Caixin
Nov 25, 2019 09:15 AM
POLITICS & LAW

In Depth: Xing Yun Graft Shockwave Reverberates in Inner Mongolia

Xing Yun. Photo: VCG
Xing Yun. Photo: VCG

Shockwaves from the corruption-driven downfall last year of Xing Yun are still reverberating through officialdom in Northern China’s resources-rich Inner Mongolia Autonomous Region. A sweeping anti-graft crackdown continues adding names to a growing list of dirty officials.

More than a dozen senior officials in Inner Mongolia have either been probed or turned themselves in. Some committed suicide. The turmoil traces back to 67-year-old Xing, a dominant figure who in a decades-long career in the region’s government spun a complex web of graft sprawling across Inner Mongolia’s government, businesses and even criminal gangs.

In August, Xing pleaded guilty to accepting bribes worth 449 million yuan ($64 million) in a court in Dalian, Liaoning province. It was a record sum for a provincial-level official caught up in China’s sweeping, seven-year anti-graft campaign. Xing’s sentence is still pending.

When he was placed under Communist Party investigation last year, Xing was two years into retirement following a career in which he became the long-time head of the region’s law-and-order apparatus and a member of its top policymaking body.

Over a career starting as a teenage teacher in 1968, he rose to hold senior positions including Communist Party chief of Ordos and Baotou, secretary of the region’s Political and Legal Affairs Commission and vice chairman of the Inner Mongolia People's Congress — a title he held until he retired in 2016.

Xing built a reputation as a bold and capable official. As the leader of Ordos and Baotou — Inner Mongolia’s two largest cities — he pushed forward local economic restructuring to bolster growth, but he also left behind controversial deals involving companies such as Baotou Iron and Steel Group (Baotou Steel) and Ordos Group.

Xing was often criticized for an iron-fisted approach to official appointments. Wherever he took office, his old subordinates and associates followed. While some applauded his loyalty to old friends, others accused him of nepotism. After his downfall, a raft of officials in Ordos, Hohhot and Baotou quickly came under investigation. Many of them held senior positions in local public security systems.

In August 2018 following a six-month investigation, China’s top graft buster accused Xing of using his power to help others get promotions, accepting huge bribes, intervening in the judicial system, undermining the party's system of selecting officials and severely damaging the local political environment, and colluding with private entrepreneurs to seek personal gain and trade in power, money and sex.

Two sides of a coin

Anecdotes circulating in Inner Mongolia paint conflicting portraits of Xing Yun. According to one story about when he was party chief of Baotou, Xing waited alongside a highway for hours to meet with the regional government’s transportation department head, winning the city billions of yuan of construction funds.

In another story, Xing kicked out a new commercial bureau head appointed to Baotou by the regional government and installed his own subordinate. Businessmen followed him from city to city as he helped them get investment deals, people said.

While proving such stories is difficult, Xing clearly has long been a controversial figure in Inner Mongolia’s officialdom. A native Inner Mongolian, Xing started his career as a teacher at age 16 in a local school. In 1973, he started college and after graduation entered the publicity department of his hometown, commencing his bureaucratic career.

Xing got on the fast track for promotion in 1987, when he was named a deputy district head of Baotou, the biggest city in the region at the time. In 1993, he became the deputy leader of the Ikezhao League, a town that later became Ordos, and was promoted to the league’s party head three years later. In 2001, the Ikezhao League was elevated to the prefecture-level city of Ordos, and Xing was the first mayor of the new city.

In late 2001, Xing was named party chief of Baotou and elected a member of the Standing Committee of the regional party committee, the top policymaking body of Inner Mongolia. In 2006, he became the secretary of the region’s Political and Legal Affairs Commission and headed the top law enforcement body for five years.

Several Baotou government employees and businessmen described Xing as an ambitious official.

“He wanted to do something and was capable,” said one person who declined to be identified. During his tenure, Baotou introduced new investors and reformed local enterprises, boosting economic growth and civil servants’ salaries, the person said.

As the head of Baotou, Xing backed investment in the local industry developing rare earths, a group of elements that are vital for consumer electronics, computers, communications, clean energy, advanced transportation and health care, among others. The deals provided new jobs and tax revenue for the city, said another source.

During Xing’s tenure, the economic rise of the Ikezhao League and later Ordos became a miracle in China. The city’s GDP grew at an average annual rate of 20% between 1996 and 2000 and remained the fastest-expanding economy in Inner Mongolia for seven years. Now, Ordos is the richest city in the region, known for coal and cashmere.

Local people attribute the rise of Ordos to restructuring of local state-owned enterprises (SOEs) pushed forward by Xing that empowered the local private sector. Under Xing’s direction, several major SOEs including cashmere specialist Erdos Group and coal miner Inner Mongolia Yitai Group Co. were converted into privately owned conglomerates through equity sales.

But Xing’s accomplishments also have a dark side. The rare earths investments he promoted in Baotou left environmental damage that threatened people’s health, sources said. Many of the SOE reforms in Ordos involves opaque deals with businessmen close to him, raising concerns that state assets were undersold, Caixin learned.

