Shanghai party chief dismissed for graft

SHANGHAI, Sep 25 (Reuters) The Communist Party secretary of Shanghai has been dismissed for corruption, state media announced today, the highest official to be felled by a graft probe since Hu Jintao became national party boss in 2002.

Chen Liangyu was involved in the misuse of Shanghai's social security funds, Xinhua news agency reported, citing a Communist Party Politburo decision yesterday.

His picture, job description and introduction were promptly erased from the city government Web site, www.shanghai.gov.cn.

Chen's fall, coming after months of speculation about hispolitical future, was viewed as another sign of Hu's tightening grip on power, as he uses corruption investigations and personnel changes to impose discipline.

Chen was also dismissed from the Politburo, the party's 24-member leadership council, the announcement said.

''Comrade Chen Liangyu has been involved in the misuse of social security funds by the Shanghai Bureau of Labour and Social security,'' it said, accusing him of illegally enriching companies and relatives, and protecting staff involved in ''grave law-breaking''.

The agency said Chen had ''created malign political effects''.

A Beijing political source told Reuters that two weeks ago investigators notified Chen, his driver and a domestic helper that they were to be questioned.

In June, Liu Zhihua, a Beijing vice-mayor who oversaw construction for the 2008 Olympics, was dismissed after being accused of corruption and dissolute behaviour.

A source told Reuters ahead of Chen's dismissal that the fact that the central leadership was investigating both Shanghai and Beijing indicated how powerful Hu had become.

''He is able to fight a campaign on two fronts,'' the source said on condition of anonymity.

More than 100 central government investigators were dispatched to Shanghai in August to investigate whether money had been siphoned out of the city's 10 billion yuan social security fund through illicit loans or investments.

The Shanghai corruption probe had already implicated two senior city government officials and at least three prominent executives in real estate, private investment and a utility firm.

The moves come as Hu prepares for the 17th Party Congress, due late next year, at which he is widely expected to reshape the central leadership and install potential successors in key positions.

Till now, Shanghai has been considered a fiefdom of officials loyal to Hu's predecessor, Jiang Zemin.

Chen would be temporarily replaced as city party boss by Shanghai Mayor Han Zheng, Xinhua said.

''Whoever it is, no matter how high their position, anyone who violates party rules or national law will be severely investigated and punished,'' the agency said, citing the central leadership's decision.

REUTERS SP DS1155