Lunatic Liu And The Quality of Corruption

To achieve a great leap, a generation must be sacrificed – Liu Zhijun

I’m continuing my education on China and I recently came across a story that I thought worth sharing. It’s about a chap called Liu Zhijun aka Great Leap Liu aka Lunatic Liu aka Minister Liu.

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For this post, I have borrowed heavily from Evan Osnos’ Age of Ambition‘  – one of the most enjoyable books I have read recently.

In 2003, Liu was made China’s Railways Minister. To give an idea of how big this job is/was, China’s railways alone employs around the same number of people as the entire US government does (over 2 million people). The Railways Ministry has its own police and courts amongst other things. It is the very definition of a fiefdom.

Great Leap Liu had very humble origins and he started his career inspecting rail tracks with a torch in the middle of the night. From there he rose to Minister through a combination of a frightening level of hard work (how he got the Lunatic Liu nickname) and unlimited ambition (also marrying a woman from a well-connected political family). When he was made Minister in 2003, he set a target to build 7,500 miles of high-speed rail by 2008. At that time, all the high-speed lines in the whole world were less than 7,500 miles.

So how did Lunatic Liu do?

The Work

1. Before his tenure came to an end in 2011, the annual budget controlled by Lunatic Liu’s ministry was well over $100bn. He managed to lay over 6,200 miles of high-speed track (more than the whole of Europe combined) while accumulating debt of almost $500bn. These are large numbers but the thing to note about high-speed rail is that, due to the speed of the trains, the lines have to be constructed practically in a straight line unlike normal rail. So if there’s a rock or mountain in the path of the line, it has to be blasted and tunnelled through. If there’s a valley, you have to build a bridge over it. And so on. These things significantly add to the costs.

2. I was in China last year and had the privilege of using the high-speed trains. It’s the real deal, no doubt about it. (See my notes here). The 5 hour plus journey from Beijing to Shanghai (and back) is the best train journey I’ve ever taken in my life. Vastly superior to anything here in the UK. And much cheaper too – the return ticket cost me around £50 at the time.

The scale of what has been achieved needs to be seen to be understood. Much of the credit for this has to go to Lunatic Liu who relentlessly drove the programme of construction forward by sheer force of will.

The photo below is one of the favourites I took – Shanghai Hongqiao Rail Station

Hongqiao

3. The CRH-380A model is the crowning glory of China’s high-speed rail system. It is manufactured from start to finish inside China. In 2010, under the watchful eyes of Lunatic Liu, the train set a world record of 486km/hr in a test run. You can watch the video here.

4. The high-speed rail network now carries more than 2 million people everyday and connects over 100 cities in China. It is on course to lay 10,000 miles of track by 2020 based on current plans. The line from Beijing to Shenzhen is 2,400 kilometres in length – the longest in the world and cost about $70bn. It is due to extend into Hong Kong by next year.

There s much to talk about China’s high-speed rail system that one blog post cannot do it justice. But I hope you get the gist – every record possible has been broken by the Chinese in this project and Lunatic Liu played a huge role in making it happen.

The Corruption

In 2011, Lunatic Liu was sentenced to death after a trial for corruption. The sentence was later commuted to life imprisonment so he will likely die in prison. The thing about China is that once you have been expelled from the party for wrongdoing, the party scrubs all your achievements from the public records. Given that most media is controlled by the government, it is now almost impossible to find articles where Lunatic Liu was being praised.

So what did he do?

1. Last week a woman named Ding Shumiao aka Ding Yuxin was sentenced to 20 years in prison for corruption relating to contracts in the Railway Ministry under Lunatic Liu.

Ding

Chinese people derisively referred to her as Daft Mrs Ding. She changed her name to Yuxin apparently because Shumiao was a ‘village name’ that gave away her very very humble origins. She began her ‘career’ by selling eggs by the roadside and somehow built a multi-million dollar empire (worth $700m in 2010) spanning railway carriages and transportation after she had a buka that became popular with railway executives.

Because the Railways Ministry was so huge and dispensed billions of dollars in contracts, there was a feeding frenzy to get in on the action. Mrs Ding thus became a sort of middle woman who could arrange contracts for you for a fee. It was during a routine audit that someone spotted a payment of $16m to her company as a sort of ‘commission’ by another government-owned company that was trying to get contracts from the Rail ministry.

How did she get so influential with Lunatic Liu? She supplied him with women. In the corruption report against him, he was accused of having 18 mistresses across the country including TV stars and actresses. Mrs Ding appeared to be the one who made the hookups for him.

2. According to gist, depending on the kind of position you wanted, you could pay anywhere from $4,000 to $15,000 for a job with the Railways ministry (the $15k would get you a Supervisor position apparently). The whole ministry was so corrupt that people who had been no more than cooks in their lives were ‘engineers’ in the Ministry.

One promotional video for the ministry that was 5 minutes long ‘cost’ $3m to produce. When investigators went to the house of the person in charge of producing the video, they found $1.5m in cash and papers to 9 different houses.

