The world is changing fast and to keep up you need local knowledge with global context.
EDINBURGH — In China, corruption carries stiff penalties, including the death sentence in extreme cases. And, as China grows in economic stature, its President Xi Jinping has been vocal about driving out corruption. China hunts down its corrupt everywhere – except, it seems, in South Africa where its business movers-and-shakers are apparently allowed to feast, unfettered, on the spoils of corruption. Investigative journalists have found evidence in the #GuptaLeaks lending weight to reports that Chinese state-run businesses have benefited enormously from patronage and corruption in South Africa. BizNews highlights the role of Shanghai Zhenhua leaders, which has strong ties with the ruling Communist Party and which is ultimately responsible for the activities of the organisation. – Jackie Cameron
The Chinese government has a reputation for tracking down the most influential of its state and business players who are believed to be corrupt. Yet, in South Africa, it leaves its own to get their proverbial snouts in the trough along with corrupt South African politicians and business players.
The Chinese government is conspicuous in its silence over the role of Chinese entities in the worst financial scandal in South Africa in decades. The Gupta state capture campaign has dominated headlines for 18 months, with evidence emerging daily through the #GuptaLeaks of the role of big international businesses in aiding and abetting the corrupt.
Highlighted in the #GuptaLeaks is Shanghai Zhenhua, a Shanghai-stock exchange listed state holding company.
Both the Chinese embassy and Shanghai Zhenhua officials have failed to respond to questions put to it, by BizNews, about what it plans to do about allegations that Shanghai Zhenhua has encouraged and benefited from corruption in irregular contracts with state-owned entities.
Evidence of corruption: “Shanghai Zhenhua paid millons to Gupta fronts”
Flashback from amaBhungane: “In September 2011, Transnet announced that Shanghai Zhenhua would build, deliver and commission seven tandem-lift ship-to-shore cranes for the container terminal at Durban harbour, notes amaBhungane.
“According to Transnet documents obtained by amaBhungane, it would pay Shanghai Zhenhua $92m (about R1.2-billion today) for the job. Three months later, money started to flow to the Guptas.
“Shanghai Zhenhua paid the first tranche of US$969 086 (R12.6m) that December. According to the Guptas’ accounting records, it went to a United Arab Emirates-registered company called JJ Trading.
“JJ Trading has also featured prominently in another Transnet kickback scheme. The #GuptaLeaks reveal China South Rail entered into a “consulting” agreement with JJ Trading, related to Transnet’s 2013 locomotive tender, and paid JJ Trading over US$107-m (R1.4-billion).”
According to amaBhungane: For every tranche of cash received from Shanghai Zhenhua, JJ Trading transferred exactly 4% to a person called “David”, sometimes as cash. The rest flowed to Gupta front companies in the UAE and South Africa.
“Bank and accounting records show that two heavy equipment manufacturers – Swiss-based Liebherr-International AG and China’s Shanghai Zhenhua Heavy Industries Limited – funnelled nearly R100m to the Guptas, as Transnet awarded them contracts to supply cranes to South African ports.”
There is no specific evidence of Transnet rigging the crane tenders to favour Shanghai Zhenhua, says amaBhungane.
“However, the payments to offshore Gupta fronts and contemporaneous contract awards trace a Transnet tender pattern that is now well known,” point out the journalists.
Shanghai Zhenhua is among at least seven large companies known to have secretly paid Gupta fronts in connection with Transnet contracts.
What Shanghai Zhenhua Heavy Industry says about itself:
“About Shanghai Zhenhua Heavy Industry Co., Ltd. (ZPMC) is a famous heavy-duty equipment manufacturer, and a state holding company listed on A and B shares in Shanghai Stock Exchange. The major shareholder is China Communication Construction Co., Ltd. (CCCC), which is one of top 500 companies in the world.
“ZPMC headquarters is located in Shanghai. ZPMC also has 8 production bases located in Shanghai, Nantong and Jiangyin, with total area of 6670 hectares and 10 kilometer coastline, (especially Changxing Base has 5 kilometer deep water coastline), and including heavy-duty dock of 3.7 kilometer. ZPMC is the largest heavy-duty equipment manufacturer in the world and owns 26 transportation ships of capacity from 60,000 DWT to 100,000 DWT, delivering products to all over the world.”
