By Matthew Miller
BEIJING (Reuters) - China's anti-corruption watchdog has stepped up inspections of state-run conglomerates, focusing on strategic firms, as Beijing prepares to implement its most ambitious reform of government industry in nearly two decades.
Anti-graft inspectors are targeting 53 strategic central government-owned groups, where top executives hold the rank of deputy government ministers, a state industry source familiar with the matter told Reuters.
Chinese President Xi Jinping has warned that the problem of official graft is serious enough to threaten the Communist Party's legitimacy and has vowed to go after powerful "tigers" as well as lowly "flies".
Graft-busters have gone after business leaders and politicians alike. On Friday, one of the country's top spy chiefs became the latest official to be caught in the dragnet, signaling that the boldest crackdown on corruption in decades had spilled over into China's powerful intelligence apparatus.
The Central Commission for Discipline Inspection (CCDI), the ruling Communist Party's top anti-corruption body, said it would inspect all central government state-owned enterprises (SOEs) this year, the official Xinhua News Agency reported on Wednesday.
In November, the CCDI announced it had dispatched teams to eight big SOEs, including China Southern Airlines Co <600029.SS>, China Unicom <0762.HK>, Dongfeng Motor Corp <0489.HK> and China Petroleum & Chemical Corp, or Sinopec <600028.SS>.
On Friday, the anti-graft body said it would prosecute Zong Xinhua, the former head of China Unicom's e-commerce and information technology unit.
China Southern Chief Financial Officer Xu Jiebo along with three other top executives at the carrier were put under investigation and sacked for suspected criminal wrongdoing earlier this month.
The SOE anti-graft efforts coincide with China's imminent roll-out of ambitious new guidelines to overhaul the country's inefficient state sector.
The State-owned Assets Supervision and Administration Commission (SASAC), the ministry-level body that directly oversees 112 central government industrial and service conglomerates, is expected to publish the reform plans before the end of March.
"Currently the anti-corruption fight at central SOEs remains severe and complicated," SASAC Chairman Zhang Yi said at an internal meeting last year, according to a post on the CCDI’s website earlier this month.
The SASAC needs to be the "eyes" of the Party and stand in the "vanguard" to curb the spread of corruption, Zhang said.
On Tuesday, Xi told a meeting of anti-graft authorities that they must step-up supervision, inspection and audits of state-owned enterprises and strengthen the Party's control over those firms.
"State-owned assets and resources are hard-earned, the shared wealth of the people of this country," Xi said, according to the official People's Daily.
"We must complete the state asset supervision system to toughen oversight of departments and positions that are rich with power, capital and resources," he said.
Anti-corruption efforts at China's most strategic conglomerates are likely to be part of an ongoing campaign rather than a one-time event, the state industry source said.
Anti-graft authorities have sent inspection teams into 36 central government-owned state conglomerates over the last two years, placing 21 executives under investigation for wrongdoing, according to statistics compiled by Reuters.
In December, the SASAC held a general meeting to discuss a key document concerning the role of company insiders and avoiding the loss of state assets during SOE reforms, the government body said in an online statement early this month.
Those plans are expected to encourage the separation of business from politics through the appointment of independent company management and boards of directors, answerable to independent state asset managers.
The government is expected to promote so-called "mixed ownership" by backing the sale of enterprise stakes to portfolio and private investors.
(Reporting By Matthew Miller and Beijing Newsroom; Additional reporting by Fang Yan; Editing by Jeremy Laurence)