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State media says China firm used connections for hazmat permit

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    Residents demanding compensation for damages to their homes after an explosion at the Tianjin port protest outside a hotel where media press conferences are held in northeastern China's Tianjin municipality Wednesday

TIANJIN, China >> The son of a former police chief is one of two silent owners of the warehouse for hazardous materials in Tianjin where explosions killed at least 114 people, and used his connections to help obtain licenses despite safety violations, Chinese state media reported Wednesday.

The other owner is a former executive at a state-owned chemical company who also used his connections to smooth the way for approval for the facility, the official Xinhua News Agency said in a lengthy report on the warehouse company Ruihai International Logistics.

The report supports the common perception that well-connected private Chinese companies use personal relationships with people in the government to override rules, a practice that can lead to disastrous consequences.

It also shed light on the murky ownership structure at Ruihai, which had been the focus of rampant rumors of potential high-level connections and cover-up since the Aug. 12 blasts, which also left 64 people missing and 674 hospitalized.

The two men, identified as former SinoChem executive Yu Xuewei and the late Tianjin port police chief’s son, Dong Shexuan, are among 10 Ruihai company officials who have been detained in the investigation into the blast. Tianjin authorities confirmed the men’s identities at a news conference Wednesday.

Both Yu and Dong chose to be shadow owners. Yu asked his wife’s cousin to hold his 55 percent share in Ruihai on his behalf, and Dong had a high school classmate hold his 45 percent share.

It was not immediately clear why Yu wanted to camouflage his involvement, but Dong told Xinhua he wanted to avoid any appearance of conflicts of interest, especially because his father was then under investigation for possible corruption.

"The public perception may not be good, given my father’s position with the police," Dong told Xinhua.

The state news agency was able to interview both men in detention.

Yu said he enlisted Dong into the company in late 2012 because of his family background. Dong proved himself, as he was easily able to obtain a fire certificate for the hazmat business. "I brought all the materials for the renovation plans, and the fire certificate was soon issued," Dong was quoted as saying.

The fire certificate apparently nudged local planning officials to issue Ruihai the building permit for hazmat storage, even though its location would be less than the required 1,000 meters (yards) away from homes and public roads, a clear violation of state safety rules.

"As for the safety distance, we took into account the fire certificate as issued by the fire division," Zhu Liming, a planning official, told Xinhua.

Dong said Ruihai also had to clear another seemingly impossible obstacle. A safety evaluation firm had told Ruihai that a satisfactory report was out of question because of the noncompliance with safety distance.

"Yu Xuewei asked me not to worry but leave the matter to him. So he changed the safety evaluation firm and got the report," Dong told Xinhua.

The evaluating company that endorsed Ruihai is approved by the State Administration of Work Safety, Tianjin officials said.

Another report on the project’s environmental impact has not been made public, although it should have been, local authorities said.

On Wednesday, Tianjin Mayor Huang Xingguo said the disaster affected more than 170 companies and 30,000 people.

"As the chief of Tianjin’s party commission and municipal government, I cannot shirk responsibility," Huang said.

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