CEFC got $4.8 bln credit line after "tens of mlns" yuan in bribes to then CDB head

China Development Bank ex-governor Hu Huaibang's corruption on CCTV1

From Tuesday to Thursday (Jan. 18 to Jan. 20, 2022)., the 19th Central Commission for Discipline Inspection (CCDI) 中央纪委, the top Party discipline watchdog which doubles as National Supervisory Commission (NSC) 国家监委, will hold its sixth plenary session.

Ahead of the session, CCDI/NSC and China Central Television 央视, now a part of China Media Group 中央广播电视总台，is broadcasting the five-episode TV series 零容忍 Zero Tolerance on CCTV1 at prime time (8 pm GMT+8) since Saturday, Jan. 15.

This is a translation of the EP 01 transcript [Chinese] involving Hu Huaibang, former Party secretary and Chairman of China Development Bank, who was filmed admitting to taking huge bribes from Ye Jianming, founder and former Chairman of CEFC China Energy Company, for, among other things, approving a 4.8 billion USD credit line to CEFC. Ye had made international headlines for rising in rocket speed from complete obscurity to being an energy tycoon in the Fortune Global 500. And Wang Sanyun, former Gansu Provincial Party Secretary, was the broker in between.

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[Commentary]: Finance is critical to the national economy and concerns the well-being of the state and the people. Financial corruption usually entangles with all corps of market risks, which can both wreak havoc on the real economy and cause systemic risks, harming the fundamental interest of the Party and people in the very end. The Central Committee of the Communist Party of China (CPC) has given high priority to anti-corruption work in the financial sector, with General Secretary Xi Jinping making major deployment on anti-corruption work in the financial sector at the third, fourth, and fifth plenary sessions of the 19th Central Commission for Discipline Inspection of the CPC. The discipline and inspection departments have deepened the anti-corruption work in this sector and investigated and punished a group of officials in the financial sector including Lai Xiaomin, Sun Deshun, and Hu Huaibang for their serious violation of Party disciplines and laws.  

Hu Huaibang: I have done a deep introspection on my wrongdoings and now understand the severity and harm caused by my own crimes. As a Party member and cadre, I received a huge sum of money and created irredeemable damage to the Party and the country, because what the ordinary people hate the most is corruption.

[Commentary] Hu Huaibang, former Party secretary, Chairman of the China Development Bank (CDB), was investigated by the CCDI/NSC in July 2019.

Wang Xiangguo (cadre with the Third Supervision and Inspection Office of CCDI/NSC): The case of Hu Huaibang is a typical case that occurred despite repeated warnings after the 18th National Congress of the CPC and has political and economic problems, as well as financial corruption and financial risks mixing and overlaying together. He violated major decisions of the Central Committee of CPC, which is entangled with his corruption.

[Commentary]: China Development Bank has a special status in the financial system, since it is a development finance institution under the State Council, with a focus on serving the national strategy. In 2014, the Central Committee of the CPC and State Council launched the deepening of the reform of CDB and specifically demanded that CDB should further focus on serving the national strategy and reduce the number of commercial projects. As the head of the CDB, Hu brazenly disobeyed the instructions of the Central Committee and assisted a private company to get a large sum of credit line before the reform plan went into effect.  

Hu Huaibang: I participated in the whole process of developing the reform plan of CDB. I was fully aware of the reform direction but still approved his loan before the reform plan was issued. In consequence, my wrongdoing wound up with non-performing loans, and I should take responsibility for causing great damage to the state.

[Commentary]: The reason Hu did that was that he received huge bribes from the private company which used to be high-flying but is now bankrupt – the CEFC China Energy. From the time when Ye Jianming, the head of CEFC, first met with Hu, till they made a power-for-money deal, a broker played a disgraceful role in this exchange. That broker is Wang Sanyun, the former Party Secretary of Gansu Province, who was punished for violating Party disciple and law in 2017. The power-for-money trade between Ye and Wang preceded Ye and Hu. After meeting with Hu via Wang’s introduction, Ye asked Wang to help send his requests to Hu.

Wang Sanyun: I think Ye treated me well. He came for my help and I know Hu, so I never thought it would be difficult. When I talked with Hu, I made Ye’s request plain and told Hu to help him if he could.

[Commentary]: CEFC China Energy applied for a credit line of 4.8 billion U.S. dollars from the CDB in 2015. [Later,] Ye again asked Wang to talk to Hu for approving the credit line.

Hu: This did deviate from the reform direction of the CDB. Ye was afraid that I wouldn’t approve, so he came to me again and invited us - with Wang - to dinner. In the February of the next year, I approved the loan.

