Second power exec probed in China

Top posts in China's power industry are expected to get an overhaul at next month's Party Congress

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HONG KONG, China -- The head of the Shenzhen Energy Group is being investigated by Chinese officials, according to a report.

Lao Derong is the second power-industry executive to come under government scrutiny in China, the South China Morning Post stated Tuesday.

An unidentified industry source told the newspaper that "everyone in the power industry" knows about Lao being taken in for official questioning.

The power industry in China is likely to get an overhaul at the 16th Communist Party Congress, which starts on November 8. (Congress may disappoint reformers)

Top figures in the industry are expected to be replaced, with Beijing reshuffling key posts.

Lao's investigation comes after Gao Yan, the president of the State Power Corp., disappeared last month. Gao used to head the largest energy company in China.

A power struggle

Gao's disappearance may be connected with the jailing of former China Everbright Group chief Zhu Xiaohua, the SCMP reports. Zhu was sentenced to 15 years in jail last week for taking bribes. (Full story)

Gao is a protégé of National People Congress Chairman Li Peng, while Zhu is a protégé of Premier Zhu Rongji.

"The speculation is that the political struggle is very heated," a Chinese executive told the newspaper.

According to the SCMP, Lao has been detained since the end of September under "shanggui" rules.

That means she must cooperate with Communist Party officials as they conduct an investigation, which could lead to criminal charges.

China rarely officially arrests suspects in corporate investigations.

Shenzhen Energy generates 75 percent of the power for the city of Shenzhen, which neighbors Hong Kong.

It had 4.7 billion yuan ($568 million) in sales last year and is attempting to sell a 25 percent stake in itself to overseas investors.

It is the largest of five Shenzhen companies looking for international funding. The Shenzhen Water, Shenzhen Gas, Shenzhen Public Transportation and Shenzhen Food groups are all also trying to attract overseas stakes.

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