Senior executives of China's 147 centrally-administered state-owned enterprises (SOEs) may face a permanent ban from their managing posts if found responsible for severe losses during their tenure, the state assets watchdog said on Wednesday.
Heads of the central SOEs may face economic and administrative punishment, and one-to-five-year or even a life ban from their posts if their businesses run into unusually severe losses or heavy losses at times, the State-owned Assets Supervision and Administration Commission (SASAC) said on its website.
The new rules spelled out 50 situations causing economic losses which will lead to punishment of company executives, including irregular practices in daily operation like purchase, sale and capital management, as well as investment and corporate restructuring.
Both direct and indirect losses will be calculated to measure executive performance. Foreseeable damage in the future will also be taken into account.
The economic punishment includes slashing pay and bonus and stopping new stock issuance. The administrative punishment consists of warning, demotion and dismissal.
Former executives cannot escape liability if they were found responsible for the losses after they leave the posts.
The 147 SOEs and their major subsidiaries are required to report to the SASAC if losses occur. The latest reshuffle has cut the number of the SOEs from 149 to 147.
As the backbone of the national economy, central SOEs control many crucial sectors including power, oil and gas. Those enterprises are plagued by corruption and malpractice scandals of their bosses, without concrete policies to bring those guilty to justice.
Chen Jiulin, the former chief executive officer of China Aviation Oil (Singapore) Corp. Ltd. (CAO), was sentenced to four years and three months in jail and a fine of 335,000 Singapore dollars (about 207,443 U.S. dollars) on March 21, 2006.
Chen, a 45-year-old Chinese national, had faced 15 counts of issuing false financial statements, cheating Deutsche Bank and failure to inform the Singapore Exchange of the company's losses.
CAO, once a major jet fuel supplier listed on the Singapore Exchange, lost 550 million U.S. dollars in oil derivatives trading in 2004.
(Xinhua News Agency September 11, 2008)