The acting chairman, Gong Jianyong, has inherited more than just a title—he has taken on a pile of unresolved problems. Another senior executive from Anhui Construction Engineering Group has been placed under investigation.
On September 27, Anhui Construction Engineering Group announced that it had received a written resignation report from Yang Shanbin, who resigned from all positions including chairman for personal reasons and would no longer hold any role at the company. The so-called “personal reasons” were in fact an investigation. On the evening of September 18, Anhui Construction Engineering Group disclosed that Yang Shanbin, the company’s party secretary and chairman, was suspected of serious disciplinary and legal violations and was under disciplinary review and supervisory investigation by relevant commissions for discipline inspection and supervision. That same evening, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission took the lead in publishing the notice, confirming the announcement. From being investigated to resigning, the leadership transition at Anhui Construction Engineering Group moved quickly. According to the announcement, Yang Shanbin’s departure date was September 23, while his original term was set to run until September 20, 2027, making this an abrupt mid-term exit. On September 24, the company quickly convened a board meeting and elected Gong Jianyong as vice chairman to perform the duties of chairman. On September 28, Gong Jianyong, in his capacity as deputy party secretary, director and general manager of the group, and head of the inspection rectification leadership group of Construction Engineering Holdings, attended the group’s mobilization and deployment meeting on rectifying the feedback from the “look back” inspection, and stated that the company would “tighten and consolidate responsibilities, vigorously implement all rectification tasks, and resolutely put an end to any notion that new officials should not deal with old accounts.” However, the chairman position remains in an acting state, the official candidate has not yet been finalized, and the case is still under investigation, so short-term strategic continuity and market confidence remain to be seen.
Yang Shanbin was not the only senior executive from the company to be investigated recently. On August 11, former deputy general manager He Hongchun was placed under detention and resigned. The fall of senior executives is only one side of Anhui Construction Engineering Group’s difficulties. Cash outflow, persistently high accounts receivable, and a rising debt-to-asset ratio each constitute substantial pressure. Regarding internal control development after the executive investigations and the company’s operating situation, reporters called the office of the board secretary of Anhui Construction Engineering Group but had not received a reply as of the time of publication.
Two Senior Executives Investigated Within 40 Days
Yang Shanbin’s investigation appeared quite sudden. Just on September 14, four days before the investigation, he still received an academician of the Chinese Academy of Engineering and an expert team from Wuhan University in his capacity as party secretary and chairman of Anhui Construction Engineering Group, coordinating industry-university-research cooperation and the commercialization of technological achievements, with external business activities proceeding as usual. Public records show that Yang Shanbin, born in 1969, holds a university degree and a master’s degree in business administration. His career path was a typical route of “technical work—entry into politics—leadership of a state-owned enterprise.” In his early years, he served as a technician in the water conservancy design office of the Ma’anshan Agricultural Economic Commission, then moved to the Ma’anshan Construction Supervision Company, starting as an engineer and later serving as deputy manager and manager, becoming familiar with the full process of infrastructure project management. He then entered politics, holding important positions including vice mayor of Ma’anshan Municipal Government, member of the Standing Committee of the Municipal Party Committee, and secretary of the Political and Legal Affairs Commission, gaining years of experience in local governance, urban construction, and investment promotion. At the end of 2022, Yang Shanbin was transferred to Anhui Construction Engineering Group Holdings Co., Ltd. and Anhui Construction Engineering Group Corporation Limited as party secretary and chairman, simultaneously leading the group’s holding platform and listed entity, with core powers over major project investment, external cooperation, business decisions, and personnel appointments. So far, the Anhui Provincial Commission for Discipline Inspection and Supervision has only announced that he is suspected of serious disciplinary and legal violations, without disclosing specific facts or amounts involved. Based on his career experience and the characteristics of the infrastructure state-owned enterprise sector, industry analysts believe the high-risk areas are concentrated in three aspects: first, power rent-seeking in major project bidding and engineering cooperation during his tenure at the state-owned enterprise; second, residual issues related to urban construction, park development, and investment promotion during his earlier period in local government; and third, typical problems in the state-owned enterprise sector such as “living off the enterprise” and improper transfer of benefits. When Yang Shanbin was investigated, less than 40 days had passed since deputy general manager He Hongchun was placed under detention. On August 11, Anhui Construction Engineering Group announced that it had received notice from the relevant supervisory commission that deputy general manager He Hongchun was placed under detention. Subsequently, the company’s board received He Hongchun’s written resignation report, and he no longer held any position at the company. One top leader responsible for overall coordination and one core deputy general manager in charge of engineering were investigated in quick succession, exposing deep loopholes in corporate governance. An industry figure who has long tracked infrastructure state-owned enterprises said that the construction and infrastructure industry has long chains and scattered projects, and areas such as bidding, project subcontracting, and material procurement involve enormous amounts of money, making them prone to integrity risks. He Hongchun grew from the project front line and long oversaw engineering business; Yang Shanbin had local government experience and, after becoming the top leader of the enterprise, controlled top-level decision-making over major projects and external cooperation. “The successive investigations of the two reflect the shortcomings of concentrated power and insufficient internal checks and balances for the top leader and the senior executive in charge of engineering at a provincial construction state-owned enterprise,” the industry insider said. At present, there is no information proving that the two cases are connected, but two senior executives being involved in cases in a short period indicates a lack of routine oversight at key positions, requiring case-driven reform and closing internal control gaps.
