China vows no let-up in graft scandal probe
Updated: 2006-09-26 18:34

BEIJING- Chinese government said on Tuesday a corruption scandal that has toppled Shanghai's party chief could claim other officials, while the city's acting chief warned subordinates to obey President Hu Jintao.

The snowballing investigation led to the sacking of Chen Liangyu as Shanghai's Communist Party secretary amid allegations he misused the financial hub's 10 billion yuan (US$1.25 billion) social security fund for illicit loans and investments.

Analysts say Chen's dismissal was a warning shot to local officials nationwide to follow national party chief Hu, whose drive to enforce loyalty might ensnare other senior figures.

"This case may implicate some people," Gan Yisheng, secretary-general of the party's anti-corruption Central Discipline Inspection Commission, told a news conference when asked if the case might ensnare more senior officials.

"Any party member who violates party discipline, no matter how high or low his rank, will be thoroughly investigated and seriously dealt with."

The acting Communist Party chief of Shanghai, Han Zheng, told officials there to line up behind Hu's central leadership.

"All Shanghai's party members and officials must unify their thinking and actions around the centre," he said, according to the official Xinhua news agency on Tuesday.

"Don't disappoint the expectations of the centre."

But Gan dismissed media speculation the party leadership was split over whether to purge Chen, who he said was implicated in the misuse of 400 million yuan. He refused to discuss the specific charges against Chen.

In 2005, the 70 million-strong Chinese Communist Party expelled 11,071 members for corruption and bribe-taking, Gan said.

The China Youth Daily reported that state auditors had ordered governments across the country to tighten management of pension funds.

"All of it must be invested in bank savings or buying government bonds, and before the state issues new regulations, none can be otherwise invested," the newspaper said, citing a directive from the auditors.

In Shanghai, special police manned airports and ports to prevent officials under investigation from fleeing, the Hong Kong Economic Times and the territory's Sing Tao Daily said.

The reports did not identify any other suspects or say how many officials might still be under investigation.

Senior Shanghai officials had been forced to surrender their passports and travel permits to Hong Kong and Macau while the investigation was under way, the newspapers said.

Shanghai officials needed party approval to travel abroad, the newspapers said, adding that three delegations were recently forced to cancel trips to Europe and Australia.

Chen also lost his seat in the party's elite, 24-member Politburo, making him the most senior official toppled in party chief Hu's drive to root out abuse and enforce loyalty.

Chen was accused of helping to enrich crony companies and relatives, state media said, citing a Politburo decision.

The corruption probe has implicated two senior Shanghai city government officials and at least three prominent executives in real estate, private investment and a utility firm.

"The scandal will send shockwaves throughout China's political hierarchy and weaken local official resistance to (the) central government's policy initiatives," said Jason Kindopp, an analyst at risk consultancy Eurasia Group.

"This is particularly true of administrative measures to slow investment growth as well as ... energy conservation and environmental protection," Kindopp said.