Head Of China’s Railway Company Commits Suicide: First Graft Probe Casualty?

Head Of China’s Railway Company Commits Suicide: First Graft Probe Casualty?

Tyler Durden on 01/06/2014 09:33 -0500

Bai Zhongren, then Executive Director and Vice President of China Railway Group Limited, attends a news conference in Hong Kong in this April 25, 2008 file photo. Photo: Reuters

Bai Zhongren, the president of state-run China Railway Group – the state-owned engineering giant behind many of the country’s largest railway projects – committed suicide over the weekend. As SCMP reports, Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago.However, there have been no direct links between China Railway Group and the corruption cases (yet); but Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun. Xinhua quotes a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up.

President of China Railway Group commits suicide – reports

Monday, 06 January, 2014, 10:45am

Business›Companies

Raymond Li in Beijingraymond.li@scmp.com

Bai Zhongren, the president of China Railway Group, a state-owned engineering giant behind many of the country’s largest railway projects, jumped to his death over the weekend, Chinese media reported on Monday.

China Railway Group, which is listed on both the Hong Kong and Shanghai stock exchanges, said in a short statement on Sunday that Bai died of “an accident”, but did not give any details surrounding his death.

The operation of the company remains normal and its chairman will assume the responsibilities of the president until a new appointment to replace Bai, according to the statement.

The 53-year-old executive jumped to his death after suffering from depression in recent years, reported China Business News, a Shanghai-based business newspaper, citing Bai’s family members.

Economic Information, a newspaper published by the official Xinhua News Agency, quoted a colleague as saying that part of the cause of Bai’s depression might be the heavy debts that his company has run up. Wang Mengshu, one of the country’s top railway engineers, said that Bai had been under intense pressure as some branches of the group ran into problems paying their workers’ wages at the end of last year.

By the end of October, 2013, China Railways Group had total assets worth 626.5 billion yuan, and total outstanding debts of 531.9 billion yuan, with a debt-to-asset ratio of almost 85 per cent, according to the company’s Q3 filings.

Bai’s suicide came as Chinese courts are about to hand down verdicts for Zhang Shuguang, a former deputy chief engineer of the now-defunct Ministry and of Railways, and Ding Shumiao, a businesswoman with close tie with disgraced former railway minister Liu Zhijun.

Zhang was charged in September in 2013 for taking in 47 million yuan in bribes and Ding went on trial late that month for bribery linked to railway projects worth more than 185 billion yuan.

China’s former railway minister, Liu Zhijun was given a suspended death sentence in July 2013 for abuse of power and taking bribes as the Communist Party scrambled to rein in rampant corruption within the railway industry during the debt-fueled high-speed rail construction boom in the last decade.

Bai is among several senior railway officials and executives who have committed suicide since corruption scandals implicating the senior railway officials began to come to light three years ago. However, there have been no direct links between China Railway Group and the corruption cases.

China Rail Slumps on Sudden Death of President: Hong Kong Mover

China Railway Group Ltd. (390) slumped the most in six months in Hong Kong trading after the nation’s second-largest rail-builder said its President Bai Zhongren died in an accident.

China Railway dropped 4.1 percent, the most since July 3, to close at HK$3.75. Its bigger rival China Railway Construction Corp. (1186) fell 3.8 percent. The city’s benchmark index Hang Seng Index declined 0.6 percent.

The company, which built projects such as Qinghai-Tibet line, the world’s highest, said its operations remain normal as Chairman Li Changjin will assume Bai’s responsibilities before a new appointment, according to a statement to the Shanghai Stock Exchange yesterday. Bai fell from a building on Jan. 4, Wang Mengshu, a deputy chief engineer at the builder, said in a phone interview today.

“The market is concerned about the real reason for Bai’s death as the company didn’t clearly state it,” said Gary Wong, a Hong Kong-based analyst at Guotai Junan Securities Co.

Beijing-based China Railway declined to comment further on the incident, according to an e-mailed statement today by Hill+Knowlton Strategies, which handles the company’s media relations.

The company, which also constructed the Beijing-Shanghai high-speed link, posted a 47 percent jump in net income to 2.8 billion yuan ($463 million) in the quarter ended in September, according to data compiled by Bloomberg.

Property Development

Infrastructure construction is the company’s biggest business, accounting for more than 80 percent of revenue as of end of June. China Railways’ other operations include manufacturing of engineering equipment and property development.

China Railway Corp, operator of the nation’s rail network, is the main customer of the builder. As of September end, trade and bills receivables of China Railway Group increased 23 percent to 116.5 billion yuan from a year earlier, the data show. The company may post a profit of 8.7 billion yuan in 2013, according to the average of 15 analyst estimates compiled by Bloomberg.

China’s former railway minister Liu Zhijun was given a suspended death sentence in July for abuse of power and taking bribes, as the Communist Party roots out graft that blossomed during the debt-fueled roll-out of the world’s biggest high-speed rail network.

The nation spent 663.8 billion yuan in railroad fixed-asset investment last year, rail operator China Railway Corp. said in a statement on the central government’s website today. That was 5.2 percent more than the 631 billion yuan invested a year earlier as the government pledged to build more rail networks, especially in China’s central and western regions.

The total length of rail network under operation reached 103,000 kilometers (64,000 miles), including 11,000 kilometers of high-speed rail, the longest in the world, according to the statement.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net