09/29/2006, 00.00
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In Shanghai top party leaders falling

Sun Luyi, a top party leader who worked closely with disgraced Shanghai city Chief Chen Liangyu, is now under investigation. For experts, President Hu Jintao is trying to crush former President Jiang Zemin's 'Shanghai Gang".

Shanghai (AsiaNews/Agencies) – Another top ranking Shanghai Communist Party leader was charged with corruption and forced to resign over the city's pension fund. Investigations into the affair are now turning to possible links to speculation in real estate development.

Sun Luyi, a deputy secretary-general of Shanghai's Municipal Party Committee, is being investigated for seriously violating "discipline" and diverting some three to four billion yuan in pension funds money to real estate speculation. Since 1998 he has been in public and party service—as the head of the party's main office he wielded great influence and reported directly to secretary Chen Liangyu.

Mr Chen was sacked on Monday for his alleged involvement in a pension fund scandal that saw money siphoned off from Shanghai's social security fund. The same day, the central government sent a six-member inspection team to the city to see how local officials were carrying out orders to halt property speculation, a major source of friction with Beijing.  Central authorities have been concerned by rising real estate prices, whilst local authorities have been less concerned and have not always implemented directives coming from the capital. The State Council (China's cabinet) has also decided to send inspection teams to 11 provinces and cities to check implementation of policies to curb real estate speculation.

Since mid-July, Shanghai has already removed other top officials:  the head of its Labour and Social Security Bureau, Zhu Junyi, who managed the pension fund; and Qin Yu, head of Baoshan district.

Mr Zhu allegedly drew from corporate annuities—funds collected from workers and their employers—and then lent the money to companies, projects or people with whom he had personal links.

The newly appointed labour chief is likely to remove the entire top level of officials at the bureau, despite the government's claim Mr Zhu had acted alone, a government source said yesterday. "The entire leadership group might be changed. This is normal." For Beijing other officials are also involved.

In the last few months, some top executives at major local companies have also been sacked like Han Guozhang, executive director of the Shanghai Electric Group, and Zhang Rongkun, chairman of the Shanghai Fuxi Investment company.

For some experts, these measure are evidence that Chinese President Hu Jintao is trying to bring Shanghai into line and weaken the powerful group of current and former leaders with links to the city known as the 'Shanghai Gang' and led by former President Jiang Zemin, a former Shanghai mayor and party chief until 1989 when he took over as the national party chief and then as president.

During his tenure of power, Jiang appointed many officials Shanghai to top positions and for some experts their network retained power beyond Mr Hu's reach.

Reports suggest that Shanghai's police Chief Wu Zhiming, a nephew of former president Jiang Zemin, is also under investigation.

Jiang has not however tried to defend Chen or any of the officials who stand accused. Some sources close to both current and former presidents believe that a "deal" has been worked out whereby Hu would assert his power without seeking an open showdown with his predecessor, who is still popular in the country.

Deputy Prime Minister Huang Ju and People's Political Consultative Conference Chairman Jia Qinglin, who are members of the Politburo Standing Committee, are considered Jiang loyalists. (PB)

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See also
Official gets death penalty for graft and embezzlement in pension fund scandal
Chen Liangyu, former leader of Shanghai, sentenced to 18 years
Party Central Committee to meet in October to launch Hu Jintao's "harmonious society"
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Son of former Shanghai party boss Chen Liangyu sentenced to jail