Age of Ambition (37 page)

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The railroad minister, Liu Zhijun, did not initially look like a candidate for a dramatic public disgrace. Liu was a farmer's son, small and thin, with bad eyesight and an overbite. He grew up in a village outside the city of Wuhan and left school as a teenager for a job walking the tracks with a hammer and a gauge. He had an innate sense of the path to power. Good penmanship was a rare skill in the provinces, and Liu perfected his hand, becoming a trusted letter writer for bosses with limited education. He married into a politically connected family and was a Party member by age twenty-one. He was a tireless promoter of the railways and of himself, and he ascended swiftly, heading provincial bureaus on his way to the seat of power in Beijing. By 2003, as railroad minister, he commanded a bureaucratic empire second in scale and independence only to the military, with its own police force, courts, and judges and with billions of dollars at his disposal. His ministry, a state within a state, was known in China as
tie laoda
—“Boss Rail.”

Liu kept his hair in an untidy black comb-over and wore a style of square horn-rimmed spectacles so common among senior apparatchiks that they were known as “leader glasses.” A colleague of Liu's, a railway staffer who worked closely with him, told me, “Ever since the revolution, most Chinese officials look alike. They have the same face, the same uniform, even the same personality. They work step-by-step, and they are content to sit back and wait for promotions. But Liu Zhijun was different.” If it was possible to invest a railway job with glamour, he was determined to do so. He liked to convene meetings after midnight and make ostentatious displays of his work habits. Even as he approached the highest ranks of power, he never stopped flattering his superiors. When President Hu Jintao was returning by train to Beijing one summer, Liu hustled up the platform so frantically to greet him that he nearly ran out of his loafers. “I shouted to him, ‘Minister Liu, your shoes! Don't fall!'” the staffer recalled. “But he couldn't be bothered. He just kept grinning and running.”

Liu's success benefited his brother, Liu Zhixiang, who joined the ministry and soared up through the ranks. He was wisecracking and volatile. In January 2005 he was detained for questioning about embezzlement, bribe-taking, and intentional harm regarding his role in arranging the killing of a contractor who sought to expose him. By then, he was vice chief of the Wuhan Railway Bureau. (The victim was stabbed to death with a switchblade in front of his wife. According to an official legal journal, he had predicted in his will, “If I am killed, it will have been at the hand of corrupt official Liu Zhixiang.”) The minister's brother was embezzling such a large share of the ticket sales that he accumulated the equivalent of fifty million dollars in cash, real estate, jewelry, and art. When investigators caught him, he was living among mountains of money so large and unruly that the bills had begun to molder. (Storing cash is one of the most vexing challenges confronting corrupt Chinese officials, because the largest bill in circulation is a hundred-yuan note, worth about fifteen dollars.) He was convicted and received a death sentence that was suspended and later reduced to sixteen years. But instead of serving his time in a facility for serious offenders, he was transferred to a hospital, where he reportedly continued to conduct railway business by phone.

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Back in Beijing, Minister Liu surrounded himself with loyal associates. The
capo di tutti capi
was the chief deputy engineer Zhang Shuguang, who once arrived at a railway conference in a fur coat and a white scarf and liked to describe his approach to negotiations as a “clasped fist.” For much of his career, he ran the passenger car division, which gave him control over colossal spending choices. “It was all up to a nod of his head,” Zang Qiji, a retired member of the Academy of Railway Sciences, told me. Zhang knew little of science, but he aspired to credibility and attempted to secure membership in an élite academic society by having two professors write a book in his name. (He fell short of membership by a single vote.)

Liu bet everything on high-speed railways. To preempt inflation in the cost of land and labor and materials, he preached haste above all. “We must seize the opportunity, build more railways, and build them fast,” he told a conference in 2009. Liu's ambitions and Chinese authoritarianism were a volatile combination. The ministry was its own regulator, virtually unsupervised, and the minister and his aides had no tolerance for dissenting voices. When professor Zhao Jian, of Beijing Jiaotong University, publicly objected to the pace of high-speed-rail construction, Liu summoned him and advised him to keep quiet. Zhao refused to back down, and the university president called him. “He told me not to continue to voice my opinions,” Zhao told me. The professor resisted, but his concerns were ignored—until the crash. “Then it was too late,” he said.

