Firms quick to hire former officials
By Lydia Chen |
July 7, 2011, Thursday
|
Print Edition
Print Edition
SOME of China's former senior government officials often find a better job even after their retirement as companies' earning reports accidently revealed that at least 34 high-level officials have been hired as non-executive directors at the country's 50 biggest listed firms.
The list includes Liu Hongru, former deputy governor of the People's Bank of China and former president of the China Securities Regulatory Commission.
He is now on the payroll of PetroChina, the country's biggest oil producer and the biggest listed firm on the Chinese mainland in terms of market value.
The other big names were all high-level officials who previously worked for at least provincial governments.
Two of Shanghai's former officials also appeared on the list. Xu Qiang, former director of the Legislative Affairs Office of Shanghai government, was hired as an independent director for Shanghai Pudong Development Bank. Fu Changlu, ex-deputy president of Shanghai Higher People's Court, is now paid by SAIC Motor, the largest listed vehicle maker in China.
A non-executive director or outside director is a member of the board of directors of a company and is not involved in the day-to-day running of business but monitors the executive activity and contributes to developing strategy.
However, these former officials are not required to do any real work for their employers, who in fact hire them to "benefit more or less" from "a vast social network they built during their tenures as government leaders," Chen Mingsheng, a professor of China University of Political Science and Law, told Xinhua news agency.
"All the employers are listed firms or fund companies which are under the supervision of the CSRC," Chen said.
Annual payment to an outside director of a listed firm could range from more than 100,000 yuan (US$15,450) to several times that, People's Daily said in a report yesterday.
In an investigation by Investor China, a Beijing-based newspaper, last year, the number of former government officials now working for mainland A-share market listed firms reached 1,599 and 467 were working as non-executive directors.
Hu Xingdou, an economics professor with Beijing Institute of Science, said the ex-officials accept the new jobs because they are at "a financial loss" after leaving their government positions.
Government employees get subsidies for car, housing and work-related costs, Hu said.
However, these benefits disappear upon retirement, which means they will find it hard to live on a pension if they want to maintain their previous living standard, he added.
However, the government backgrounds have raised concerns whether the public interest would be compromised as such hirings could easily slip into trading power.
Li Yuan, former vice head of the Ministry of Land and Resources, was kicked out of the National Committee of the Chinese People's Political Consultative Conference last month for "serious violation of Party discipline," according to a statement by the top Chinese political advisory body.
Li resigned his position as non-executive director for PetroChina almost at the same time. He had held the position for more than three years after retiring.
China's Civil Servant Law states that former government servants, resigned or retired, are not allowed to work for firms and other for-profit institutions related to their previous work for two years after their departure.
For government officials it is three years, according to the law.
The list includes Liu Hongru, former deputy governor of the People's Bank of China and former president of the China Securities Regulatory Commission.
He is now on the payroll of PetroChina, the country's biggest oil producer and the biggest listed firm on the Chinese mainland in terms of market value.
The other big names were all high-level officials who previously worked for at least provincial governments.
Two of Shanghai's former officials also appeared on the list. Xu Qiang, former director of the Legislative Affairs Office of Shanghai government, was hired as an independent director for Shanghai Pudong Development Bank. Fu Changlu, ex-deputy president of Shanghai Higher People's Court, is now paid by SAIC Motor, the largest listed vehicle maker in China.
A non-executive director or outside director is a member of the board of directors of a company and is not involved in the day-to-day running of business but monitors the executive activity and contributes to developing strategy.
However, these former officials are not required to do any real work for their employers, who in fact hire them to "benefit more or less" from "a vast social network they built during their tenures as government leaders," Chen Mingsheng, a professor of China University of Political Science and Law, told Xinhua news agency.
"All the employers are listed firms or fund companies which are under the supervision of the CSRC," Chen said.
Annual payment to an outside director of a listed firm could range from more than 100,000 yuan (US$15,450) to several times that, People's Daily said in a report yesterday.
In an investigation by Investor China, a Beijing-based newspaper, last year, the number of former government officials now working for mainland A-share market listed firms reached 1,599 and 467 were working as non-executive directors.
Hu Xingdou, an economics professor with Beijing Institute of Science, said the ex-officials accept the new jobs because they are at "a financial loss" after leaving their government positions.
Government employees get subsidies for car, housing and work-related costs, Hu said.
However, these benefits disappear upon retirement, which means they will find it hard to live on a pension if they want to maintain their previous living standard, he added.
However, the government backgrounds have raised concerns whether the public interest would be compromised as such hirings could easily slip into trading power.
Li Yuan, former vice head of the Ministry of Land and Resources, was kicked out of the National Committee of the Chinese People's Political Consultative Conference last month for "serious violation of Party discipline," according to a statement by the top Chinese political advisory body.
Li resigned his position as non-executive director for PetroChina almost at the same time. He had held the position for more than three years after retiring.
China's Civil Servant Law states that former government servants, resigned or retired, are not allowed to work for firms and other for-profit institutions related to their previous work for two years after their departure.
For government officials it is three years, according to the law.
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