Caixin
Aug 19, 2019 07:28 PM
BUSINESS & TECH

Former Steel Boss Expelled From Communist Party

A worker surveys the production of steel at a plant of Dongbei Special Steel Group in Dalian, Northeast China's Liaoning province, on April 8. Photo: VCG
A worker surveys the production of steel at a plant of Dongbei Special Steel Group in Dalian, Northeast China's Liaoning province, on April 8. Photo: VCG

A former top official at a state-owned steel heavyweight that went bankrupt after massive accounting fraud was exposed has been expelled from the Communist Party of China following an anti-graft investigation.

Zhao Mingyuan, former president and party chief of Dongbei Special Steel Group Co., will now be transferred to prosecutors to determine possible charges. The move follows a half-year investigation that found Zhao had committed a “series of violations of discipline and law,” according to the commission for discipline inspection of Northeast China’s Liaoning province, which used the phrase that commonly connotes corruption.

Zhao could face charges related to falsified accounting involving a listed company, as well as taking bribes.

Now 66, Zhao started working at Dalian Steel Mill, the predecessor of Dongbei Special Steel, in 1969. He later took the helm of the restructured company for 19 years before retiring in 2015 due to his age. His successor Yang Hua committed suicide less than a year after taking over the company.

In 2016 Dongbei Special Steel was exposed for accounting fraud, forcing it into bankruptcy. Later, the state-owned company sold a 43% stake to a private steelmaker as part of a restructuring plan. In 2017, Fushun Special Steel — Dongbei Special Steel’s Shanghai-listed subsidiary — was also exposed for accounting fraud.

In July, Fushun was penalized for accounting fraud, according to a notice issued by China Securities Regulatory Commission (CSRC). Fushun was found to have fabricated financials related to its inventory, earnings and fixed-asset investments between 2010 and the first three quarters of 2017, among other things.

During that period, Fushun allegedly inflated its profit by 1.9 billion yuan ($276 million) by exaggerating inventory levels and reducing production costs, according to the CSRC notice.

More than 40 executives including Zhao were named and shamed at that time. Zhao was individually fined 300,000 yuan and banned from China’s capital markets due to his alleged role.

Contact reporter Mo Yelin (yelinmo@caixin.com)

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code