Caixin
Jul 30, 2021 07:29 PM
CHINA

In Depth: For Worker Safety, Phony Risk Assessments Are a Hazard in Themselves

The agency that did the safety assessment for the company involved in an explosion in Xiangshui, East China’s Jiangsu province, was accused of having a serious discrepancy between the evaluation report and the actual situation. Photo: Liang Yingfei/Caixin
The agency that did the safety assessment for the company involved in an explosion in Xiangshui, East China’s Jiangsu province, was accused of having a serious discrepancy between the evaluation report and the actual situation. Photo: Liang Yingfei/Caixin

When inspectors from Nanjing’s emergency management bureau looked at the pictures in the safety assessment report, they felt something wasn’t right: the grass in the photos was greener than it should be at that time of year, and travel for the assessor from their home base in the far off northwestern city of Ningxia would have been very difficult due to the stringent Covid-19 restrictions.

The inspectors then discovered that the assessor, who works for Ningxia Zhicheng Anhuan Technology Development Co. Ltd., a licensed agency that offers safety assessment services, had never conducted an on-site inspection of the Nanjing-based company that had passed the work safety evaluation.

It’s far from the only case of its kind. Ningxia Zhicheng, which outsourced its assessment work to local agencies in Nanjing, has issued safety reports for 71 companies in the eastern Chinese city without sending assessors to conduct on-site inspections for any of them, Caixin has learned.

The emergency bureau’s inspection of Ningxia Zhicheng came at a time when the country’s top safety authorities are strengthening supervision of workplace assessments (link in Chinese), which is regarded as a key mechanism to ensuring the health and safety of employees. Authorities are also urging agencies in all regions to stamp out any malpractice, including falsification of safety assessment reports and certified agencies and safety assessors renting out their licenses and credentials, according to the ministry of emergency management.

At a May meeting, the authorities asked safety assessment agencies to complete rectification by the end of this year, and urged local officials to increase scrutiny.

According to China’s work safety laws and regulations, companies that operate in industries like construction and production of dangerous chemicals are required to pass a safety assessment before they can obtain permits to run their business. Based on an analysis of the data gathered from the sites, the assessment is intended to map out the risks and existence of hazards at construction sites as well as in the operation of the facilities.

Failure to do so can lead to workplace accidents, which in recent years have brought malpractices during safety assessments under the microscope. After a deadly explosion at a chemical warehouse in Tianjin’s Binhai New Area in 2015 and a chemical blast at the Tianjiayi Chemical Plant in Xiangshui, Jiangsu province, in March 2019, safety assessors for the companies in question were held criminally responsible for providing fraudulent documents for their clients.

Zhu Baoyan, a professor at Liaoning Technical University, said that the current problem in the industry is that some companies lack awareness about the importance of improving workplace safety, and regard the assessment solely as means to obtain a permit for production. Since the safety assessment agencies are paid by the companies to conduct the evaluation, it is very likely that the agencies are pressured to sugarcoat the results.

Dubious safety assessments

The Ningxia agency’s malpractice was uncovered in March when law enforcement officers in Nanjing identified safety hazards during on-site inspections of two local pharmaceutical companies, both of which claimed that they had completed safety assessments.

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There was no sign that a company was located at the registered address of one safety assessment reporting agency in the Inner Mongolia autonomous region on June 11, 2021. Photo: Qin Jianxing/Caixin

The officers found the assessments had been conducted by an unlicensed company, Nanjing Haoding Technology Co. Ltd., but the final reports were issued by Ningxia Zhicheng and another agency in Inner Mongolia, which has 10 branches registered in the country.

According to the inspectors, Huang Kaiming, an employee of Nanjing Haoding, cooperated with an individual named Shen Lu, who handled nearly half of the 71 projects in Nanjing for Ningxia Zhicheng between June 2018 and June 2020, to issue reports for its clients. Shen is also linked to the Inner Mongolia agency, where he is named as a manager.

According to the inspectors, Huang conducted on-site inspections himself or hired others to do so, and prepared reports for Shen, who then submitted the reports to Ningxia Zhicheng to get the company seal. The reports used the names of safety assessors employed by Ningxia Zhicheng.

Huang told Caixin that Nanjing Haoding has to pay Shen 5,000 yuan ($771) each time for using the licenses of Ningxia Zhicheng or the Inner Mongolia agency. A person who had been hired by Huang to conduct the on-site inspection said it only involved a 10-minute tour of the factory.

According to industry insiders, the standards of safety assessment agencies declined after authorities raised the market entry threshold in May 2019, requiring them to have fixed assets of no less than 8 million yuan. The requirement resulted in many licensed agencies leaving the market, while those with enough cash expanded their business and opened branches across the country.

However, the branches are not subject to strict supervision and they sometimes use unqualified assessors to conduct inspections.

Several sources in the local emergency management systems told Caixin that there’s often a lack of supervision of safety assessment agencies and the reports they issue are not verified. Meanwhile, many companies don’t attach enough importance to safety assessment for their operations and treat them as a mere formality.

A manager from an urban gas company in the central Hunan province told Caixin that their safety assessment reports, which are required once every three years, were “bought” from the safety assessment agencies, which only review documents, skip on-site inspections and agree to any request made by the company.

According to industry insiders, it is common that companies being inspected ask for favorable assessments. As the companies are paying the agencies to conduct the safety evaluations, they don’t require the agencies to be strict with inspections. And as the payments are usually made after the reports are issued, agencies are afraid of losing money if they don’t give a pass in the reports.

Rectification ordered from the top

Currently, agencies that rent out their licenses are punished with a warning and a fine of up to 10,000 yuan. The penalties may be increased to 30,000 yuan for those who fail to make rectification within the required time.

Since earlier this year, authorities have vowed to increase scrutiny and crack down on phony safety assessments. At a meeting in March, Huang Ming, party secretary of the ministry of emergency management, said phony safety assessment agencies must be “tackled with an iron fist.”

In May, the ministry issued special rectification plans for safety assessment agencies, which include specific measures such as revoking licenses of agencies that issue fake reports and punishing companies that use fake reports to obtain permits to operate, Caixin has learned.

The amendments to the Criminal Law, which took effect on March 1, have made fraudulent safety evaluation a criminal offense. Under the Criminal Law, those intentionally providing false reports can face up to five years imprisonment. And those who provide falsified safety assessment reports for major projects involving public safety, causing significant harm to public assets or the national and public interest, can face up to 10 years in jail.

Wang Zhiyong, a safety assessor who managed work safety for several companies, told Caixin that while the legal punishment under the Criminal Law serves as a deterrence, it is more important to strengthen general supervision and law enforcement. And businesses should take more responsibility.

“The quality of safety assessment, no matter high or low, is not a decisive factor in whether an enterprise can ensure safety,” he said. “The primary responsibility for ensuring safety always lies with the enterprise itself.”

Contact reporter Cai Xuejiao (xuejiaocai@caixin.com) and editor Michael Bellart (michaelbellart@caixin.com)

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