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Shanghai reclaims misappropriated funds
2007-01-28
Shanghai's mayor announced Sunday that investigators have recovered all the money siphoned away from city social security funds in one of China's most politically divisive corruption scandals. Mayor Han Zheng's announcement was the first major revelation in months into the sprawling investigation that already has toppled the city's Communist Party boss, Chen Liangyu, and seen more than a dozen other officials and business executives detained for questioning. "We have already reclaimed in full the misappropriated funds safely," Han said in an annual policy speech to the Municipal People's Congress, the city's legislature. Han gave no specific figure for the amount recovered. State media has previously reported that $400 million was diverted from the city's pension and housing funds into risky real estate, toll road and other investments. The announcement, however, indicates a gradual winding-down of the investigation, which has cast a web of suspicion over China's financial center and frayed nerves within the party. Chen was the highest level party official to be axed in more than a decade, part of a move by President Hu Jintao to consolidate his power and expand an anti-corruption crackdown ahead of a key party congress in 2007. As the city's most powerful official and a senior member of the party's so-called "Shanghai faction," Chen had been viewed as one of Hu's main political rivals. Chen, who disappeared from public in September after the allegations against him were announced, is accused of aiding illegal businesses, shielding corrupt colleagues and abusing his position to benefit family members. Growing numbers of Han's aides and business cronies have become ensnared in the probe, including the city's labor chief and a district governor. The former head of the National Statistic Bureau, Qiu Xiaohua, also has been accused of taking bribes in connection with the scandal and was expelled from the Communist Party earlier this month. Han said Sunday the scandal also had alerted the city to the need to improve government institutions. He said management rules for the city's $1.2 billion pension fund were being strictly implemented and pledged greater government transparency as a way of curbing graft. "Sunshine being the best disinfectant, transparency itself is a form of supervision," Han said.
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