960405

China blasts

corrupt bosses

of ailing

state firms

BEIJING: China's leading newspaper took aim on Friday at bosses of loss-making state firms who spent lavishly on themselves while their workers went unpaid, saying corruption added to the troubled state-owned sector's woes.

"Poor monasteries cannot support wealthy abbots," said the People's Daily, quoting a traditional Chinese adage exhorting austerity.

"Some 'abbots' of state-owned firms... notwithstanding profit or loss, have pagers on their hips and cellular phones in their hands and go about in a (Volkswagen) Santana," the Communist Party mouthpiece said, listing trendy items coveted by young executives.

"They continuously make their work situation more cushy and eat, drink and play using public funds."

The newspaper cited an example of 18 ailing firms in Laohekou city in central Hubei province where authorities seized plant managers' new cars, pagers and portable phones and sold them off to pay taxes and workers' back wages.

"These 18 state-owned firms owed taxes and had stopped or partially halted production, with some not having paid workers' wages in two months," it said. "Yet (bosses) were still breaking regulations and buying luxurious new sedans."

With some 40 percent of China's estimated 100,000 state firms in the red and another 30 percent teetering on the brink of losses, Chinese authorities have stepped up calls to reform the public sector.

However, despite the passage of its first bankruptcy law 10 years ago, China has been cautious in closing ailing firms for fear of causing social unrest among the tens of millions of workers that would be affected.

Only about 160 state enterprises have begun legal proceedings for bankruptcy and more than 90 have gone bankrupt, Xinhua news agency reported.

With corruption joining bankruptcy as one of China's hottest political issues, authorities have targeted the extravagance and misdeeds of factory managers in the campaign to reform the state enterprise system.

Public resentment against obstructive officials who take advantage of their jobs to line their own pockets is strong in China, where graft was virtually eliminated in the years after the communists came to power in 1949.

Corruption has flared following economic reforms in the past decade, costing China billions of dollars.-Reuter