Book Profits, But Cash Bleeding
Deeper pressure is also reflected on the books: apparent profitability, but continuous cash outflow. As the largest construction state-owned enterprise in Anhui Province, Anhui Construction Engineering Group has a massive asset scale. By the end of the first half of the year, the company’s total assets reached 228.9 billion yuan, total liabilities reached 194.8 billion yuan, and the debt-to-asset ratio was 85.08%, a high level in the construction industry. Operationally, the company faces multiple pressures of “shrinking orders and cash outflow.” In the first half of the year, the company achieved operating revenue of 30.688 billion yuan, a slight year-on-year increase of 1.67%; net profit attributable to shareholders was 564 million yuan, up 2.08% year on year. But core operating indicators showed clear weakness: newly signed contracts in the first half totaled 48.548 billion yuan, down 13.72% year on year, and the reserve of new orders shrank significantly, indicating insufficient revenue growth momentum over the next one to two years and pressure on market expansion. The pressure from occupied funds is especially prominent. By the end of the first half, the book balance of accounts receivable was 50.42 billion yuan, bad debt provisions were 4.49 billion yuan, and net accounts receivable were 45.93 billion yuan, far exceeding the company’s first-half operating revenue of 30.688 billion yuan. A large amount of engineering payments has been tied up externally for a long time, continuously squeezing the company’s working capital and keeping capital turnover efficiency low. In terms of debtors, Anhui Construction Engineering Group’s accounts receivable mainly come from local urban investment platforms, local government project owners, and park construction platforms, with a small amount from market-oriented enterprises. Such infrastructure projects generally feature long settlement chains, cumbersome audit procedures, and delayed fiscal disbursements, resulting in generally long payment cycles. Some payments are within the normal settlement cycle, while many others have been delayed, forming long-term outstanding accounts. Anhui Construction Engineering Group has repeatedly sought to recover engineering payments through legal litigation, with defendants including Bengbu Urban Investment Holding Co., Ltd., Shaanxi Xixian New Area Qinhan New City Development and Construction Group, and other local urban investment platforms, as well as troubled real estate developers such as Evergrande Group. Cash flow pressure is even more severe. At the end of the first half, the company’s net cash flow from operating activities was -4.509 billion yuan, which the company explained was “mainly due to a decrease in net inflows from construction projects”; at the same time, due to increased expenditures on expressway investment projects, the net cash flow from investing activities fell 68.63%, dragging on the company’s funding position from both directions. Regarding its full-year operating improvement plan, Anhui Construction Engineering Group stated in an investor relations activity record disclosed on September 29 that in the second half of the year it would continue to strengthen cash flow management, enhance communication and coordination with project owners, intensify the use of litigation and other legal means, and recover engineering payments in accordance with laws and regulations through multiple measures. At the same time, it will accelerate the transfer and recovery of PPP project equity, speed up capital recovery efficiency, and strive for a relatively better performance in operating cash flow by the end of the year. The acting chairman, Gong Jianyong, has inherited not only a position, but a pile of unresolved problems. Whether inspection rectification can truly be implemented in internal controls and whether year-end cash flow can be “relatively better” as the company hopes will test the strength of this construction leader.