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Chongqing's China Mobile Corruption


By Zhang Xiaohui (张晓辉)
Corporation, page 29
Issue 540
Oct 17, 2011
Translated by Song Chunling
Original article:

The trial of Shen Changfu (沈长富),the former party secretary and the president of China Mobile's Chongqing office, began being heard at Chongqing's No. 5 Intermediate People's Court on Oct 10. Since first being detained by authorities on Oct 19 in 2010, Shen has spent over 300 days in detention.

Shen has yet to be sentenced and his defense lawyer told the EO that Shen's family hope that he will be spared the death penalty.

The 60-year-old Shen faced charges of taking advantage of his position from 1990 to 2010 and accepting over 36 million yuan in bribes. Below we offer details that emerged during the course of the trial about who bribed Shen and how they went about making the payments.

A Career in Corruption

The EO was informed by a reliable source that Shen's case was revealed by Mao Jieqi (毛节琦), the general manager of Changyuan Trade Co Ltd (长远毛衣株式会社), during the trial of Li Hua (李华), the former General Manager of the Sichuan branch of China Mobile who was sentenced to death with a two year reprieve in August this year.

Mao also worked as an agent for the Swedish company Ericson and is also said to have operated as an unofficial Chinese public relations consultant for the company.

In June 2010, Mao was detained for investigation after Li Hua had been taken away by Chengdu's Discipline Inspection Commission. Four months later, Shen was also later detained by investigators from the Communist Party's corruption watchdog. We now know that Mao Jieqi bribed both Shen and Li ans had been doing so for more than ten years.

According to details revealed in court, Shen had been involved in corruption since he started working in the provincial telecommunications bureau in 1990.

From 1990 to 1998, Shen came to know Xue Hanming (薛汉明), the general manager of Jinbang Trade Co. (金邦贸易公司) and Huatong International Telecommunication Co Ltd (华通国际电讯有限公司), who made a "deal" with Shen: Shen got five yuan for every pager his company sold to the Telecommunication Bureau in Chongqing. Later that amount increased to ten yuan per pager.

Meanwhile, after Xue set up a paging platform in the city, Shen helped him to transfer ownership of shares in the center to the Telecommunication Bureau. In total, Shen received about 1.6 million yuan from Xue during those years.

In 1997, when he was the deputy director of the Telecommunication Bureau in Chongqing, Shen got to know the Hong Kong businessman Mao Jieqi (毛节琦).

Mao was very generous and gave Shen cheques for large amounts of US dollars. In order to avoid risks, Shen arranged for his brother-in-law Wang Xiaocheng (汪晓诚) to travel to Beijing and Shenzhen to accept the money offered by Mao. In total, Shen accepted 1.41 million yuan from Mao.

In 2008, Shen asked Mao to open a stock trading account for him in Hong Kong, Mao deposited 6 million yuan into this account.

In March, 2010 when Shen was in Hong Kong with his wife, Mao offered to buy her a gift but Shen told him there was no need and told Mao to just give him cash directly. Mao later met with the couple in Chongqing's Jinke Hotel and gave them 60,000 yuan to cover their shopping expenses in Hong Kong.

In April, 2010, as Shen ran into financial difficulties, he started to directly ask Mao for cash, after which Mao came to Shen's office in Chongqing and handed over 200,000 yuan in cash.

Companies Involved in Bribing Shen

In 1998, Keen Bond Telecom Lt. Hong Kong (香港友邦电讯邮箱) reached an agreement with the Telecommunication Bureau in Chongqing to transfer the shares of Aosi Telecom and Speech Technology Co.  Ltd (奥斯通讯语声技术有限公司) to the bureau. Shen helped with the trade and received a 1.8 million yuan kickback from Chen Shuchang (陈树畅), the CEO of Keen Bond Telecom Ltd in return.

In 1999, following the State Council's decision to split China's telecommunication monopoly into three new telecommunication groups (China Telecom, China Mobile and China Unicom), the enterprises under China Telecom's Chongqing branch were also divided up between the three new companies.

At that time, Shen also started planning for his new position. He wanted to be the president of the newly formed Chongqing branch of China Mobile, but was instead appointed as the head of the Communications Administrations Bureau of Chongqing.

Shen went to the head of the Telecommunications Bureau of Chongqing and asked for a change of position. Yang Xiaowei (杨小伟), who is also the current vice president of China Telecom, was moved to fill Shen's position as head of the Communications Administration Bureau while Shen was moved to the position he had been planning on getting.

Once he'd been appointed to that powerful position, Shen Changfu also served on the Chonqing People's Political Consultative Conference and was also a delegate to the National People's Congress (NPC).

Like Father Like Son

Shen Changfu's son Shen Juncheng (沈俊成) - who is also known as Shen Li (沈力) - has also been arrested and charged on the same charges as his father. However, Shen Li's trial was not held concurrently with that of his father.

