Extravagance of reputation(1)

DAMAGED IMAGE: The building of Sinopec Guangdong Oil Products Co. stands in the center of Guangzhou, south China's Guangdong Province. The company's former General Manager Lu Guangyu was demoted on April 25 for buying expensive liquor with company cash for personal consumption (TIAN JIANCHUAN)

China Petrochemical Corp. (Sinopec), Asia's largest refiner, came under fire in mid-April after one of its subsidiaries was exposed to have purchased large quantities of expensive liquor for its head's private use.

On April 25, Sinopec held a press conference, announcing the demotion of Lu Guangyu, General Manager of Sinopec Guangdong Oil Products Co. who it said was responsible for the extravagant bills worth 2.59 million yuan ($399,000). It also ordered Lu to pay 131,100 yuan ($20,170) for the liquor he consumed.

According to Sinopec's investigation, Lu seriously violated the company's regulation in decision-making, which is "collective discussion and consultation for decisions concerning key matters, appointment of key leaders, arrangement of key projects and usage of large funds."

Lu's unauthorized decision to purchase expensive liquor with company cash damaged the image of Sinopec and caused negative impacts on the company's business, said Fu Chengyu, Chairman of Sinopec, at the press conference.

Abuse of power

LI SHIGONG

SMOKING GUN: Online postings on April 11 show Sinopec Guangdong Oil Products Co. had spent a huge sum of money on expensive liquor, triggering public concern on possible corruption involved (TIAN JIANCHUAN)

The scandal came to light on April 11, when a self-proclaimed insider at Sinopec Guangdong Oil Products Co. posted photocopies of four invoices signed by the company with combined value of 1.68 million yuan ($259,000) on Tianya.cn, a popular online forum, showing the company had spent the money on expensive alcohol.

The postings said Sinopec Guangdong Oil Products Co. had bought upscale liquor worth 2.59 million yuan in three different batches since September 2010.

The purchases included 30 bottles of 50-year Moutai, 30 bottles of 30-year Moutai, 60 bottles of 15-year Moutai and 360 bottles of non-vintage Moutai. Moutai is one of the most famous and expensive spirit brands in China. A bottle of 50-year Moutai sells for about 22,000 yuan ($3,386) and a bottle of non-vintage Moutai sells for more than 1,000 yuan ($154).

The postings showed the company had also bought 696 bottles of imported wines worth 630,720 yuan ($97,083). They included 17 bottles of Chateau Lafite Rothschild produced in 1996, which is priced at more than 10,000 yuan ($1,540) a bottle in China.

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