In North China corruption rules the coal mines

“Accident prone, lax regulation, corruption and inefficiency” with “widespread collusion between the mines and the government”. Is this where PNG is headed with the Chinese owned Ramu nickel mine?

From AFP

BEIJING — In China’s coal-rich Shanxi province, the source of much of the fuel that powers the energy-hungry nation, there is an oft-repeated saying: “To make money, all you have to do is dig a hole.”

Hao Pengjun, a former county mine bureau chief and Communist Party official, apparently followed that advice — and then took it too far.

In April, Hao was jailed for 20 years for graft and tax evasion after allegedly amassing 305 million yuan (44.7 million dollars) in ill-gotten gains — a cautionary tale about the corruption endemic to the industry, experts say.

“In Shanxi, collusion between the government and the mines is widespread,” Chu Ren, a retired coal industry expert at the Shanxi Academy of Social Sciences, told AFP.

“The money Hao Pengjun made was about average for a guy in his position. If you do not pay off government officials, there is no way you will open a mine.”

China’s vast coal mining industry is notoriously accident-prone due to lax regulation, corruption and inefficiency as mines rush to meet soaring demand.

Hao, 60, ruled the mining industry in Shanxi’s Pu county for a decade, serving as county mining chief, mine safety head, coal industry head and, from 2006 onwards, the Communist Party boss of the county’s coal industry.

According to state media, he not only flouted regulations barring officials from owning and operating coal mines, but also made sure his mine remained open when neighbouring pits were shut down under a province-wide safety crackdown.

Reports said it also appeared Hao was taking kickbacks from other Pu county mine bosses, with millions of yuan unaccounted for.

Instead of paying taxes, mine operators sometimes pay off officials to turn a blind eye to safety violations or to obtain permits to extract more coal or expand the scale of their mining operations, Chu said.

Hao’s wife Yu Xiangning, the former head of the county civil affairs department and the accountant for the family mine, was jailed for 13 years. Her brother Yu Xiaohong, who ran their private mine, was given a 12-year sentence.

The trio were convicted of corruption, evading 18.7 million yuan in taxes and misappropriating public funds. They were collectively fined a total of 320 million yuan, and their money and property were confiscated.

According to Xinhua news agency, investigators found 120 million yuan stashed in scores of bank accounts belonging to Hao and his relatives.

The family also owned 35 apartments, mostly prime real estate in central Beijing, valued at another 160 million yuan.

The government has touted his case as part of its 2009 overhaul of the Shanxi coal mining industry, an effort to weed out graft and end a spate of fatal accidents — the result of an unabashed drive for energy profits.

But experts say Hao is a sacrificial lamb, and his conviction is only the tip of the iceberg.

“It was only a matter of ill chance that Hao Pengjun was investigated,” Tian Zhaoshu, a coal industry expert at the Shanxi Finance and Economics University, told AFP.

“Most of the corrupt officials have not been investigated because they are good at concealing their crimes. They use relatives to indirectly operate mines and rake in profits.”

Tian said it was unlikely that corruption in the industry would be stamped out unless China placed checks on the power of local officials.

Pu county, with vast coal reserves and a population of about 100,000, is in scandal-prone Linfen prefecture, home to some of the worst coal mine accidents in China and recently infamous as one of the most polluted places on earth.

The investigation of Hao was launched in September 2008 after 277 people were killed when a hillside mining waste pond burst, burying an entire village in sludge. Local mine operators were arrested and blamed for the disaster.

The calamity prompted sweeping reforms that have led to thousands of small mines being shut down or merged with large state-run conglomerates.

The charges and the sentences meted out to Hao have become a topic of anger in China’s Internet chatrooms, which cite death penalties given to other corrupt officials who amassed far smaller fortunes than Hao.

“His luck was no good — what is pitiful is that there are so many with good luck. What is even funnier is that luck can be bought by money. High-level leaders are the gods of good fortune,” said one user of a chatroom.

During his trial, Hao fingered more senior officials — accusations that were struck from the record by the presiding judge.

“There are reasons that I have fallen so low,” numerous state press reports quoted Hao as saying at his trial, accusing the county’s Communist Party secretary of demanding a huge bribe from him as the judge cut him off.

The Pu county government refused to comment on the case when contacted by AFP.



