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Probe reveals questionable activities by Tianjin blast warehouse owners

20 August 2015

Exclusive interviews by the Xinhua news agency of the detained owners and executives of Tianjin Rui Hai International Logistics Co. Ltd, whose warehouse exploded on August 12 in Tianjin killing 114, have unveiled a number of dubious practices, including using connections to get safety approvals that should not have been granted.

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Chinese regulations stipulate that dangerous warehouses must be 1,000 metres from major transport hubs and public buildings, but the warehouse was only 560 metres away from the Vanke residential community and 630 meters from a railway station.

Rui Hai co-owner Dong Shexuan said: "The first safety appraisal company said our warehouses were too close to the apartment building. Then we found another company who got us the documents we needed."

Dong is the son of a former police chief for Tianjin Port. He said he held a stake in the company through a schoolfriend because of his father’s position. “If the news of me investing in a business leaked, it could have brought bad influence," Dong told Xinhua.

Yu Xuewei, the other co-owner, also controlled the company at arms’ length through a cousin.
Yu, who had been the deputy manager of the Tianjin Branch of China's state-run Sinochem Group, said: "I met Dong Shexuan during a dinner party in 2012. His father was police chief and he was well connected in the port," he told Xinhua.

Yu said he and Dong capitalised on their connections by establishing the logistics company, which they did on November 28, 2012. These connections are thought to have facilitated their business by helping them obtain various fire safety, land, environmental and safety certifications.

"My guanxi (translated as connections) is in police and fire. When we needed a fire inspection, I went to meet with officials at the Tianjin port fire squad. I gave them the files and soon they gave me the appraisal," said Dong. He did not specify whether there was a bribe or official misconduct.

Meanwhile from October 2014 to June 2015 the company handled hazardous chemicals without a license. "After the first license expired, we applied for an extension. We did not cease operation because we did not think it was a problem. Many other companies have continued working without a license," Yu said.

The Xinhua probe supports the common perception in China that well-connected private companies use personal relationships with people in government to override rules and regulations.

The State Council, China's cabinet, has set up a panel to investigate the accident. The team will "define the nature and gravity of the accident, and determine liability," according to the statement.

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