The obsession with speed was all-encompassing. The system was growing so fast that almost everything a supplier produced found a buyer, regardless of quality. According to investigators, the signal that failed in the Wenzhou crash was developed over six months, beginning in June 2007, by the state-owned China Railway Signal and Communication Corporation. The company had a staff of some thirteen hundred engineers, but it was overwhelmed by demands on its time, and crash investigators discovered that those in charge of the signal had performed only a “lax” inspection, which “failed to discover grave flaws and major hidden dangers.” The office in charge was “chaotic,” a place where “files went missing.” Nevertheless, the signal passed inspection in 2008 and was installed across the country. When the industry gave out awards for new technology that year, the signal took first prize. But an engineer inside the company subsequently told me that he was not surprised to discover that the job had been rushed.

There were other suspicious factors. In April 2010 the chairman of Central Japan Railway, Yoshiyuki Kasai, said that China was building trains that drew heavily on Japanese designs. When Kawasaki Heavy Industries threatened to sue the Chinese for passing off its technology as their own, the Railway Ministry in Beijing dismissed the complaint as evidence of “a fragile state of mind and a lack of confidence.” Kasai also pointed out that China was operating the trains at speeds 25 percent faster than those permitted in Japan. “Pushing it that close to the limit is something we would absolutely never do,” he told the London
Financial Times
.

In the days before the crash, the rush to build the railways added a final, lethal factor to the mix. In June the government had staged the debut of the most prominent line yet, Beijing to Shanghai, to coincide with the ninetieth anniversary of the Chinese Communist Party. A full year had been slashed from the construction schedule, and the first weeks of the run were marred by delays and power failures. According to a manager in the ministry, high-speed-rail staff were warned that further delays would affect the size of their bonuses. On the night of July 23, 2011, when trains began to stack up, dispatchers and maintenance staff raced to repair the faulty signal and ignored the simplest solution: stop the trains and repair the signal. Wang Mengshu, a scholar in the Chinese Academy of Engineering who was deputy chief of the committee investigating the crash, told me, “The maintenance people weren't familiar enough with their jobs, and they didn't want to stop the train. They didn't dare.”

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When the crash occurred, Great Leap Liu was no longer running the Railway Ministry. In August 2010 the National Audit Office had reviewed the books of a big state-owned company and came upon a sixteen-million-dollar “commission” to an intermediary in return for contracts on the high-speed rail. The intermediary turned out to be a representative of a woman named Ding Shumiao, who perhaps more than anyone embodied the runaway riches created by China's railway boom. Ding was an illiterate egg farmer in rural Shanxi—five feet ten, with broad shoulders and a foghorn of a voice. In the 1980s, after Deng Xiaoping launched the country toward the free market, she collected eggs from neighbors to sell on the sidewalk in the county seat. This was illegal without a permit. Her eggs were confiscated, and years later she still talked of her embarrassment. In time, she came to run a small, thriving restaurant, where she gave away food to powerful customers and exaggerated her own success. “If she has one yuan, she'll say she has ten,” one of Ding's longtime colleagues told me. “It makes her look more influential, and bit by bit people began to think that they could benefit from their friendship with her.”

Her restaurant became a favorite with coal bosses and officials. Soon she was involved in coal trucking. Then she was “flipping carriages,” as it's known in the railway business: working her connections to get cheap access to coveted freight routes and, according to Wang, the investigator, reselling the rights “for ten times what she paid.” She became friendly with Great Leap Liu around 2003, and with her ties to the railway business, she prospered. Her company, Broad Union, signed joint ventures and supplied the ministry with train wheels, sound barriers, and more. In two years, Broad Union's assets grew tenfold, to the equivalent of $680 million in 2010, according to the state news service.

