Extravagance of reputation(2)
The postings said Lu decided to buy the wines and planned to use them at business banquets or give them out as gifts.
Sinopec Guangdong Oil Products Co. on April 12 confirmed the purchases, but spokesman Xu Tao said the liquor was destined to be resold at stores in Sinopec's gas stations.
Netizens did not buy the explanation, saying such expensive liquor was unlikely to be sold out at gas station convenience stores.
Reporters with Xinhua News Agency contacted people familiar with business operations of Sinopec's gas stations in Guangdong, but the interviewees said they had never seen or heard the liquor was available for sale there.
The Beijing Morning Post cited anonymous sources with Sinopec Guangdong Oil Products Co. saying Lu, who had previously worked in Sinopec's Guizhou branch, had selected Moutai as the main wine to be used for business receptions after being transferred to the Guangdong branch in 2009.
The disclosure of extravagant liquor bills soon made Sinopec a target of public anger, especially at a time when China's fuel prices are at record high levels.
On April 7, China increased retail gasoline and diesel prices for the second time this year, a move that benefited Sinopec, which has been lobbying for higher fuel prices, or state subsidies, to hedge losses caused by soaring international crude oil prices.
China's gasoline prices have doubled since March 2005, rising from 3.92 yuan ($0.60) per liter to 7.85 yuan ($1.21).
Net profits of Sinopec in 2010 rose 13.7 percent from one year earlier to 71.8 billion yuan ($10.51 billion), according to its statement filed with the Shanghai Stock Exchange in March.
The public blamed the company for extracting too much profit and demanded Sinopec disclose why the liquor was bought.
"Sinopec said it must raise gasoline prices to offset rising costs, while drinking Moutai in an air-conditioned office," said an online posting.
In response to the tirade of criticism, Sinopec issued a statement on April 14, saying it had sent a team to probe the alleged purchases and promised to publish the results as soon as possible.
The statement said those responsible would be punished if they were found to have violated any laws or Party discipline.
Before April 25, the investigation team twice visited Sinopec Guangdong Oil Products Co. It finally concluded Lu had bought the liquor in company cash for personal consumption.
On this basis, Sinopec decided to demote Lu from his post.
Many netizens have expressed disapproval of the punishment meted out to Lu.
They doubt about Sinopec's claim that the liquor scandal is an individual matter. Many believe that the case reflects rampant abuse of power and public funds among SOEs.
"All forms of extravagance are rooted in absence of effective supervision," said Yu Pengyi, a professor at the School of Finance and Economics of Guangdong University of Foreign Studies.
Gu Xiaoming, a professor at the School of Humanities of Fudan University, said Sinopec needs to open up its accounts.
"The top leaders must stand up and apologize to the public immediately when a scandal breaks. This misplaced punishment only shows a lousy corporate culture and slack management," Gu said.
Absent checks
The extravagant liquor bills are only part of a spate of scandals hitting the state-owned Sinopec in recent years.
In July 2009, online postings claimed Sinopec had splashed out 12 million yuan ($1.85 million) on a crystal hanging lamp installed in its Beijing headquarters. The company said later the lamp actually cost about 1.6 million ($246,000).
In February of this year, the company was embarrassed by disclosures that it had ordered its own employees to post online comments supporting fuel price hikes in disguised identity.
