One of China’s biggest power companies has been accused of illegally subcontracting a subway project to a construction company using unsafe materials.

China Gezhouba Group Electric Power had agreed to construct part of the Qingdao Metro in eastern China, but allegedly subcontracted parts of the work out to private companies that then subcontracted the projects several times again, according to state-run broadcaster CCTV. At least one of the companies involved had asked other subcontractors to cut corners, which could have compromised the safety of the subway, Liu Feiyun, the manager of one construction team, told CCTV.

Liu said he was also required to sign a contract that forbade him from reporting problems to the authorities, according to CCTV. Liu’s account, which was published in multiple Chinese media outlets over the past week, drew Qingdao Metro’s attention to the problem.

Qingdao Metro said on Saturday that it had investigated Liu’s allegations, and that Gezhouba had indeed been engaging in “illegal subcontracting activities.” Qingdao Metro now wants 1 million yuan ($146,244) from Gezhouba for violating its contract, and has put the power company on a blacklist.

Gezhouba's Shanghai-listed parent company denied that it had used subcontractors, but admitted in an official filing that there were “project management” problems. The parent company said Gezhouba will reconstruct any parts of the subway found to have quality problems. Qingdao Metro has yet to respond to the filing.

Contact reporter Zhao Runhua (runhuazhao@caixin.com)