Ding's given name, Shumiao, betrayed her rural roots, so she changed it to Yuxin, at the suggestion of her feng shui adviser. She was easy to lampoon—Daft Mrs. Ding, people called her—but she had a genius for cultivating business relationships. A longtime colleague told me, “When I tried to teach her how to analyze the market, how to run the company, she said, ‘I don't need to understand this.'” The Chinese press chronicled her audacious social ascent. To gain foreign contacts, she backed a club “for international diplomats,” which managed to attract a visit in 2010 by Britain's former prime minister Tony Blair. Her lavish receptions drew members of the Politburo. She joined the lower house of the provincial legislature and made so many charitable gifts that in 2010 she ranked No. 6 on the
Forbes
list of China's philanthropists.

Ding was detained in January 2011, and eventually indicted on charges of bribery and illegal business activities. She was convicted of paying fifteen million dollars in bribes to Liu and others to help twenty-three companies secure railway construction contracts worth thirty billion dollars. For her services, her haul was impressive: she received kickbacks from contractors totaling more than three hundred million dollars. Like many others, Ding had discovered what government auditors found out only later: China's most famous public works project was an ecosystem almost perfectly hospitable to corruption—opaque, unsupervised, and overflowing with cash. In some cases, the bidding on contracts was truncated from five days to thirteen hours. In others, the bids were mere theater, because construction had already begun. Cash was known to vanish: in one instance, seventy-eight million dollars that had been set aside to compensate people whose homes had been demolished to make way for railroad tracks disappeared. Middlemen expected cuts of between 1 and 6 percent. “If a project is four and a half billion, the middleman is taking home two hundred million,” Wang said. “And of course nobody says a word.”

One of the most common rackets was illegal subcontracting. A single contract could be divvied up and sold for kickbacks, then sold again and again, until it reached the bottom of a food chain of labor, where the workers were cheap and unskilled. Railway ministry jobs were bought and sold: $4,500 to be a train attendant, $15,000 to be a supervisor. In November 2011 a former cook with no engineering experience was found to be building a high-speed railway bridge using a crew of unskilled migrant laborers who substituted crushed stones for cement in the bridge's foundation. In railway circles, the practice of substituting cheap materials for real ones was common enough to rate its own expression:
touliang huanzhu
—“robbing the beams to put in the pillars.”

With so many kickbacks changing hands, it wasn't surprising that parts of the railway went wildly over budget. A station in Guangzhou slated to be built for $316 million ended up costing seven times that. The ministry was so large that bureaucrats would create fictional departments and run up expenses for them. A five-minute promotional video that went largely unseen cost nearly $3 million. The video led investigators to the ministry's deputy propaganda chief, a woman whose home contained $1.5 million in cash and the deeds to nine houses.

Reporters who tried to expose the corruption in the railway world ran into dead ends. Two years before the crash, a journalist named Chen Jieren posted an article about problems in the ministry entitled, “Five Reasons That Liu Zhijun Should Take Blame and Resign,” but the piece was deleted from every major Web portal. Chen was later told that Liu oversaw a slush fund used for buying the loyalty of editors at major media and websites. Other government agencies also had serious financial problems—out of fifty, auditors found problems with forty-nine—but the scale of cash available in the railway world was in a class by itself. Liao Ran, an Asia specialist at Transparency International, told the
International Herald Tribune
that China's high-speed railway was shaping up to be “the biggest single financial scandal not just in China, but perhaps in the world.”

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In February 2011, five months before the train crash, the Party finally moved on Liu Zhijun. According to Wang Mengshu, investigators concluded that Liu was preparing to use his illegal gains to bribe his way onto the Party Central Committee and, eventually, the Politburo. “He told Ding Shumiao, ‘Put together four hundred million for me. I'm going to need to spread some money around,'” Wang told me. Four hundred million yuan is about sixty-four million dollars. Liu managed to assemble nearly thirteen million yuan before he was stopped, Wang said. “The central government was worried that if he really succeeded in giving out four hundred million in bribes he would essentially have bought a government position. That's why he was arrested.”