Recently, 19 people, led by Du Lujun, secretary of the Party Committee of Kunming Iron and Steel Holding Co. In the process of restructuring state-owned enterprises on the mainland, management’s “lack of cooperation” is the biggest obstacle. The problem is particularly serious in the steel sector, where vested interests are involved.
On February 1 this year, China’s largest steel company, China Baowu Iron & Steel Group, announced that it had signed a cooperation agreement with the Yunnan provincial government to promote the joint restructuring of China Baowu and Kun Steel. From the same day, China Baowu took custody of Kunsteel.
Seventy-two days later, on April 14, Yunnan officials released five consecutive reviews and investigations and detentions, involving a total of 31 people. Among them, a total of 19 people, including Du Lujun, Secretary of the Party Committee and Chairman of Kunsteel Holdings, Li Ping, member of the Standing Committee of the Party Committee and Deputy General Manager, and He Zhijun, Deputy General Manager and other senior executives, leaders of Kunsteel Holdings’ subordinate companies and individual employees and public officials, were under review and investigation. In addition, there are 12 company legal representatives, the actual controller, for suspected bribery was taken to detention measures. Some of these companies have close business dealings with Kunsteel.
Official biographical information shows that the fallen Du Lujun and Li Ping have been working in Kungang, Du Lujun 23 years old in Kungang bridge steel plant to participate in the work, Li Ping 20 years old into the Kungang Luoji iron ore processing plant.
Du Lujun became secretary of the party committee and chairman of the board of Kunsteel Group in April 2019. Li Ping became the Standing Committee of the Party Committee, Deputy General Manager and Director of Kungang Group in December 2016.
In addition to Du Lujun, Li Ping and He Zhijun, 16 other people were announced to have fallen from Kunsteel Holdings: Bai Baoan, former chief economist and deputy general manager of the company; Dong Yu, chairman of Yunnan Cement Building Materials Group Co. Ltd. general manager Zhu Yingdong, Kunming Iron and Steel Holding Co., Ltd. marketing center deputy general manager Wang Tao, Kunming Iron and Steel Holding Co., Ltd. operations improvement department procurement management room employees Zhang Defu, Kunming Steel Group Kunming Iron and Steel Co., Ltd. former deputy director of the office Yang Lingming, Honghe Iron and Steel Co., Ltd. steel mill former plant director Duan Hongjun, continuous casting workshop employees Li Dong, former Kungang Bridge Steel Industry and Trade Co. Ltd., Chen Wei, deputy manager of the business department, Feng Jin, deputy manager of the market development department, and Chen Caichang, researcher of the maintenance department of Yunnan Provincial Highway Bureau, were investigated.
The company was founded in February 1939, formerly known as the China Electric Steel Factory and Yunnan Iron and Steel Factory. 2019 revenue of more than 120 billion yuan (RMB, the same below).
This time, the simultaneous fall of 19 top executives of Kunsteel caused a shock.
According to Xinjing News, the annual salary of Kunsteel Holdings executives is around 1 million yuan. The official website of Kunsteel Holdings shows that Du Lujun’s 2019 salary totaled 1,145,700 yuan, He Zhijun 1,010,700 yuan, and Li Ping 973,500 yuan.
The Communist Party’s Jiang Zemin interests have controlled China’s economy for many years, and the economic lifeline of the mainland is basically in the hands of vested interests represented by Jiang Zemin, and central and state-owned enterprises have almost become the cash cows of Jiang Zemin’s interests. After Xi Jinping came to power, he drastically reformed state-owned enterprises, which became the main battleground for “tiger hunting”.
The biggest obstacle in the process of restructuring the CCP’s central and state-owned enterprises has been the “non-cooperation” of the management, which is often solved through personnel means. This problem is especially serious in the field of steel.
According to an analysis article, the 19 people at Kun Steel bucked the general trend of SOE restructuring and were all taken down by the authorities. Among the many steel groups in China, Ansteel, Baosteel and Wuhan Iron and Steel are directly under the State-owned Assets Supervision and Administration Commission of the Communist Party of China (CPC), while the others are all locally owned. Restructuring between central and local enterprises is difficult. Because the local steel group tens of billions, hundreds of billions of assets, are the core of the local economy, driving too many industrial chains, the relationship is intertwined. No one wants to hand over the control to the central government.
In 2005, the CPC issued a “steel industry development policy”, intends to implement mergers, restructuring, expand the size of the backbone group of enterprises with comparative advantages, to improve industrial concentration. However, there was a lot of resistance to its implementation. In August 2005, Anshan Iron and Steel Group and Bensteel Group, both of which have a 100-year history, jointly announced the establishment of Anshan-Bensteel Group, but no progress has been made since then.
In that year, the Communist Party of China’s top brass proposed to promote the centralization of central enterprises by merging Baosteel and Wuhan Iron and Steel, but it was always difficult to push through. It was not until 2015 when Deng Qilin, chairman of WISCO, was knocked out that Baosteel and WISCO merged to form China Baowu.
In May 2015, Deng Qilin was removed as chairman and party secretary of WISCO. 3 months later, on August 29, Deng was announced to be under investigation.
Deng Qilin was accused of using his position as Standing Committee Member, Deputy Secretary and Secretary of the Party Committee of Wuhan Iron and Steel Group, Deputy General Manager, General Manager and Chairman of Wuhan Iron and Steel Group to provide assistance to a number of enterprises in expanding their business, contracting for projects and promoting others in their positions, and illegally receiving, directly or through specific associates, a total of more than RMB 55.39 million in equivalent property between 2000 and 2015.
On May 31, 2017, Deng Qilin was sentenced to 15 years for accepting bribes.
The Chinese Communist Party mouthpiece said in an article on April 17 this year that Bengang Plate, a listed company indirectly controlled by Bengang Group, recently issued an announcement that Angang Group was planning to restructure Bengang Group. This is a reorganization of the two parties after the Anshan-Ben joint venture was shelved for more than ten years.
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