Filed under Corruption, Environmental impact, Human rights

13 responses to “In North China corruption rules the coal mines

  1. madang watcher

    Landowners of Ramu mine are paid by Ramu NiCo MCC we hear. MRA is paid by miners and works for miners. Keep on pushing Somare to act like he sacked Puka Temu. Lapun is a leader of repute unlike Puka Temu. Who will be next will be interesting to see.

  2. j kross

    “Since Ramu NiCo’s inception in 2006, we have seen huge tangible developments in our areas including Kurumbukari mine site, Basamuk refinery and the two pipeline areas. They include construction of schools, roads, bridges, health centres, clinics, etc. we also received assistance like donations of school materials, sporting equipments and cash donations. These assistance were not available before Ramu NiCo developed the Project.

    Ramu NiCo is also attaching great importance to training of project landowners in the hope to provide them fulltime employment. Recently, 17 young men from project impact areas graduated from Maritime College after three months of training. They hope for fulltime employment once the project goes into operation. In 2008, Ramu NiCo also organized Unitech graduates to China for a three month cultural and industrial training. The company is confident these are not the only training it provides.

    But these young men’s hope for employment is shattered. And our hope for more benefits during the mine operation is also shattered following the Supreme Court’s ruling on 16 July 2010, upholding the National Court decision of May 9 which stops the construction and operation of the deep sea tailing placement (DSTP). DSTP is an important component of the whole Project.

    It is almost four months now since the DSTP was stopped by the courts. We are learning that the company and other owners including Highlands Pacific Limited (HPL) and MRDC are losing up to K7m daily. Our fear is that the Project might be closed due to huge money being incurred to date. Then we will return back to our jungles, gardens and villages, those places which were neglected by our very own government ever since.

    We climbed the mountains, crossed the valleys, paddled huge rivers like the Ramu River, and travelled rough seas to reach home. Our mothers delivered in bushes. Schools were not available for us. The old, children and weak died because there were no hospitals available before Ramu Project arrived. And now that the Supreme Court has upheld the Madang National Court ruling of May 9, we see nothing but “darkness” at the end of the tunnel. Our hopes and dreams are shattered. We see that few minorities who are not genuine landowners with their NGO’s will send us back to the jungles where tourists will come and take photos. How dare can this be in the 21st century when the world is changing, so do as rest of PNG, yet NGO’s and their cohorts want us to live in caves and jungles.

    In the true spirit of Madang, we believe in resolving our differences through a consultation process. This is also ingrained in the “Melanesian Way” which our forefathers lived with. So we do acknowledge that the MoA currently in place allows for all disputes to be discussed and negotiated in a consultation process. We have not done that but it is not late. We can explore this now. Complainants in the legal battle have not explored this consultation process. They must remember that those foreign NGO’s who support them will discard us and return to their luxuries. Therefore, lets sit down and solve our differences within the true “Madang Spirit” for our own benefit.

    It is imperative to understand that if the Project is delayed then we will lose. This is our great fear today. Delaying in the project will also affect benefits that landowners expect such as royalties, employment, business development and other benefits including improved infrastructures and services. We are afraid the Company will reduce its manpower, directly affecting the landowners from impacted areas where most are enjoying their first job in life and will never have any chances in finding any jobs in other provinces or projects. The Company employed around 1,500 landowners and expected for another 5,000 jobs to be created indirectly for locals in the service industry during the mine’s operation and we can not let go this opportunity.

    The prolong delay in the project operation will also incur further financial and economic burden on the developer. This will subsequently affect our benefits should there be operation in the future.

    We appeal to all stakeholders, including the government to ensure the Project is not interrupted. Solving disputes and problems before the court of law creates more problems in the future as we have seen in PNG. We have the “Melanesian Way” to solve this problem. We appeal to all stakeholders and complaints to explore all avenues of consultation with Joint Ventures, the Provincial Government and the National Government to solve the DSTP issue amicably and allow the Project to continue as required under the MoA. Ramu Project is our ONLY hope, our children’s hope and those who will come later.”

    David Tigavu, Kurumbukari LOA Chairman; Lima Mullung, Basamuk LOA Chairman; Charles Okori, Coastal Pipeline LOA Chairman; and Peter Tai, Inland Pipeline LOA Chairman.

    From a paid advertisement in the PNG National Newspaper, 27 July, 2010.

    • Fed up

      am i surprised? not one bit.

      ofcourse it is not unexpected that the Krumbukaris, the inland Madang people, other Papua New Guineans and the rest of the wannabes would be giving their support. because they have NOTHING to lose!! the DSTP won’t affect them after all.

      i’d like to hear from the affected coastal communities themselves because their voices carry a hell of a lot more weight than whoever else out there as far as the DSTP debate goes.

