South China Morning Post Wednesday, October 27, 1999
More power for
enterprise managers
JOSEPHINE MA
The city of Liuzhou, a bastion of the state sector in the
Guangxi region, has taken steps to smooth the
relationship between Communist Party committees and
directors and managers of state firms.
The southwestern city's deputy party secretary, Yu
Kaijin, said the resident party cells would adopt a
relatively low-key form of leadership in enterprises to
give managers more leeway in pursuing commercial
interests.
Since most leaders in state enterprises were Communist
Party members, committees could influence the
decisions of an enterprise subtly instead of acting like
patriarchs, said Mr Yu.
The old way of "having everything decided by party
committees" would be jettisoned and leadership would
be exercised through a kind of moral influence, he said.
The tug-of-war between party committees and
professional managers has long prevented state firms
from adapting to the marketplace.
As part of its effort to reform the state sector, the
director of the city's economic commission, Yu Zuyi,
said Liuzhou had come up with new incentives for
managers.
In 1993, Liuzhou, Guangxi's industrial base, raised
eyebrows by giving one million yuan (HK$930,000) to
the manager and factory director of Liuzhou Steel
Enterprise as a reward for the company's profits.
Now state enterprises which achieved more than eight
per cent profit for three consecutive years could enjoy a
bonus of up to two per cent of the total revenue, said
Mr Yu Zuyi.
The city was also looking at introducing fixed annual
salaries for managers of state enterprises based on their
firms' performance, as suggested by the central
Government, he said.
These would be much higher than current salaries which
were close to those of civil servants.
Liuzhou had asked the central Government to allow 16
industrial enterprises to transform their debts, totalling
2.8 billion yuan, into stakes to be held by creditors.
It hoped that at least two large enterprises would
receive permission to transform their debts totalling 700
million yuan into equity, he said.
The enterprises would be asked to buy back their
shares from the banks in three years.
Debt-equity transformation was suggested by the central
Government to bring temporary relief to debt-ridden
enterprises. Liuzhou has 166 state enterprises, 45 per
cent of which are unprofitable. ------------------
Wednesday, October 27, 1999
Bosses face jail if firms go
bust
CHOW CHUNG-YAN
Legislators have proposed amending the law in an
attempt to bring the managers of bankrupt state firms to
justice, it was reported yesterday.
Under the proposal, a manager would face trial if a firm
went into bankruptcy due to "neglect of duty or abuse of
power", China Youth Daily said.
The penalty for managers of the insolvent state firms
could be as much as three years in jail. In some special
cases managers could be put behind bars for seven
years.
"In the past it has been difficult to bring charges against
those who cause serious economic loss to the state
because of neglect of duty," the paper quoted the
National People's Congress (NPC) Law Committee
vice-chairman Gu Angran as saying.
The "neglect of duty" referred to by Mr Gu includes
improper management, stock speculation in overseas
markets without approval and providing personal loans
with state money.
"We need to enhance our laws in these fields to punish
those who breach government rules and lead state
enterprise to bankruptcy," Mr Gu said.
"We have consulted with the Central Commission [for
Political and Legal Affairs], Supreme People's Court
and Supreme People's Procuratorate to propose this
amendment."
State firm managers have been given heavy sentences
for corruption and embezzlement. But the proposed
regulation would see managers failing to perform their
duties go to jail as well.
Many top state managers have been involved in graft
scandals in recent years.
Hu Junliang, former manager of Hunan International
Trust and Credit Investment, was sentenced to 10 years
this year. Earlier, Chu Shijian, ex-boss of the Hongta
Tobacco Group in Yunnan province, was jailed for life
for embezzlement.
If the NPC approved the amendment it would improve
the management of state enterprises, the paper said.
It quoted a legal expert as saying: "It will be a big step
forward. The amendment will also help the
anti-corruption campaign."