Yes I know this happens everywhere, but rarely on this scale, and when I see stories like this they only increase my skepticism about whether or not we should be confident that the financial system is in good shape and most of the skeletons taken out of the closet. These stories involve a lot of people at the center of the corporate and financial worlds. This is from today's South China Morning Post.
Finance chief replaced amid sex scandal
Finance Minister Jin Renqing has been replaced abruptly after a sex scandal snowballed to implicate several senior mainland officials, sources said.Mr Jin had been shifted to a government think-tank and would be replaced by Xie Xuren , director of the State Administration of Taxation, Reuters reported, citing an announcement by the Communist Party's Organisation Department.
Its report did not give any specific reasons why Mr Jin, 63, had been transferred to the Development Research Centre. But sources said there had been intense speculation about the minister's career after the mainland leadership said it was stepping up investigation of a corruption case involving Du Shicheng, the former party secretary of Qingdao , a booming coastal city which will host the sailing events of the 2008 Olympic Games.
In December, Mr Du was fired from his government and party posts for "serious breaches of discipline", the party's euphemism to describe corruption and moral lapses including keeping mistresses. As the party's anti-corruption watchdog, the Central Commission for Discipline Inspection, continued its investigation, it also detained a young woman believed to have had an intimate relationship with Mr Du. To the shock of anti-graft officials, the woman, known as a social butterfly, later confessed she had also had intimate relationships with several senior government officials and some of them had abused their power to advance her business dealings.
In June, Chen Tonghai, chairman of oil giant China Petroleum & Chemical Corp (Sinopec), was detained for corruption. Sources said the woman's confession had prompted anti-graft officials to launch an investigation of Mr Chen but that they focused their investigation on economic irregularities involving Mr Chen but unrelated to the woman's case. The woman was also believed to have implicated Mr Jin and several other senior government officials who have important roles advising on foreign and domestic policy.
The keeping of mistresses and dalliances with young women have been among the main reasons for the recent sackings of senior officials. State media has reported that the majority of government officials arrested for corruption were accused of keeping young women as mistresses.
Michael Pettis is a professor at Peking University's Guanghua School of Management, where he specializes in Chinese financial markets. He has also taught, from 2002 to 2004, at Tsinghua University’s School of Economics and Management and, from 1992 to 2001, at Columbia University’s Graduate School of Business. He is a member of the board of directors of ABC-CA Fund Management Co., a Sino-French joint venture based in Shanghai.
Pettis has worked on Wall Street in trading, capital markets, and corporate finance since 1987, when he joined the Sovereign Debt trading team at Manufacturers Hanover (now JP Morgan). Most recently, from 1996 to 2001, Pettis worked at Bear Stearns, where he was Managing Director-Principal heading the Latin American Capital Markets and the Liability Management groups. He has also worked as a partner in a merchant banking boutique that specialized in securitizing Latin American assets and at Credit Suisse First Boston, where he headed the emerging markets trading team. Besides trading and capital markets, Pettis has been involved in sovereign advisory work, including for the Mexican government on the privatization of its banking system, the Republic of Macedonia on the restructuring of its international bank debt, and the South Korean Ministry of Finance on the restructuring of the country’s commercial bank debt.
Pettis is a member of the Institute of Latin American Studies Advisory Board at Columbia University as well as the Dean’s Advisory Board at the School of Public and International Affairs. He is the author of several books, including The Volatility Machine: Emerging Economies and the Threat of Financial Collapse (Oxford University Press, 2001). He received an MBA in Finance in 1984 and an MIA in Development Economics in 1981, both from Columbia University.
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October, 2007
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