Reform of China's 169 state-owned enterprises (SOEs) or central enterprises will focus on tightening the mother companies' control, especially financial control, over the affiliate firms, governor of the state-owned assets overseeing agency said Monday.
"Account books must be tautly grasped by the head offices," said Li Rongrong, director of the State-owned Assets Supervision and Administration Commission (SASAC).
Loose financial management and internal control system have been major causes of the non-performing assets of the SOEs, Li said while addressing a conference on the management of SOE non-performing assets.
He urged the SOEs to strengthen control over the assets circulation of their branches and affiliates, and to set down rules to regulate the subordinate firms' fund raising, capital management, budget, purchase and sales.
Li has repeatedly stressed at the department's internal communication that enhancing the mother corporations' control power "will be the next core task of SASAC", following the present focus of perfecting board of directors of the SOEs, a SASAC official told reporter during the meeting. According to him, SASAC is drafting a measure in this respect.
"Selecting right chief accountant and improving information management are the key ways to tighten the mother companies' financial control," Li said, noting that chief accountants of the SOEs will "enjoy higher status and shoulder greater obligation", and financial software of the mother company must be used by the affiliate firms to facilitate timely supervision from the head office.
Li stressed that the head offices must take control of the large-volume capital management of the affiliate firms, and financial affairs of the lower-level firms must be open to the head offices.
"Any concealing of account will result in a warning or a dismissal to related personnel," he said.
Among SASAC's 20 newly recruited top managerial personnel, who were publicly advertised for from home and abroad, 12 are chief accounts for the SOEs. Li said during talks with them that the very purpose of recruiting chief accounts at large scale is to enhance the mother corporations' control power.
China's SOEs have been long hindered by too-many affiliates and too-broad businesses. Take PetroChina as an example, the oil giant cleared 728 subordinate firms from January to June, and the number merely accounted for 17 percent of its total by the end of 2004.
SASAC has been taking pains to condense the structure and businesses of the SOEs, aiming at fostering 30 to 50 global giants out of the current 169 SOEs and their numerous affiliates by the end of this decade.
(Xinhua News Agency November 8, 2005)