3. Lunatic Liu had a younger brother called Liu Zhixiang who joined the Ministry under him and became the head of the ministry in a town called Wuhan. The younger Mr Liu was also deeply corrupt and took bribes for everything. In 2006 he was given a death sentence (also commuted later) for hiring people to kill a contractor who had threatened to expose him.

Unfortunately for him, the contractor wrote a will before he was killed which included the line ‘If I am killed, it will have been at the hand of corrupt official Liu Zhixiang’. The contractor was killed in front of his wife with a knife.

When Liu Zhixiang was arrested, he had so much cash n his house that some of it was starting to turn mouldy. In all, about $50m in cash and assets was seized from him – he was taking a cut of every railway ticket sold in his area apparently.

4. 5 months after Lunatic Liu was arrested, there was a devastating crash in a town called Wenzhou. The wiki page of the crash is here. The gist of what happened was that there was a storm and lightning struck a signal box while it was on green. Somehow, this then froze the light on green while disabling one of the trains that was in service in a tunnel at the time. Another train was coming behind it and of course was working on the green signal. Before it could be stopped, it rammed into the stationary train from behind and knocked it off the bridge where it was.

In all, 40 people died and almost 200 were injured. It emerged that the company that built the signalling system had done a rushed job and probably got the contract by paying Mrs Ding as you would imagine. Lots of people were fired after the investigation and the incident sort of confirmed what many people had feared with the pace of work under Lunatic Liu – things had been done too fast. There was a lot of soul-searching in China afterwards with people wondering if statistics were everything and how much human life mattered to corrupt government officials.

After the crash, speeds were reduced across the entire high-speed network

5. Lunatic Liu understood the art of sycophancy very well. He knew that as long as he was delivering targets, his bosses would be happy. When the first line to Beijing opened in 2008, it was almost 100% over budget. The Guanghzhou Station was supposed to cost $360m to build. In the end it cost 7 times that amount. But it remains a magnificent thing to behold with 15 platforms and used up around 3.7 million metric tonnes of cement (more than 30% of what Dangote cement produces in a year).

One time President Hu Jintao was passing through a station where Lunatic Liu was and it is said that he ran so fast across the station to meet him that his shoes came off but he continued running anyway.

Kawasaki Heavy Industries which developed the technology for Japan’s Shinkansen bullet trains complained bitterly that Lunatic Liu stole their technology and passed it off as Chinese made. They threatened to sue and it became a diplomatic incident before they backed down.

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Poll

So there you have it. Feel free to search the internet for more of the gist as I have left out some things for word count reasons.

Note that in the year of the crash that killed 40 people, Chinese rails carried 400 million people. 40 people easily die on Chinese roads daily as the World Bank noted at the time. And as much as Kawasaki complained about technology theft, the Americans complained about the same thing many years ago when the Japanese began building their own train system.

Having read all that, I now invite you to take the poll below.

Merry Christmas and see you in 2015, God keep us.

FF

 

 

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17 thoughts on “Lunatic Liu And The Quality of Corruption

  1. Well done FF. Very similar to Nigeria – round pegs in square holes, cronyism, “it’s alright as long as I get a cut” etc – except for the cultural context, the size of money involved, and the size of the jobs being carried out. Lunatic Liu may have done well ensuring necessary infrastructure is put in place but a Yoruba idiom says “o f’iso kekere ba’di je”- translated as tainting a beautiful buttocks with a small fart (presumably after a meal of beans and/or eggs bought with bread, groundnut and ‘asala’ (walnut) at the motor park). Not unexpected from Lunatic Liu since he probably got the job due to his political affiliation irrespective of any past history of hard work. I would be interested in how much wealth hard work got him before he got married. He was just waiting for ‘his turn’ and when his #turnup op came, he abused it like many of his kind. Is there a correlation between a society’s corruption index and economic growth? Are the stories similar for Britain and the US during their years of economic growth? Nigeria needs to allow its Police greater independence and the Judiciary, equal power as the other arms of government. Of course with provision for oversight of both.

    1. It’s an interesting question.
      Regarding the UK – you won’t find anything like this kind of corruption here today but have a look at the synopsis of a book called ‘Forging Capitalism’
      I just got it and will start reading it next week.

      It made me wonder…

  2. 1. You just couldn’t resist calling out Alh. Putin, right!
    2. Imagine investigating NRC, Sure-P, and the Various Ministries over the last few years. The death row inmates would have equaled the mutinous soldiers.
    3. On your polls, no guessing the kind of persons seeing nothing wrong with ‘little’ corruption. Maybe they feel it’s common stealing, not corruption. I’m actually very disappointed.

  3. LYL, that “common stealing is not corruption” was unleashed shows that Nigeria’s National Orientation Agency has some work to do. I think the definition of corruption needs to be standardized for all Nigerians. People need to be taught that acts of corruption transcend those big acts publicized by the media and include “apparently ok” acts in the corners of our homes, offices and businesses.

