What Brought China's Railway Minister Down?

By Chen Yong
Published: 2011-02-15

Feb 15, 2011
Translated by Tang Xiangyang
Economic Observer Online
Original Article:

According to information provided to the EO by a source close to the Central Commission for Discipline Inspection (CCDI) of the CPC, the fall of China's Railway Minister Liu Zhijun (刘志军) was not a sudden occurence and investigators already had Liu in their sights as early as last year.

According to the above source, CCDI's decision to remove Liu from his position as party secretary of the Ministry of Railways on suspicion of "severe violations of discipline," was connected to two other ongoing investigations into individuals with links to China's railway industry.

The first is that of a Shanxi businesswoman and philanthropist Ding Shumiao (丁书苗), who, according to a Caixin Media report, was taken away for investigation in January this year.

The other is that Luo Jinbao (罗金保), the former chairman of both the China Railway Container Transport Corp. Ltd. (CRCT) and the listed China Railway Tielong Container Logistics Co., Ltd.. The Economic Observer reported on the investigation into Luo Jinbao by the CCDI in early January this year.

The cases revealed that corruption involving vast sums were present in China's high-speed rail sector, with almost 10 billion Chinese yuan involved and multiple listed companies implicated, the reprecussions could go as far as to shake up the organization of the country's railway system.

The EO has also learned that it was when Luo Jinbao's case was first uncovered by the CCDI, that serious problems with corruption in the high-speed rail sector, including interference and illegal practice in the awarding of contracts and also the wanton acceptance of bribes, was exposed.

A source close to the Ministry of Railways revealed to the EO, that Li Zhijun's case had shaken up the whole railway system and that everyone is putting on hold any kind of activity involving enterprises in order to protect themselves.

According to a Shanxi coal mining figure who wanted to remain anonymous, Ding Shumiao was first introduced to Luo Jinbao in 1998 when he served as the Party Secretary of the Linfen Branch of the Beijing Railway Bureau.

The same source also said that it was through Luo that Ding first met Liu Zhijun in 2000 when he served as the Deputy Railways Minister and was also a member of the Ministry of Railway's Party Committee.

Caixin Media first reported about a possible connection between Liu Zhijun's case and that of Ding Shumiao in a Feb 12 article that now appears to have been removed from their website.

According to an earlier report regarding reports of an investigation into Ding Shumiao that was published on Caixin's English-language site on Jan 28, the 55 year-old Ding built her considerable fortune up from a transportation company that shipped coal in the coal-rich Shanxi province in the late 1980s.

Ding, who is also a member of the Shanxi's Provincial Chinese People's Political Consultative Conference, has since built up a substantial business empire and cultivated high-level political connections.

The Caixin article also details how various companies owned by Ding were awarded contracts to install noise barriers along many of the new high-speed rail lines that are beginning to connect the country.

Other Accusations: A Corrupt Lifestyle

Aside from seeking to unravel the connections that have led to the downfall of the Minister of Railways - though it should be noted, that up until now Liu Zhijun has only been stripped of his party position and is still officially the Minister of Railways - other media have turned to examine Liu's alleged corrupt lifestyle.

According to a report in today's China Business Journal, a newspaper published under the authority of China's Academy of Social Science, which relies on a report in yesterday's China Times, a Taiwan newspaper, the recently deposed party secretary is rumored to have kept 18 mistresses.

The report also alleges that, although he claimed to have gained a masters degree, Liu Zhijun left school after completing junior high school.

Hong Kong media has also reported on Liu's younger brother Liu Zhixiang (刘志祥) who received a suspended death sentenced in 2006 on charges of embezzlement and taking bribes as well as hiring someone to kill the man who had informed on him.

Links and Sources
: Successful Shanxi Rail Magnate Under Scrutiny (English)
The Economic Observer Online: High-level Railway Executive Under Investigation (English)
Caixin: 刘志军被查与丁书苗案有关 (Chinese) - NetEase link as original appears to have been removed
Sydney Morning Herald: China's rail chief under investigation
China Business Journal: 铁道部刘志军或涉高铁腐败 传其拥18情妇受贿10亿 (Chinese)
China Times: 傳擁18情婦 劉志軍涉弊數10億