Shen's defense lawyer was also confused about this, and told the EO that "It might have been arranged in order to reduce the risk of one of the retracting their confession or of the two of them colluding"

Both father and son share a common friend that they trust - Liu Wei (刘卫), the chief of Dong Xun Electronic Engineering Co. Chengdu (成都东讯电子工程公司).

Liu used to be an employee in the Telecommunication Bureau of Chengdu and was well acquainted with Shen Changfu. In the 1990s, Liu resigned from his position and started his own business and become very successful. In 2003 when he met with Shen, Shen asked Liu to take care of his son, who had just returned from studying in the UK.

Shen Li was born in Oct, 1981. In July, 2003, the then 22-year-old returned to China from the UK and told his father he wanted to enter the telecommunications business. Shen Changfu, who had by that stage already accumulated over 10 million yuan bribes, told his son to meet with his old friend Liu Wei.

Liu and Shen Li set up the Guanxin Telecom Technology Development Co. in Chengdu (成都市冠新通信技术发展有限公司). Liu made all the investment but Shen Li held more shares. The company sold of cordless telephones to the Chongqing branch of China Mobile, but after only two months of supplying the equipment, the contract was scrapped due to the poor quality of the products.

After he returned to Chongqing, Shen Li told his father that he wanted to do something productive. Shen later told a Mr. Zeng, the head of Huawei Technologies Co., Ltd. (Huawei) in Chongqing, that he hoped his son could find a position there.

Later Zeng took Shen Li to Shenzhen (深圳), where Shen Li registered with Huawei's HR department, trained there and was offered a position of his choosing.

Shen Li remembers what his father advised him: If you want to do business, don't do it in Chongqing, keep low key and don't register a company with your own name. Shen Li thus choose to work in the Chengdu office of the company.

Two months later, Shen Li was not content with his salary and told his father that he still wanted to do business and was considering quiting his job at Huawei and Shen Li left the Chengdu office in January, 2004.

Despite leaving his postion, Shen continued to receive his salary, along with generous annual bonuses. The company continued to sign new contracts with Shen and regular work performance forms were also faked.

An official from Huawei's Chengdu office told police that as Shen's father was the head of China Mobile in Chongqing, they knew they had to look after him. Every year the Chongqing branch of China Mobile would purchase over 100 million yuan's worth of communications equipment from Huawei.

Shen Li continued to be paid until Shen Fucheng's corruption was revealed.

Shen Li went to Liu Wei after he left Huawei's Chengdu office and set up Sichuan Guanda communication engineering Co. Ltd (四川冠达通信工程有限公司). Liu invested and Shen Li owned 55% of the shares. Shen Li held the shares directly at first but later Wang Xiaocheng (汪晓诚), the brother-in-law of Shen Fucheng, held the shares on his behalf.

Shen Changfu specifically designated Wanzhou (万州) as a pilot area in order to appoint Sichuan Guanda as the company charged with maintaining the base station in the area, thus providing the company with a share of the base station business in Chongqing.

Qin Dabin (秦大斌), the current president of the Chongqing branch of China Mobile, told investigators that Shen Changfu had repeatedly asked executives at board meetings to look after Sichuan Guanda.

From 2004 to 2010, Shen Li and Liu Wei reaped huge profits by winning contracts from China Mobile for the their base station projects. Shen Li also received a total of 13 million yuan from Liu Wei in "bonuses."

Shen Li not only bought luxury cars, high-end real estate and expensive retail outlet with his money, he also married a well-known TV actress from Chongqing called Yin Tao (殷桃) who was 2 years older than him.

Someone close to the matter told the EO that Shen and Yin had already divorced before Shen Changfu's corruption was exposed. Yin also told the EO through her agent that they don't have anything to do with each any more.

Chongqing Baijun law firm (重庆百君律师事务所律师) represented both Shen Changfu and his son during court proceedings. The defense strategy for Shen's case was similar to the line taken during the case of the former head of the Sichuan branch of China Mobile.

Li Pixu (刘沛谞), the defense lawyer representing Shen Changfu told the EO that he planned to defend Shen by arguing that since July 2002, Chongqing China Mobile belongs to the listed Hong Kong subsidary of China Mobile, it's therefore a foreign-funded company and thus Shen's identity as a state functionary should open to further discussion.

But given the sentence that Li Hua received (death penalty with 2-year reprieve), the judges in this case are also unlikely to be swayed by this defense strategy.

Once sold told our journalist that Shen Changfu's corruption lasted for more than 20 years and it's unlikely to be the only such case that exists in Chongqing's telecommunication sector.

It's possible that like the situation in Sichuan, where following Li Hua's fall from grace, Chen Binglan (陈炳澜), the former vice president of Sichuan China Mobile, has now been detained, that more cases might emerge in the future.

Links and Sources
Economic Observer Online: Former GM of China Mobile Sichuan Gets Suspended Death Sentence
Economic Observer Online: Former Head of Chongqing Branch of China Mobile Detained in Beijing
Economic Observer Online: Huawei Implicated in China Mobile Corruption Case



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