Saturday, December 27, 2014

Liu Tienan, Chinese former planning official, sentenced to life imprisonment for taking bribes from Toyota's JV partner and others

Liu Tienan

I posted about this man's trial and now follow up with news of his sentence, and some more details on the deal with Toyota's JV partner in China.


The former deputy head of China’s top planning agency was jailed for life Wednesday over a bribery scandal that exposed graft at the highest levels of China’s government, and ensnared several companies — including Toyota Motor Corp....According to court documents, Liu used his son as a conduit to funnel the money to himself from four Chinese companies, including Guangzhou Automobile Group Co., which has a joint-venture with Toyota.
The documents describe Liu using his power over economic affairs in exchange for a raft of quid pro quos, including a 30 percent share in a Beijing auto dealership that was given to his son and later sold for profit.

Here's another glimpse. Financial Times story on Liu 's dealings with Toyota's JV partner in China.

Mr Liu’s trial provided a glimpse into how officials often use family members to funnel corrupt payments — and can sometimes expose unwitting [?] multinationals to reputational risks in the process. 
As a senior planning official, Mr Liu was in a position to approve or reject investments by Toyota’s highly successful joint venture with state-owned Guangzhou Automobile Group (GAC Group) in southern Guangdong province.
According to court documents, in 2005 a former GAC Group general manager suggested that Mr Liu’s son [Liu Decheng] open a Beijing dealership for the joint venture.
When Mr Liu said that his son had neither the capital nor experience to do so, the Chinese executive arranged for him to take a 30 per cent stake in a new dealership that was established with Rmb12m in registered capital. According to the court, the arrangement was approved by GAC Group’s current chairman, Zhang Fangyou.
At the time, China was on the cusp of the largest automotive boom in industrial history and competition for lucrative dealerships was intense. Mr Liu’s son never worked at the dealership and did not collect any salary from it, but in 2007 was able to sell his stake for Rmb10m [$1.6 million]. 
Mr Zhang, who has not been charged with any wrongdoing, was not immediately available for comment on Wednesday. The former GAC Group general manager was appointed head of another state-owned enterprise in 2008 and retired last year. Prosecutors did not present any evidence that Toyota was aware of the arrangement. The Japanese company declined to comment.