China’s anti-corruption drive has turned its attentions to Sinopec, claiming the scalp of a senior executive at the state-owned group’s oilfield services unit.
This week’s detention of Xue Wandong, vice-chairman and general manager of Sinopec Oilfield Services Corp, comes as the unit prepares an initial public offering in Hong Kong.
Investigators have previously said Sinopec and several other state-owned enterprises would be the new front in anti-graft probes that have netted thousands of officials and executives at private and state-owned companies.
Sinopec has until now been relatively unscathed by the investigations, while the purge has hit the management ranks of rival PetroChina.
The inquiry into Sinopec was portrayed in Chinese media as a chance for Fu Chengyu, the company’s ambitious chairman, “to build a clean Sinopec”.
Many of those detained so far are tied to the patronage networks of former energy and security tsar Zhou Yongkang, who began his career in the Liaohe and Shengli oilfields of northeastern China. Mr Zhou is also under investigation, but no formal charges have been laid against him nor against the majority of those detained.
Sinopec said it had fired Mr Xue from its oilfield services unit, which this year entered a joint venture with Weatherford International of the US.
“Sinopec has always had zero tolerance of any behaviours that are against laws or regulations, and it will resolutely investigate whoever is involved and there will not be any soft-pedalling,” the company said.
Mr Xue could not be reached for comment.
Mr Xue began his career at the Shengli oilfield, China’s second-largest, and then oversaw Sinopec’s operations in the southwest of the country.
Businesses linked to the Shengli oilfield in Shandong, the launch pad for Mr Zhou and now one of Sinopec’s largest production centres, have also been tied to corruption allegations in China and Iraq.
But Sinopec itself has been largely untouched during the purge after losing its chairman, Chen Tonghai, five years ago amid spectacular tales of corruption at Shengli, millions of dollars spent on fine wines, and the $1.7m purchase of a chandelier in the company’s Beijing headquarters. Sinopec at the time said the chandelier cost only $250,000.
The investigations can be fickle, and devastating for the individuals and companies involved who have virtually no legal recourse while under investigation.
Last month, private petrochemicals contractor Wison Engineering resumed trading after 13 months of suspension following the detention of its founder Hua Bangsong. Company accounts were frozen, triggering loan defaults.
After months of disruption, Mr Hua was cleared of allegations that he owned the company on behalf of Mr Zhou’s son. He and the company now face two charges: of allegedly bribing a customer with a $1m house in 2009, and of conspiracy to commit fraud in a 2004 tender, Wison said.