The Inside Story Of Housing Enterprises' Thunder And Corruption: Competition Between Regional Companies And Auditors

"Have you ever seen housing companies fight corruption?" Wang Yang, a design clerk of a large housing enterprise in Beijing, asked reporters, "a deputy general office was empty for several days, and everyone thought he was away on business. After a long time, the administrative staff cleaned up the office and changed it into a conference room because the boss felt bad.

Wang Yang said, in the enterprise, anti-corruption is often not so great, "sometimes we see the news from the news before we know what happened. In the company, a notice of resignation is often issued.

On the evening of December 23rd, the new China Federation announced that the personal problems of Supon, chairman and CEO of the company were being investigated by the public security organs, and that the relevant matters had yet to be confirmed by the public security organs. The previous day, the new China Federation held a board of directors to remove the duties of chairman and CEO of Su Bo.

According to the new Hualian internal staff reported to the economic report twenty-first Century, the Soviet Union to assist the investigation, is the new China Federation high-level anti-corruption initiative launched, the initiative to report to the public security organs, the results of the corruption may be involved in the real estate sector.

In recent years, the anti-corruption action of real estate enterprises has increased significantly and is becoming more open from privacy.

According to incomplete statistics, since 2019, there are at least ten housing companies, such as COFCO, agile, rhyme, Pauli, RC, Wanda, Fosun, Mei, real estate, Jinhua and new Hualian. The anti corruption operation is public, and more than 30 people are involved in the case.

This is not a simple coincidence. Since 2016, the property market has ushered in a "bumper harvest year". Housing companies took the opportunity to expand their scale substantially. However, due to the slow upgrade of management system, the risk point of corruption has increased rapidly. The purpose of public anti-corruption is a warning. As Li Hongjun, director of Audit Department of a large housing enterprise in Beijing, said, "public anti-corruption is also for your own people."

Behind this is the change of management ideas of Housing enterprises. In recent years, the strengthening of the status of audit and supervision departments, as well as the involvement of law enforcement agencies, means that the internal and external supervision of enterprises is being strengthened. At the same time, the establishment of regional change and headquarters function settlement will also help to curb the occurrence of corruption. Housing enterprises do a large scale while repairing loopholes in the system.

"The original extensive management is out of date." Li Hongjun said.

"Leaky clippers"

The real estate industry has been regarded as a serious area of corruption because of the huge interests involved, the long examination and approval process and the lack of restrictive mechanism.

"Housing prices are" Party B "in front of the government and banks, but in front of construction companies, design companies, sales ditch companies, advertising companies and consulting companies, they are also" party a ". Li Hongjun told the twenty-first Century economic report. Li Hongjun is a master of law. Before entering the real estate industry, he worked as deputy procurator general in the grass-roots Procuratorate of Beijing.

In the real estate industry, investment, extension, engineering and sales are recognized as fat, but corruption is also easy to appear in design, advertising, landscaping and even personnel. A number of respondents confirmed to the twenty-first Century economic report that people in charge of human resources in housing enterprises accept bribes from headhunting companies and accept their recommended senior professional managers, which is not new in the industry.

Over the years, with the increase in housing prices, the amount of corruption involved has also become huge. In September this year, vice president of Hainan's Atlantis Business Travel Development Co., Ltd. and its two subordinates sold some apartments and villas to buyers, earning nearly two hundred million yuan.

People with housing prices say that nowadays, in a single real estate project, the amount of corruption involved is often in the order of tens of millions or even billions.

Wu Jianbin, executive vice president of Sun City Group, referred to the concept of "three year adjustment period" in the twenty-first Century economic report, that is, the housing enterprises have made achievements in one year, and then adjusted the management structure, personnel structure and assessment mechanism in two years to meet the new scale needs.

According to this rule, in the rapid expansion period in recent years, unless the special means are adopted, the management structure of the housing enterprises will easily lag behind the scale development.

Li Hongjun described housing prices as "leaky clippers". Corruption cases are loopholes on ships, though not large, but they have an impact on product quality, brand image, profits and goodwill.

The rise of Auditors

The management pressure brought by scale expansion is mainly reflected in whether headquarters can effectively control and control regional companies. "There is a management radius between headquarters and regional companies. The larger the scale, the greater the radius of management. Further improvement of system will inevitably result in loss of management effectiveness. Zheng Lei, vice president of a Fujian Department of housing, told the twenty-first Century economic report.

In the past, the means of making up for losses were quite extensive. Zheng Lei said that the management structure of many regional companies is "three pillars": the head of the district is the "frontier official", the head of the region; the No. 1 sub zone is business oriented, mostly local or has a deep foundation in the area, and is responsible for developing business; the No. two sub district is designated by the headquarters, which is called auxiliary, but actually exercises supervision.

This structure seems to be stable, but it is actually very fragile.

Zheng Lei said that in practice, there are few successful cases. The most common to two situations: first, three people form factions, which restrict each other, affect business progress; two, three people hold together, forming regional forces and breeding mass corruption.

