According to an investigation by the Supreme People's Court, from 2003 to August of 2004, procuratorial bodies nationwide prosecuted 25,322 officials from state-owned enterprises (SOEs) for crimes involving the abuse of their position during restructuring.

These crimes resulted in a huge drain of state assets, and accounted for 41.5 percent of all graft and corruption cases investigated and dealt with by the Supreme People's Court. Cases related to the restructuring of SOEs also proved to be the most aggressive and avaricious.

Beijing procuratorial bodies said there have been four increases in position-related crimes during restructuring: a rise in the number of cases from 169 five years ago to 242 in 2002; a rise in the number of SOE first-in-commands committing them; a rise in the number of cases involving over 1 million yuan; and an increase in total losses from under 100 million yuan (US$12 million) five years ago to 470 million yuan (US$57 million) in 2003.

During SOE restructuring, turning state property into one's own has been considered the most effective and quickest way to amass a fortune by some officials.

They have used various means: deliberately reducing and concealing the amount of state assets by forging accounts and certificates; illegally transferring state assets through shares and stocks; awarding themselves bonuses; exploiting preferential treatment granted by the state to employees of restructured enterprises through black casework; and colluding with other SOE officials.

Many SOE officials have taken advantage of instability and lack of supervision during restructuring, and some deliberately siphoned off high-quality assets, leaving bank debts and tax for the enterprises to pay.

Much of the money illegally acquired has been used to make investments, rather than simply for hoarding or consuming. The crimes are becoming more sophisticated and international, making it harder for procuratorial bodies to track them.
 
Li Baomin, vice director of the Research Center at the State Council's State-owned Assets Supervision and Administration Commission, said that restructuring should be based on clear definition of property rights. Transference of property rights should involve employees to protect their interests instead of providing opportunities for black casework by the management team.

Experts propose standardization of procedures for the flow and trade of state assets based on principles of openness, transparency, orderliness and standardization. They say information about SOE restructuring should be made public, and for those enterprises in which state assets account for over 25 percent of the total, they should report restructuring plans and property transfers to state assets administration departments. Supervision should also be strengthened.

Some also recommend amendments to state assets administration and supervision laws and regulations, and that the role of departments in charge of investigating asset-draining cases should be clarified and strengthened.

(Xinhua News Agency, translated by Yuan Fang for China.org.cn, January 2, 2005)