companies to pocket additional funds.

"Loose internal management and the poor incentive mechanism have resulted in China Mobile's recent corruption scandals," said Xiang Ligang, who runs a professional telecom portal in China.

Ma Li, the deputy general manager of China Mobile's data service department, was reported by Economy & Nation Weekly as being under investigation by the authorities, after being apprehended in March.

Economy & Nation Weekly reported that Ma's case was related to a 350 million yuan ($53.93 million) corruption case which involved at least 60 people.

Source: Xinhua
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