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Coal Bosses Nab Government Posts
Summary:Two Shaanxi government officials with coal industry connections were exposed for having fabricated their educational qualifications. This has brought attention to a trend of second generation coal tycoons leveraging their family background in obtaining government posts that bring them social status and their parents peace of mind.


By Xie Liangbin (谢良兵)
Nation, page 11
Issue No. 580
July 30, 2012
Translated by Zhu Na
Original article:

In recent years Liu Lirong (刘利荣) amazed people in his hometown by climbing the ranks to a high justice bureau post by the tender age of 25. People were less impressed however when they realized he was the son of an influential coal boss and didn’t have so much as a high school education.

On May 22, the Fugu (府谷) County government of Shaanxi Province confirmed that Li Ruihua (李瑞华), head of the Fugu County Justice Bureau, and Liu Lirong, then its deputy head, had faked their educational qualifications. The government said the men would be punished but it’s no longer willing to discuss the case with reporters.
The coal industry accounts for more than 70 percent of Fugu County’s GDP, making the relationship between coal tycoons and local officials very sensitive. Recent years have seen many second generation coal tycoons in the region leverage their family background for government positions.

Shortcut to Power

According to the cadre promotion information previously announced by the Fugu County Organization Department, Liu came from Xinmin (新民) Town of Fugu County and started work in Aug 2005 with a college diploma. In 2009, he was transferred to the Fugu County Justice Bureau where he was promoted to deputy head in 2010. 

But according to information gathered by an EO reporter, Liu dropped out of school in 2000 during his second year of junior high school and joined the army. Five years later, he returned to Xinmin and became a driver for the local government and eventually worked his way into the justice bureau. In 2011, he was even awarded “Shaanxi Province Advanced Individual in Popularizing Laws.”

However, it now appears those accolades were simply a result of Liu’s family background. The EO learned through interviews that his father is a well-known coal tycoon in Fugu with over 100 million yuan in assets. His uncle, Liu Biao (刘彪), is also a famous local coal tycoon and even serves as a member on the city and county Chinese People's Political Consultative Conference (CPPCC). Li Ruihua, the other man implicated in the counterfeiting scandal, isn’t directly related to a coal boss but has connections with local coal tycoons.

In the local government’s announcement dealing with the diploma counterfeiting issue, Liu’s family background wasn’t mentioned. The explanation for Liu’s promotion was that the checking process was lax. Later, it said, the people responsible for the oversight were punished.

Draw of the Uniform

A person working in a local Yulin City government department in Fugu County told the EO that it’s not uncommon to see second generation coal tycoons working in government, but they mostly work in unskilled, unimportant positions. “For example, a second generation coal tycoon might work as a driver for the justice bureau,” he said. “He only earns 1,000 yuan per month and drives a car worth 200,000 yuan for work. Then after work he’ll drive a Mercedes or BMW.”

According to his observations, these people most often work within justice bureau agencies like the district court or law enforcement. “It’s more important than anything else for them to get a uniform to wear, even it’s a job serving people,” he said. “It makes them feel they’re associated with the government.”

Liu Lirong’s colleague once asked why he wanted to become a public servant. Liu allegedly said, “Don’t the rich still have to follow the leaders?”

The draw of a uniform not only attracts second generation coal tycoons in Fugu County. Second generation rich have been swarming to political posts across China.  A survey done by Yu Mingyang (余明阳), a management professor at Shanghai Jiao Tong University, showed that 82 percent of China’s second generation rich don’t wish to continue their family businesses, but hope to become officials.

Yu explained that so many second generation rich are reluctant to continue their family business because “they’ve seen the hard work and helplessness of their fathers’ generation.”

The source working in the Yulin government said that coal bosses in the city have gotten rich quickly by relying on special opportunities that depend on circumventing certain policies. Later they feel they have money but no power, which makes them uneasy. Many coal bosses hope their next of kin can get inside the system because, even if it’s not as an official, having a family member in government brings peace of mind.

“I’ve seen many successful local businessmen and almost all of them are absolutely obedient in front of officials,” the government source said. “This illustrates that they’ve encountered some trouble before from officials even at low positions. Therefore psychologically, they’re fearful and respectful of the system.”

He explained that rich businessmen have the “conditions” to get their children to work within the system though. These “conditions” predominately consist of money.

Empty Positions

The local Yulin government is highly reliant on coal companies to maintain GDP growth and social welfare. Maintaining the relationship with coal bosses is critical and the best way to do that is by giving coal bosses “invisible” official positions. 

In June 2008, the Fugu government planned to hire four local coal tycoons as part-time assistants to the county head, as well as three coal bosses to be economic advisors.

This plan was criticized and soon canceled though.  He Qiang (贺强), the head of the Fugu County Organization Department, explained that hiring these private entrepreneurs as assistants was only meant to give them a title. They wouldn’t be involved with the work of the county’s standing committee or participate in official meetings.

After the county assistant plan was scrapped, the local government soon provided the families of the coal bosses opportunities for political promotions.
Starting from 2010, Fugu County implemented a new system of cadre selection and retirement. Under the system, cadres over 45-years-old who volunteered to give up their positions and go to work for major enterprises or important projects would be entitled to 1,000 to 1,500 yuan in subsidies per month.

226 cadres applied for the program but some others complained and ultimately leaked the Liu Lirong scandal. Liu and Li Ruihua both benefited from this reform in 2010 as senior cadres left their posts.

The measure was especially questionable because it was launched after a large donation by coal bosses. The donation details released on Feb 27, 2010 showed that 57 coal entrepreneurs donated a total of 1.3 billion yuan to the county.

A coal entrepreneur who was once hired as an assistant to the county head said that coal tycoons hired by the government really have no political clout. It’s only when they give donations that they’re noticed.

Still, coal bosses and their kin don’t mind having empty positions.

The EO learned that among second generation coal tycoons in Yulin City, some have gone abroad, some have gone to big cities like Beijing or Xi’an, and some have gone to work in local government departments, banks and other stable jobs with steady income.

The official working in Yulin’s local government said, “While they’re suddenly becoming rich, they hope to get an amulet that brings them convenience and more benefits.” 


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