More power for enterprise managers

Stephen E Philion philion at hawaii.edu
Wed Oct 27 12:36:55 PDT 1999


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."



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