[Commentary]: After the investigation, Wang and Hu have both received tens of millions yuan from Ye, respectively, and Hu used his power as the head of the CDB to approve the colossal loan which from the very beginning included huge risks and was not befitting the positioning of the CDB.

Liu Huasong (Cadre of the CCDI/NSC): Hu has lost his ideals and beliefs, and his perspective on power, performance, and career was all severely distorted. He understood fully that CEFC did not qualify for applying for loans from the CDB but he still branded the loan as an act to implement national policy. What is behind all these is Hu’s illusion of cozying up to and connecting with local leaders with the financial resources that he controlled. He even imagined streamlining his promotion in the future and plotting for more personal benefits by making under-the-table deals with some seemingly resourceful or connected businessmen.

Hu Huaibang: The senior leaders of the financial sector deal with people at higher levels who have, for example, private jets. Therefore, I had a feeling of unfairness and imbalance. Since I was weak in spirit, I slipped into the abyss. I later wrote a sentence in my letter of confession: when you gaze into that abyss, it gazes back. [Yes, that appears to be a Friedrich Nietzsche quote.]

[Commentary]: After Ye was investigated in 2018 for suspected violation of the law, the companies linked to CEFC went defunct instantly. Multiple violations of the law and disciplines hidden in its business operations and the weak basis supported by high leverage were unveiled after the disintegration. 71 subsidiaries under the CEFC were merged and then went defunct, and CEFC’s assets are in the judicial auctioning process. As of today, CDB has large sums of loans outstanding which are unrecoverable, causing great damage to the financial assets of the country.

Wang Xiangguo (Cadre with the Third Supervision and Inspection Office of CCDI/NSC): Comparing with the money he received and the losses he caused, it was totally disproportionate. Financial corruption would induce financial risks. The larger the bribes, the bigger risks and damages - that’s a typical characteristic of financial corruption.

[Commentary]: In July 2017, General Secretary Xi Jinping delivered an important speech at National Financial Work Conference, in which he clearly instructed financial institutions to serve the real economy, prevent and defuse financial risks, and deepen the reform in the financial sector. In his speech, Xi sharply criticized some chaos in the financial sector. Hu thought his conduct fell within the scope of the criticism and felt very uneasy.

Wang Xiangguo (Cadre with the Third Supervision and Inspection Office of CCDI/NSC): Before the (National Financial Work) Conference, Wang Sanyun was put under probe. Hu thus feared that if he conveyed the General Secretary’s important speech to his subordinates, that would cause a wide discussion in the CDB and lead to some bad talk about him, Therefore, he did not call for a meeting of the Party committee of the CDB to study Xi’s speech but instead hid the topic from further discussion. That the spirit of the National Financial Work Conference was shelved at CDB caused the work of CDB to deviate, and made CDB miss a good opportunity to resolve the risks. 

[Commentary]: From 2013 to 2018, Hu was the Party secretary and Chairman of China Development Bank. Because of his own serious corruption, he undoubtedly neglected his primary responsibilities on implementing the Central Committee’s decision on exercising full and strict Party self-governance. That made the integrity-building and graft-busting work in CDB superficial and shallow, and many problems were not effectively addressed.

Liu Huasong (Cadre of the CCDI/NSC): Hu lacked confidence and foundation [because of his own corruption], so he always managed the unhealthy conduct and corruption in the CDB in a carefree manner. He tried to avoid disciplining CDB staff as much as possible. Hu’s behavior of neglecting his primary responsibility of enforcing full and strict discipline within the Party has caused the CDB to let loose the Party discipline, and the political ecosystem was never improved when he was the Party secretary of the CDB. In conclusion, Hu was the resource of corruption in the CDB, and he also immersed himself in a polluted environment, eating the bitter fruit of his own making.

[Commentary]:: Due to Hu’s interference, when he was the head of the CDB, the bank failed to discover, report, or investigate even one single major case, but there were multiple cadres of CDB investigated by other departments because of job-related crimes. Hu himself didn’t "land in safety." On January 7, 2021, Hu was sentenced by a court of law to life in prison for accepting money and gifts worth more than 85.52 million yuan.

Hu Huaibang: I deeply regret my wrongdoing, but life has no backspace key. Once you did bad things to the Party and the country, you have to take responsibility and be punished. Therefore, I’m in prison and serve a sentence with remorse. It’s a life sentence so my life ends here. I hope that my experience in blood and tears will become a lesson and warning for later generations.