Top power official 'flees China'

By Alex Frew McMillan

The turmoil in the electricity industry is likely a symptom of a power struggle among China's top officials

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HONG KONG, China -- Gao Yan, the former head of China's largest electricity company, has fled China to escape arrest, according to a report published Wednesday.

According to the Hong Kong-based South China Morning Post, Gao, who served as president and CEO of the State Power Corp., is hiding in an unidentified Western country.

The same newspaper reported Tuesday that Lao Derong, the head of the Shenzhen Energy Group, is currently being investigated by Communist Party officials. (Full story)

The power industry is expected to get an overhaul and top-level changes at the 16th Communist Party Congress. That begins on November 8 and is also expected to see a transition in key Communist Party positions.

Observers have interpreted the scandals in the electricity industry as signs a power struggle is under way. Gao is a protégé of Li Peng, China's second in command, who is expected to step down at the congress.

Li's son, Li Xiaopeng, was Gao's deputy at the State Power Corp.

Gao's troubles may be a response to the jailing of China Everbright chief Zhu Xiaohua. Zhu, a protégé of Premier Zhu Rongji, though not a relation, was last week sentenced to 15 years in jail.

Several top businessmen are eyeing important positions, as China's top level leaders try to put successors in place and ensure their policies continue. (Full story)

Government media confirmed this week that Gao had disappeared. Gao has not been seen since August 29, according to the 21st Century Business Herald, which said he resigned August 2.

Gao would be the most-senior Chinese figure to flee the country since Xu Jiatun, once Beijing's top envoy to Hong Kong, escaped to the United States after the Tiananmen Square killings in 1989.

Connection to Wang Xuebing

Gao, a former vice governor of Jilin Province, took over State Power Corp. in 1998. He and Xu both held the title of government minister.

But where Xu's flight was politically motivated, Gao is escaping arrest on corruption charges, according to the Post.

Reports suggest that stock buybacks and the acquisition of assets from a State Power subsidiary may be at issue, with the company reportedly only paying one-third of what the assets were worth.

Gao also negotiated a three-year credit deal with China Construction Bank, then headed by Wang Xuebing.

Wang, another Zhu protégé, has since been stripped of his positions in banking and the Communist Party and held responsible for fraud that happened while he was running the Bank of China's New York operations.

The State Power Corp., which controls 72 percent of power-generating assets in China, was listed as the 60th-largest company in the world by Fortune magazine.

China does not typically acknowledge investigations or arrests for white-collar crime.

China placed Yang Bin, the man chosen to head North Korea's fledgling enterprise zone, under house arrest earlier this month in connection with tax evasion. (Full story)

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