  4. After reading this story again, and working a bit tonight, I think I’m ready to leave a comment.

    I admire all those people saying that corruption should not be tolerated at all. You are the salt of the earth and God loves you all so much. However, I find myself, after much soul-searching, firmly on the other side of the argument. If you asked me today whether I wanted a train line that would make living in Abeokuta and working in Lagos possible but I had to accept corruption, my answer would be “where’s the train ticket?” Corruption is not as great a sin as this inefficiency that we live in and I think Lunatic Liu realised that. Africa’s biggest sin is not corruption; it’s the lack of progress that accompanies it.

    No one believes that any economic miracles occured without some corruption (or a lot of it). Go from America’s robber barons to the Asian Tigers, there are stories of men doing terrible things to get ahead. But by God, capitalism is beautiful when it works.

    Feyi. I want trains. Fast trains that move people and cargo from Kano to Lagos, along the coast every day and open up the country to trade and commerce with the rest of the world. I want a trans-continental railroad so I can take my family to see their continent in high definition. I want progress. I want prosperity. I want wealth. And if it has to come with some corruption, then I welcome it.

    There’s a parable Jesus tells *chuckles*. Something about a shrewd servant who “forgave” debts on behalf of his master to ensure that he had friends after he was fired. In short, he bribed people to make friends in his new life. Jesus said something to the effect of “the children of the world are wiser than the children of God” about this.

    In the end, Lunatic Liu and his brother deserved death for the massive corruption. That is the honest truth. But it’s not sure that those people wouldn’t have died even if he as angel Gabriel. And yet those trains are there. They work. They are more advanced than what’s available in most of the world. Wouldn’t you want that in Nigeria?

    1. Nigerian corruption is different from Chinese corruption. Their own involves taking something off the top and executing the contract. Our own M.O is to create contracts as an excuse to steal everything and do nothing. So the question isn’t really whether we should do away with corruption or not. It’s what sort of corruption do we want? Are we okay with substandard work that kills people ever so often? The problem with looking the other way when it comes to corruption is that it never stops. If they take 10% and we look like mumus what stops them from taking 20% and a little more every time? After a while they stop bothering to even do the work and inflate the contract 1000%. Stealing public funds should be as difficult as possible otherwise we’re all screwed.

      1. I remember Oby Ezekwesili once telling me that when she was in government, you could trace the ‘career’ of thieves almost on a straight line.
        They always start by stealing N5k and getting away with it before they graduate to N100m.

        I think you nailed the problem – in China no one can argue that the plan was not to build trains. It was in the course of building the trains that lots of money got stolen. This is a subtle point but in Nigeria the complete reverse is the case.
        They first decide that they need to make some money disappear and then work backwards to how to make it happen by awarding fictitious contracts.
        If you get a single track of rail out of the contract, consider yourself lucky.

    2. Seyi, I understand you are being realistic and at the same time frustrated you about the level and pace of development in Nigeria but I need to drop some warning. While one isn’t naive enough about the issue, I’d rather stand on the side angling for zero corruption. In fact I have been tempted a few times to look at Alh. Putin from a somewhat tolerant perspective: he at least puts the money to good use. On further introspection, I consider such thoughts unacceptable. For instance, the Alhaji’s cement plant as just been behaving as predicted of monoplists, tinkering with the price of his product as he likes. I doubt that has been social welfare-enhancing which some economists argue could be a benefit of a corrupt process. My position is based on my observation that corruption exists on a spectrum spanning from infinity to infinity on either side. The implication of this is that when corruption is openly tolerated then it is almost impossible to determine the boundaries. The trains, roads, power plants, schools, health care facilities etc you ask for may then never show up. The ramifications may be beyond our expectations as you can see in the China story. If you are happy Mr. Liu provided the trains amid all the corruption then you shouldn’t agree he deserves to be punished because without it, there may have been no trains at all. Those inefficiencies you consider Africa’s biggest sin are the consequences of some corrupt practices somewhere. What will a visionless guardian of a development process do with the budget? Furthermore, bad behaviour in America or elsewhere should not be used as standards when it comes to corruption. We shoud compete with them in economic development. That they had corrupt individuals while growing doesn’t make corruption a sine qua non for development. I am of the opinion that development can and should occur without corruption. Societies are organized around this notion and that is why there are laws and law enforcement.

      N.B.
      “Asian Tigers” reminds me of watching Nasir El-Rufai on NTA Abuja justifying Obasanjo’s friends proposition of a third term.

  5. Nigeria’s corruption has befuddled me so much that I actually empathised with Liu’s plight thinking ‘but he at least built the trains – trains that work too’!.
    The poll got me chuckling. The last option ‘i dont know needs the addendum ‘God dey’.
    Sigh

  6. This is simply a case of “Corruption that facilitates development” vs “Corruption that obstructs development”.

    I’m on the side of the former!!

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  10. I like the Chinese govt. approach. Allow the man to finish the project, then prosecute him to teach others a lesson.

    No one can convince me the party leaders didn’t know that corruption was going on, but since the man was ‘delivering’ it made sense to let him continue until there’s enough rope to hang him on.

    If he was incompetent, they probably wouldn’t have let him stay that long.

    We we should adopt a similar position in Naija. Fight corruption with long term view (with patience and guile), but smash incompetence pronto, especially in key positions.

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