Profiles: Shanghai Zhenhua leaders – who is to blame for corruption in South Africa?
The Shanghai Zhenhua board members all have impressive credentials, with many educated to PhD level. Here’s what the company says about its leaders:
1. Song Hailiang – chairman
Shanghai Zhenhua says of its chairman: “Born in 1965, male, PhD, professor-level senior engineer. He started to work in July, 1987 and successively held posts of engineer, director of Design Dept. of CCCC Water Transport Planning & Design Institute and vice president, president, member of the Party Committee, deputy secretary of the Party Committee, and chairman and general manager of CCCC Water Transport Planning & Design Institute. Now, he serves as the vice president of CCCC and general manager of CCCC Equipment Manufacturing and Marine Heavy Engineering BU and chairman of ZPMC.”
2. Zhu Lianyu – vice-chairman
Another Communist Party heavyweight, and the head of the Shanghai Zhenhua executive team, Zhu is probably the most influential person at Shanghai Zhenhua. He was “born in 1970, male, PhD, professor-level senior engineer. He started to work in September, 1992 and successively held posts of engineer, principal of Overseas Project Equipment Dept., deputy director of Ship Machine Dept. and manager of Business Development Dept. of CCCC First Harbor Engineering Co., Ltd., general manager of CCCC International Shipping Co., Ltd. and vice general manager of CCCC Marine Heavy Engineering BU. Now, he serves as Secretary of the Party Committee, Vice-Chairman of ZPMC, and also as Chairman for ZPMC Offshore Business.”
3. Huang Qingfeng – director
Says Shanghai Zhenhua: Huang was “born in 1975, male, EMBA, senior engineer. He started to work in August, 1996 and successively held posts of director of QA project, head of RTG Inspection Room of Quality Management Dept., vice general manager of After-sales Service Dept., general manager of Quality Inspection Company, vice director of Offshore Office, director of Quality Safety Office, director of Product Service Center and assistant to president etc. Moreover, he has served as vice president since January, 2005 and executive vice president and director of production and Project Management Center since 2014. Now, he serves as director and president of ZPMC.”
4. Chen Qi – director
Born in 1962, Chen is “senior engineer, master”. “She successively held posts of project manager of Imp. & Exp. Port Machinery Dept. of China Harbor Engineering Co., Ltd., vice general manager and general manager of Industry and Trade BU of China Harbor Engineering Group and general manager Industry and Trade Dept. of CCCC. She has served as director of ZPMC since 2011. Now, she serves as executive general manager of CCCC Equipment Manufacturing and Marine Heavy Engineering BU.”
5. Yan Yunfu – director
“Born in 1959, male, EMBA, professor-level senior engineer. He successively held posts of vice director of Technical Dept. of ZPMC, manager of Machinery Design Dept. of ZPMC, deputy chief engineer, chief engineer, vice president and president of Onshore Heavy Industry Design Institute of ZPMC, etc. He has served as director of ZPMC since 2004. Now, he serves as director and chief engineer of ZPMC.
6. Liu Qizhong – director
“Born in 1964, male, undergraduate, senior economist. He successively held posts of vice manager and manager of Business Dept. of ZPMC. He has served as director of ZPMC since 1997. Now, he serves as director and vice president of ZPMC.
7. Dai Wenkai – director
“Born in 1967, male, master of physics, EMBA, senior engineer. He started to work in 1993 and successively held posts of vice manager and manager, deputy chief economist and chief economist of Business Dept. of ZPMC. Now, he serves as director and vice president of ZPMC, and also as General Manager for ZPMC Offshore Business.”
8. Wang Jue – secretary of the board of directors
“Born in 1964, male, EMBA, CPA, senior accountant. He successively held posts of financial officer and chief accountant of subsidiary of CCCC Third Harbor Engineering Co., Ltd., director of Audit Dept., director of Financial Dept and deputy chief accountant of CCCC Third Harbor Engineering Co., Ltd. He has served as CFO and secretary of the board of directors since Nov. 2005. Wherein: he served as director of ZPMC from 2006 to 2011. Now, he serves as director, finance director and secretary of the board of directors of ZPMC.”