  3. watchman

    Great story about development benefits but let’s not divert attention away from the real issue. The issue isn’t about how much Ramu NiCo has done for Madang, it’s about what cost the people (particularly those directly impacted) will pay to live with the consequences of development. Taking out paid advertisements in the papers is a fairly common PR tool for swaying public opinion but it doesn’t change the facts on which the debate arises. The “Melanesian Way” isn’t just about sitting down and listening to your neighbour – it’s also about showing a person respect for the stand he/ she is prepared to make for their people. The Rai coast people have made their stand clear – everyone should respect that position and listen open-mindedly to what they have to say. The injunction only preserves the status quo until the real issues are addressed. It doesn’t stop people from talking among themselves and reaching an amicable outcome that is beneficial for all. We only need look to Bougainville to see what happens when people’s legitimate concerns are ignored by developers and, more sadly, their own Govt.

  4. j kross

    The Bougainville experience may shoot both ways. Remove infrastructure, services and jobs from Basamuk and there are a few unhappy people, and they are Madang people. No? If the mine packs and leaves, I want that to happen, to be honest because I am fed up with this nonsense. I really want the project to close because DSTP cannot be accepted even if it made scientific sense. There are people fixed and welded into a life of protest against mining by the environmentalist propaganda machine. It cannot be helped. Someone then has to fill in the gap and provide the goods and service lines the people have been receiving, and paying jobs too along the project footprint. You take biscuits from kids, give them real food. Who will do that? The government is hopeless.

  5. watchman

    j kross, the majority of people aren’t against the mine, just the methods. You and your friends might want a repeat of the bougainville crisis in madang but no decent papua new guinean who has lived through that tragedy will ever wish that upon their fellow brethren or anyone else for that matter. You acknowledge that our govt is hopeless – that is precisely the reason why the people of Rai coast have taken the steps they have to protect themselves. This govt is too corrupt/ incompetent to be relied on.

  6. j kross

    You missed my point. When the mine shuts down and the Chinese have pulled out, the lawyers and NGOs have retreated to their huge plasma TVs, their restaurants, and their wining and dining, someone will be left holding the bag. There will be our little “Melanesian post mortems” and believe me, it will happen. DSTP is still the safe option for tailings disposal for this project. You still haven’t answered by question on who will provide those services and build that road from Ramu Highway to Rai Coast. Maybe the Rai Coast people should tie down the NGOs to an MOA so they would provide those services when MCC pulls out. Don’t put that to the government because we know that is not an escape route.

  7. watchman

    So what’s your point j kross? That mcc is the messiah for our people? That we should bow down and let them dump hundreds of tons of tailings waste into our oceans just because they’ve given us a few biscuits etc?? Who cares if they’ve built a few roads. That’s a pittance compared to the huge profits they’ll reap from our land. Rest assured, we’ll still be around long after the mine has shut down and mcc and its investors have packed up and gone. People have been exploiting the ignorance of our people for far too long and we’ve had enough. Is there something wrong about wanting to get things right now, before it’s too late? We’ll sort out our own problems in our own time and on our own terms, with or without the govt.

  8. j kross

    Science and truth are ignored over propaganda. The people need not fear the DSTP.

    • Fed up

      j kross please state your professional background and give us some credibility on your definitive statements about DSTP being the safest method of waste disposal for this project.

  9. j kross

    Pittance, pittance! You worm your way out of genuine questions and the wining and dining might separate the men from the boys. That’s tough. Deflates one’s ego too. Its easier to take a marker and scrawl slogans on placards but try taking up a shovel and build a road. Easy huh?

  10. watchman

    What’s easy is getting a corrupt govt to abuse and re-write laws in favour of a project that adopts seemingly flawed methods. What’s easy is exploiting a weak regulatory system. What’s easy is buying the support of puppet organisations who purport to represent the interests of our people. We have a right to protest against what we believe to be wrong. Perhaps, as you so wish, our actions might lead to a repeat of the bougainville crisis. If that’s what it takes to protect our land then that’s the reality we’ll live with.

  11. j kross

    Protect your land wait on the beach till your ship comes. The flip side of bougainville is possible too. Like, ‘Husat pasim prosek?’ when mcc pulls out. No one will develop that mine, nickel it is, for a long while, believe me.

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