China’s top power official, Gao Yan, the president of the State Power Corporation, has apparently disappeared amid conflicting reports about his fate. Initially, according to unconfirmed reports, he had been arrested, possibly in political infighting during implementation of reforms that will lead to the splitting up of the giant state company. But according to the October 16 South China Morning Post only three days later he had fled the country to avoid corruption charges, and was hiding out in an unnamed Western country. SPC has appointed vice president Zhao Xizheng to head the State Power Grid, and former Zhejiang governor Chai Songyue to run the China Electricity Regulatory Commission. Nonetheless Gao’s disappearance, coupled with the break up plan, has hurt the shares of Chinese power companies.
The charges against Gao apparently relate to his time as governor of Yunnan state from 1995 to 1997, and possibly to allegations concerning share buy-back deals. The scandal has been one of several involving high ranking officials during the run-up to China’s Communist party congress in November. In October top banker Zhu Xiaohua was convicted of bribery amounting to nearly $500 000 between 1997 and 1999 when he was chairman of the Everbright group. He received a fifteen year jail sentence. In the same month China’s second richest man, entrepreneur Yang Bin, head of North Korea’s Economic Zone, was put under arrest for tax evasion.
The Gao scandal reaches to the very top. Li Peng, chairman of the People’s Congress Standing Committee and (at time of writing) ranked second in the heirarchy to president Jiang Zemin, is likely to be damaged by the corruption allegation, because he is closely linked to Gao – his son, Li Xiaopeng, worked for him as deputy at the SPC. Li’s reputation had already been harmed by allegations that his second son, Li Xiaoyong, was involved in a fraudulent trading scheme.
