Companies

Oil giant under new fire for extravagance

By Yan Jie (China Daily)
Updated: 2011-04-29 14:08

Misuse of money brings shame to Sinopec Group

BEIJING - A subsidiary of the China Petrochemical Corporation (Sinopec Group) breached the group's internal rules by handing out millions of yuan in bonuses to executives and employees between 2008 and 2010, the Beijing News reported on Thursday, citing a company document.

The total value of the merit pay was 6.4 million yuan ($985,000), according to the report.

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The revelation of the bonuses was the second recent bit of news to cast a bad light on the Sinopec management. Also this month, the top executive of another Sinopec subsidiary was found to have spent extravagant amounts of the company's money on liquor for his own use.

Huang Wensheng, spokesman with the group, declined to comment about the report immediately on Thursday, saying he hadn't read it.

In October 2010, Sinopec Group, one of China's petroleum giants, received word that the Yunnan Petroleum Company, the group's sales unit based in Southwest China's Yunnan province, had misused company money set aside to support education, safety, labor unions and Party member activities. Rather than going to those purposes, the money went to give employees and executives five rounds of bonuses in the past three years, according to the company document, which was dated Dec 20, 2010.

The document was obtained from an unidentified insider within the group, according to the newspaper.

The tips about the misuse of money came after the group had started a concerted effort to prevent the mismanagement of funds within itself and its subsidiaries. That work led to a probe into the Yunnan subsidiary, the group told the Beijing News.

Of the total bonus amount, 6.4 million yuan was divided among the company's current and retired top executives, whom the company's internal rules ostensibly banned from receiving payments of that kind, no matter what the payments were called.

The rest of the bonus money, originally set aside to support the work of Party and labor union members, went to Sinopec employees. That also violated the company's internal rules, according to the document.

The group has ordered the company's current top executives to refund the bonuses.

As for the blame, the group is pointing to Gao Zhongbao, general manager of the company, who many believe decided to hand out the bonuses in breach of the rules.

Even before this latest revelation, Sinopec Group was having to deal with the public anger that arose following the release of reports suggesting that an executive had extravagantly spent company money on alcohol.

Earlier this month, Lu Guangyu, the former general manger of the group's Guangdong Petroleum Company, was removed from his post and demoted after he had been accused of spending nearly 1.6 million yuan on luxury liquors, which he took for his own use.

In response, Fu Chengyu, chairman of the Sinopec Group, called for the group to be reformed in a way that would improve its reputation.