"If we carefully study the corruption cases of Housing enterprises in recent years, we will find that there are many phenomena of mass corruption." Zheng Lei said that another reason is that in recent years, the mobility of professional managers is large and often flows in the "built system". "A senior professional manager will take a lot of job hopping. Although this is easy to carry out, it is easy to form a small circle and breed mass corruption.

After the original "EyeLiner" supervision was proved invalid, institutionalized anti-corruption measures began to rise. The most important manifestation is the rapid rise of audit and supervision departments.

"Before, many enterprises' audit supervision departments are" furnishings ". As long as they do not involve real big cases, the annual work is mostly a form of walking. Zheng Lei said that the rise of audit departments can not only solve the management problems of regional companies, but also effectively supervise the functional departments of headquarters.

In the real estate sector, the most audited audit department came from Wanda. Wanda audit department was established in 2001, and its members are composed of financial, engineering, budget, and local hydropower professionals.

Wanda audit department has been granted great authority. Wang Jianlin, chairman of Wanda Group, wrote in the book "Wanda philosophy", "I personally do not control the specific business in the group. The only department that controls is the audit department. The audit department is equivalent to the Wanda Group's Discipline Inspection Committee." the audit bulletin is the most powerful, and the first one means that someone is dismissed or gets heavier punishment. "

In 2015, Wanda Audit Center investigated the corruption behavior of 18 people, including the vice president of the Xi'an item company. In 2017, 263 cases of illegal activities were investigated and dealt with, 129 people were relieved of labor relations, 3 cases were put on judicial cases, and 130 million yuan was recovered for enterprises.

In recent years, many companies have invested heavily in auditing and monitoring professional backgrounds. Li Hongjun is one of them. He confessed to the twenty-first Century economic report that he had a lot of trust from his boss. Besides the supervision work, the main contents of the work will assist the company in building and perfecting the internal system and blocking the source of corruption.

At the same time, the management system is slowly upgrading, many of which are helpful to anti-corruption. For example, we should adjust the management structure, implement the regional change mechanism, and implement the sinking mechanism of headquarters staff.

Put down your loyalty and pick up the law.

On the morning of August 1, 2018, Wanda Group headquarters located in Jianguo Wai Street, Beijing, two Wanda executives Yin Jianwu and Jin Zhen were taken away by Chaoyang police on suspicion of using their posts to facilitate their personal gain. Prior to this, the two men respectively served as vice general manager and general manager of central marketing of Wanda Group.

In the fight against corruption in China's housing sector, this kind of impact is seldom seen. As Wang Yang said, the internal anti-corruption of enterprises is mostly low-key treatment. The common result is that the parties return money and return stolen goods and then retire. Even when law enforcement agencies intervene, companies rarely speak up.

Li Hongjun believes that China's real estate industry still has some "Jianghu loyalty", "many executives are playing with the boss, and then invited professional managers, often with their boss brother. So how can you have the heart to send your brother to prison?

In addition, many parties involved in corruption cases have played an important role in the development of enterprises, or even ministers. With this in mind, some bosses will be soft hearted and choose to "give a decent".

Nowadays, the practice of high profile and open anti-corruption like Wanda is still not a common phenomenon, but the ideas of bosses are changing.

In June 2015, the anti fraud alliance of Chinese enterprises was established in Shanghai. This is the first non-profit cooperative organization initiated by enterprises in China, aiming at anti fraud. Among the 10 enterprises and institutions, there are three housing companies including Vanke, Biguiyuan and Shimao. The agency "focuses on internal audit, supervision, wind control, forensic, integrity, compliance and other functional areas". Today, there are 545 members, 116 of which are real estate enterprises.

"Bosses are beginning to realize that if a person is covered up for corruption, he will probably make the same mistake in another housing company. At this time, the reputation of the old club will be affected in the industry. Li Hongjun said.

At the same time, as the industry enters the era of professional managers, the human touch is slowly fading away. Yan Yuejin, director of the think tank center of Shanghai Yi Ju Real Estate Research Institute, told the twenty-first Century economic report that, like Wanda, many enterprises are implementing "high salary and honesty", and the treatment of professional managers is also rising. Under such circumstances, the company's tolerance for corruption has declined markedly.

Yan Yuejin said that in modern corporate governance, labor and capital should be based on contractual relationship. At the same time, the law must not be absent in the industry with hundreds of billions of corruption.

According to PWC's survey of the status quo of the 2018 anti fraud alliance of Chinese enterprises, after the occurrence of corruption, enterprises recovered only 18% of the direct economic losses. The loss that can not be accurately counted also includes the damage of corporate atmosphere, the loss of goodwill and the interruption of subsequent operations, so the actual loss is much larger than the carrying amount.

But Li Hongjun believes that public anti-corruption is at least the first step in the legalization of Housing enterprises, which is crucial to the large scale but not reputable real estate industry. He believes that this practice is not only for the outside world, but also a "warning bell" for practitioners.