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Baotou, one of the biggest cities and business hubs in Inner Mongolia, has become ground zero for an unfolding corruption scandal. Photo: VCG

Murky links

Shortly after Xing was placed under investigation, Dong Jierong, chairman of Ordos Taibao Investment Co., disappeared, local sources said. They believed Dong was placed under authorities’ investigation.

Dong is one of the businessmen closely linked with Xing. His company has businesses ranging from road construction to real estate, coal mining, new energy and micro lending. Established in 2004, Taibao Investment spent more than 10 billion yuan on several road projects linking Ordos and other cities, according to company documents.

In 2001 when Xing transferred from Ordos to Baotou, Dong also moved his business focus to Baotou and established a new company, Baotou Huanghe Luqiao Engineering Co. Ltd. The company quickly became a major contractor on several infrastructure projects in Baotou.

Although Dong remained little-known outside Inner Mongolia, Caixin found that Huanghe Luqiao appeared as an investor in a high-profile deal in 2006 to privatize state-owned power company Shandong Luneng Group. Part of the 3.7 billion yuan deal was questioned for the widespread use of shell companies and complicated transactions among interconnected companies linked to mysterious tycoon Xiao Jianhua. Xiao was detained by authorities in January 2017 for graft investigation.

Dong’s whereabouts are still unclear, but in August he exited from several companies he controlled by selling stakes to a person named Dong Jinshuan, business registration records showed. The two are relatives, people familiar with the matter said.

Xing is also connected to a graft investigation of Baotou Steel, which brought down two company chairmen, Caixin learned. State-owned Baotou Steel is the world’s largest rare earths miner.

Zhou Bingli, a former chairman of Baotou Steel, was investigated in March 2017. In August this year, he was sentenced to 11 years in jail for taking bribes and abuse of power that caused a huge loss to a state asset. One month later, Zhou’s predecessor Cui Chen was sentenced to 18 years for accepting bribes. Zhou and Cui are old acquaintances of Xing and veteran managers of Baotou Steel.

People familiar to the company said Xing frequently used his power to influence executive appointments and business deals at Baotou Steel.

One of the controversial deals handled by Cui and Zhou was the 2007 acquisition of privately owned Baotou Huamei Rare Earth High-Tech Co. Baotou Steel paid 1.3 billion yuan to take over Huamei Rare Earth amid a national campaign to consolidate rare earths mining. Huamei Rare Earth, controlled by businessman Ma Yongmao, was said to have 240 million yuan of total assets and nearly 100,000 tons of rare earth mining capacity.

However, former employees of Huamei Rare Earth said the company was much smaller than it claimed and worth much less than what Baotou Steel paid. In 2011, Ma and his whole family migrated to Canada.

Continuing shockwaves

Xing has a strong personality that made him the absolute decision-maker in places he worked, a retired Inner Mongolia official said. He promoted many officials that were not qualified under party rules when he was in Ordos and Baotou, the official said.

Before Xing departed Ordos for his new post in Baotou, he carried out an extensive reshuffling of Ordos’ government involving more than 160 officials, a Baotou source told Caixin. Some of his closest aides were brought to Baotou with him, the source said.

“Over the years, his subordinates and connections are intertwined,” said another source familiar with Xing.

Xing’s fall set off an avalanche among the former subordinates he elevated.

Zhang Mang, a schoolmate of Xing, followed his footsteps from the Ikezhao League to Baotou, rising to the top post of Baotou’s state-owned asset administration. On the same day Xing’s investigation was announced, Zhang was detained on corruption charges. In July, he was sentenced to four years’ imprisonment for taking 2.5 million yuan of bribes.

Xing’s downfall also sent shockwaves through Inner Mongolia’s security system, which he oversaw for five years. In September 2018, Du Baojun, former deputy director of the Baotou Public Security Bureau, was placed under investigation.

One month later, Baotou’s Vice Mayor Lu Zhi and Inner Mongolia’s retired deputy public security head Meng Jianwei were both investigated. Meng was accused for providing protection to local gangs.

Then, on Nov. 1, Li Zhibin, Hohhot’s vice mayor and director of the city’s public security bureau, committed suicide in his office. Li was a subordinate of Meng. Caixin learned that Li was questioned before his death by anti-graft authorities for involvement in Xing’s case.

The shockwave continued spreading after Li’s death as several of his subordinates and affiliates in local public security systems have also been investigated.

In March this year, Dong Binghui, president of Hohhot Intermediate People's Court, was targeted by investigators. In May, Su Yu, a retired top legislator in the region fell under investigation. One month later, Zhao Yunhui, Inner Mongolia’s deputy director of public security, and Yun Guangzhong, party chief of Hohhot, became the latest targets of the graft crackdown.

Sources close to the matter said the list of the disgraced may continue growing as several officials in the region’s public security system have turned themselves in and are awaiting further investigation.

Contact reporter Han Wei (weihan@caixin.com)


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