Caixin
Jul 30, 2014 02:52 PM

Li Chuncheng

Li Chuncheng, accused by the party's graft fighters of taking bribes, abusing his position and engaging in "morally degenerate" activities, had been passed to prosecutors for criminal investigation, the Central Discipline Inspection Commission (CDIC) said on April 29.

The CDIC started investigating Li in December 2012.

Li was the first high-level official to fall from grace since an anti-corruption campaign started unfolding after the party's 18th National Congress was held in November 2012. Led by the party's general secretary, Xi Jinping, the campaign is heavily linked to Sichuan, ensnaring senior officials, executives of state-owned companies and tycoons in the province.

The Rise of Li Chuncheng

Li, born in Haicheng, in the northeastern province of Liaoning in 1956, enjoyed a smooth rise in his career in officialdom after graduating from a university in the northeastern city Harbin and entering the local government.

In 1995, Li became one of the youngest party leaders in Harbin and was later appointed vice mayor. Three years later, he went to Chengdu, Sichuan Province, to be vice mayor.

In 2001, Li was promoted to mayor of Chengdu, and in 2003 he became the city's party chief. In the same year, he initiated a reform plan to promote the city's urbanization. The program involved pilot measures to change the household registration system and social welfare support for rural people and fairer access to public services. The plan was approved by the State Council, China's cabinet, in 2007, winning Li a good reputation.

In 2004, Li launched a campaign to streamline administrative procedures and improve the efficiency of Chengdu's government. He also pushed forward a project to offer extended free education to the local Tibetan ethic group.

Li was credited with being innovative and capable of implementing reform measures. People close to him said his success was linked to his connections with high-level officials in Beijing.

Several sources said Li, along with Guo and Li Chongxi, the former chairman of the Sichuan's People's Political Consultative Conference, a political advisory body, were three of the favorite subordinates of Zhou Yongkang, Sichuan's party chief from 1999 to 2002. Zhou retired from the Politburo Standing Committee, the party's top decision-making body, in 2012. From 2007 to 2012, he headed the party's Central Politics and Law Committee, meaning he handled the nation's public security affairs.

The CDIC started an inquiry into Li Chongxi in December.

Official-Business Connection

A complicated network connecting businessmen and officials and surrounding Li grew during his eight years as party chief of Chengdu.

Backed by Li, dozens of government-linked investment companies were formed in the city, including urban investment and construction firms, asset management companies and others. They received capital injections from the local government and enjoyed preferential policies in land purchases and business operations. The companies have conducted a wide range of investments in urban construction, industry, transportation and tourism.

Such companies have played an active role in pushing forward the development of Chengdu, while also forming grey areas that link government officials and businessmen.

Deng Hong, chairman of Chengdu Exhibition and Tourism Group, is one of the businessmen who profited from Chengdu's development projects. Born in 1963, Deng was recruited by the military in 1977. After leaving the army he started his own business and tapped the property market in Chengdu starting in 1995.

In 1997, Deng invested hundreds of millions of yuan in building Chengdu's exhibition center, and in 2002, his company invested 2 billion yuan to build a 26.7 hectare tourism compound in Jiuzhai, the famous resort in western Sichuan. The project – representing the most money ever invested in a tourism project in China – opened in 2003.

The project has come under attack for causing environmental damage because it is inside a national park and caused the loss of forest. Some have asked whether the project ever won approval from central government forestry and land resources authorities.

Deng was also granted preferential policies in land use for building the new exhibition center in Chengdu in December 2003. The project covers 100 hectares of land, and Deng has said that it cost some 10.4 million yuan per hectare. But a Chengdu official who refused to be named said the actual price Deng paid was 4.3 million yuan per hectare.

In 2008, Deng started another commercial compound near the exhibition center, a development that covers 86.7 hectares of land. According to the record from the city's land and resources bureau, the parcel was publicly auctioned in September 2008 and Deng won the bidding by spending 480 million yuan, equivalent to 7.9 million yuan per hectare. But several sources from the property industry said they never heard about the auction. A source said in nearby region, the price was 29.9 million yuan per hectare.

Various sources say Deng maintained a close relationship with Li. He once paid 3 million yuan to help Li moving his family graves and hold a ceremony. In the April 29 statement, the CDIC accused Li of "carrying out superstitious acts."

Falling from Grace

Sources close to the situation said that Li was detained by CDIC officials on December 2, 2012.

The investigation into Li was triggered by reports from Chengdu officials regarding violations in a property project in a suburb. Investigations into the project and its developer, Shi Zhenhua, who came from Li's hometown, soon expanded to a number of businessmen and officials in Chengdu. Those who have been put under investigation include Wang Junlin, chairman of liquor maker Sichuan Langjiu Group Co.; Zhang Jun, chairman of Chengdu Construction Engineering Group; Xing Ping, chairman of Chengdu Hi-Tech Investment Group; and other executives involved in Chengdu's construction projects and having ties to Li.

Deng was detained in the Chengdu airport by police in late February 2013, and faces accusations of illegal land transfers, tax evasion and loan fraud. Many people in the industry speculate that the accusations are related to Deng's land deals for the exhibition center project.

In May 2013, the former chief of the public security bureau of Jinjiang District in Chengdu, Wu Tao, was detained on accusations of offering a fake passport to Li's wife. Wu was sentenced to 12 years in jail in January on charges of falsifying a government document, taking bribes and illegally owning guns.

On March 24, the CDIC said in a statement that He Huazhang, a former media businessman who became the mayor of Suining, a city east of Chengdu, was the subject of a graft probe. Sources said He has been a close subordinate of Li.

As the investigations unfold, they reveal deep and complicated connections among the business and officials in Sichuan.

"It is like a storm swept the government and business circles in Sichuan," a source in the provincial government said. "After more than 10 years, officials like Li Chuncheng and Guo Yongxiang have cultivated complicated networks here and profited a lot."

See related story http://english.caixin.com/2012-12-17/100473379.html

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