South China Morning Post
May 22, 2006

Since 1998, Three Gorges Probe has been reporting on corruption at China’s Ministry of Water Resources. This article details the latest MWR scandal.

China’s Ministry of Water Resources (MWR) has been a strong supporter of the Three Gorges dam, overseeing studies of the Leading Group for the Assessment of the Three Gorges Project and the work of the Yangtze Valley Planning Office, which is responsible for development plans of the Yangtze River.

A short distance from Beijing’s western railway station stands a brand new 28-storey glass skyscraper. Curiously, the building is empty and the site deserted but for a security guard at the gate.

This skyscraper, which cost 600 million yuan (about HK$560 million), should never have been built. It is one of the biggest examples so far of corruption within the central Government. According to a report by the Auditor-General, Li Jinhua, published last month, 36 of the 55 ministries and commissions of the central Government were guilty of misusing money allocated to them in 1999.

The skyscraper belongs to the Ministry of Water Resources (MWR), which Mr Li singled out as one of the most corrupt after it embezzled three billion yuan, or 10 per cent, of its 1999 construction budget of 30 billion yuan for office and apartment blocks, hotels, stock-trading and “administrative costs”.

“Work stopped on the building two years ago,” said the guard. “It was illegal and built without approval. It was supposed to have been auctioned, but this has not happened. I do not know why. It is a pity – the building looks good enough to me.”

The MWR obtained permission to build the skyscraper by falsifying documents, and collected the money by siphoning off funds allocated to its local operations. Money that should have gone to build dykes, irrigation ditches and dams was stolen for a building which a small number of officials intended to use in part for themselves and to lease the rest for personal profit.

Shoddy dykes were blamed for catastrophic floods in the summer of 1998 when thousands of people lost their lives and property. They were so badly built, they became known as “bean curd”.

It was in 1994 that the ministry decided to build a well-appointed building in Beijing, equipped with restaurants, retail space, meeting rooms, offices and apartments. It chose the Fengtai district in the southwest of Beijing because this was an area designated for commercial development by the city government, and also where the western railway station, the largest in Asia, was built.

The problem was that on June 24, 1993, the State Council issued an order banning government departments from building expensive hotels and office blocks. To get round this, the ministry falsified an application that was dated April 18, 1993 – two months before the ban. Although aware that it was fake, the planning commission of Beijing city approved the application, back-dating it to June 18, 1993 – six days before the ban. The ministry failed to apply for approval from the State Council as it should have done for such a large investment.

The building’s purpose was also falsified. The application said that it would be used as a flood forecast centre and communications base to co-ordinate nationwide anti-flood work and would contain a Sino-Japanese irrigation technology training centre. The application also under-stated the price at 170 million yuan.

The finished building contains none of these facilities. It has 30 floors of which five are designed for commerce, restaurants and meeting rooms, 10 for offices and 13 for guests.

The next problem facing the MWR was how to get the money. Since the building was illegal and not within its official budget, it had to steal the money from its organisations nationwide. According to an investigation by Mr Li’s office, the MWR took funds from the budgets of its branches and bureaus in nine other provinces. All the cash had been allocated by Beijing for water projects. In July 1997, the MWR held a meeting of senior officials who were heads of different Communist Party branches, making each of them responsible for collecting at least 50 million yuan.

Mr Li has now ordered that the building be auctioned. Officials at his office and the MWR declined comment on why this had not happened.

Among other examples of the ministry’s corruption is the stealing by the local government of Qingyuan in Guangdong of 314 million yuan, or 20 per cent of the money allocated for migrants from a dam project, for investment in real estate, factories, apartments for officials and two cement plants that lost money as soon as they opened. About 1.8 million yuan was used to buy golf club memberships for a few top government officials and for foreign trips.

In another case, 20 million yuan allocated for building work on the Tai Lake in Jiangsu province was given to a Shanghai stockbroking company and used to trade treasury bonds and new share issues.

Mr Li also discovered that local branches of the MWR were involved in the misuse of 2.85 billion yuan of the 100 billion yuan in special bonds, issued in the second half of 1998 to stimulate the economy. For example, Dianbai county in Guangdong stole 9.32 million yuan set aside for local officials’ wages. Officials of Changde city in Hunan province stole 1.06 million yuan allocated for the strengthening of dams and put the money into bank0 accounts in their own names.

The corruption in the MWR and other ministries is widespread despite years of campaigns against it by the Government and the party. “Every year the annual report by the Auditor-General is shocking,” said Shao Daosheng, a scholar at the China Academy of Social Sciences.

“It is a disaster for the nation and the people. For example, an investigation of tax payments in 12 provinces covered several cities and counties and revealed irregularities of 9.37 billion yuan. If the investigations were done everywhere, it would be an unimaginable figure.

“The reasons for this corruption are complicated but the full extent of it is never explained to the public. Society does not know, nor does the media. Cases are simply given to the ‘concerned department’ or ‘concerned leaders’ to deal with.”

Mr Shao said corruption often involved many people and the economic interests of an organisation. “You cannot throw an entire department into prison, so the cases are dealt with ‘internally’. In this way, big cases become small and small ones are not investigated at all.”