In Nature’s Name

Government officials have been caught profiting from composing fabricated environmental assessment reports, a practice that the Ministry of Environmental Protection has finally vowed to curb. ChinaReport speaks to whistleblowers who claim that the problem goes far deeper than the government has so far admitted

In late April, according to a statement from the Ministry of Environmental Protection (MEP), China Green Enterprise Ltd., an affiliate company founded in 1996 and engaged in the environmental impact assessment (EIA) industry, abruptly withdrew from the market. State media claimed that this was the start of MEP regulation of this controversial sector and a move to limit corruption among environmental officials.

The MEP’s censure of China Green was a response to allegations of serious violations and corruption at the company which were highlighted by the Central Commission for Discipline Inspection (CCDI), China’s top anti-corruption agency, during an inspection in late 2014.

Inspectors reportedly identified widespread professional negligence within the country’s environmental protection apparatus, pointing out that government-backed institutions dominate the EIA market, making it easy for them to trade favours between multiple related government departments.

Shortcut

Ever since Wang Zhiwei (pseudonym) obtained his EIA Engineer qualification certificate in 2014, he has received frequent phone calls from professional headhunters, asking if he wanted to “attach” himself to various EIA companies. In industry parlance, to guakao, or to “attach” oneself to a particular institute as its designated engineer, is a common phenomenon.

According to regulations, qualified EIA institutes must be staffed by full-time engineers, but in reality, these rules are largely ignored. Most institutes simply obtain the nominal services of qualified engineers, some of whom may never set foot on the premises, in exchange for a set sum of money.

Ji Chengjun (pseudonym), an EIA engineer from Guangdong Province, told ChinaReport that employers typically need to pay an annual retainer of 50,000 yuan (US$8,060) to secure the services of an EIA engineer. The engineer receives payment for no tangible work, while the patron institution can save itself an additional 50,000 yuan per year by not employing a full-time EIA engineer.

Enterprises in China are required to have new projects assessed by a qualified EIA institute before seeking approval from their local environmental department. To facilitate this process, EIA institutes routinely seek out well-connected EIA engineers – ideally someone with an existing relationship with local environmental officials or even someone already employed by them – who can secure approval more quickly.

On March 3, the MEP announced that disciplinary measures would be enacted against 63 EIA institutes and 22 individual engineers. Four institutes were deprived of their qualifications due to having only ever employed a single EIA engineer. According to current regulations, for an EIA report to be considered valid, the responsible institute must have enlisted the participation of a minimum of five qualified engineers.

However, on searching the national database of registered EIA institutes, ChinaReport identified 14 of a total of 1,159 EIA institutes that only retained one EIA engineer, while 16 did not employ a single one.

Further investigation into these “abnormal” organisations revealed a hidden, intricate relationship between China’s EIA market and the government’s environmental protection apparatus.

For example, 11 Chinese EIA institutes currently employ EIA engineers who are concurrently employed by local environmental protection departments. In the case of the 16 EIA institutes lacking any in-house EIA engineers, their legal representatives generally have similar links to local environmental protection departments. For example, Li Li, an EIA engineer with the Deyang Environmental Protection Science Institute in Sichuan Province, is also serving as deputy director of the Deyang Environmental Monitoring Station.

By all accounts, the MEP itself has long been aware of these potential conflicts of interest. In 2014 alone, it de-listed 62 EIA engineers, 55 of whom were moonlighting while also employed as environmental protection officials.

Institutional

Li Yuan (pseudonym), a full-time EIA engineer based in Zhejiang Province, revealed to ChinaReport that there are other, even less visible ways for government agencies and EIA institutes to profit from their roles. According to him, EIA companies with no formal qualifications can conduct environmental assessments by “borrowing” the qualifications of other institutes – for a price.

Insiders call this “institute attachment,” and the market for this form of fraud has boomed in recent years. Obtaining the signature and seal of a qualified EIA institute on a single report requires a company to pay a fee of 1,000 yuan (US$161). Unqualified institutes can issue these signatures and stamps in the name of their qualified equivalents. Long-term cooperation between qualified and unqualified institutes can require the latter to pay hundreds of thousands of yuan in fees to the former.

Ningxia Ruibo Environment Consultative (NREC) Co. Ltd., one example of an unqualified company, has illegally issued EIA reports for a total of 23 projects in the names of three different institutions. So far, the MEP’s only official response has been to issue a single demand that the company cease its illegal activities.

According to Ji Chengjun, unqualified EIA companies often market themselves as agencies for qualified EIA institutes, conducting business in remote locations on their behalf. “This makes fraud hard to unearth,” Ji said.

Ji is personally aware of a qualified EIA institute based in Heilongjiang Province, in China’s distant northeast, which expanded its business into the southern coastal province of Guangdong by seeking cooperation with local “partners” willing to act as its unlawful agents.

As a whistleblower, Ji has freely disclosed information about this and other similar situations to the MEP, but has received no direct response. “EIA is the starting point for environmental protection, but how on earth can its supervisory government bodies monitor [the sector] effectively?” Ji added.

Process

For any enterprise, the main purpose of securing partnership with an EIA institute is to ultimately gain approval for a project from China’s environmental authorities. Since fees are paid to EIA institutes only upon approval of the relevant project, these institutes’ profits depend on the sheer number of approvals they issue, not the quality of their reports.

Li Yuan told ChinaReport that it is common practice for EIA institutes to “help” enterprises in this regard by finding and exploiting loopholes within the current system. Li himself was formerly placed in charge of writing an EIA report for a project producing mobile phone casings, a process involving multiple chemicals that could potentially lead to water contamination. Li described how the scale of the project meant that it would be incompatible with local environmental regulations. To get around this, Li’s patron institute simply fabricated a completely fictitious, eco-friendly manufacturing process for the purposes of its report.

Another tactic is to simply rename a project in order to bypass local restrictions targeting certain industries. According to Ji Chengjun, some local environment bureaus are complicit in the fabrication of environmental assessment reports.

According to Outlook Weekly, in one major corruption case that came to light in 2007, the Hangzhou Research Institute of Environmental Protection under the Hangzhou Environmental Protection Bureau offered a 30 percent kickback to officials responsible for approving EIA reports in 13 district-level environmental protection departments. The institute allegedly paid 7.4 million yuan (US$1.2m) in “commissions” in 2005 alone.

Li Yuan acknowledged that despite regulations requiring EIA engineers to conduct field research, such diligence is rare. The bulk of data used in reports comes directly from the enterprises themselves, and EIA engineers rarely bother to authenticate it. “Sometimes, a single EIA report can be wrapped up within half a day,” said Li.

During ChinaReport’s investigation, a number of EIA engineers interviewed admitted that the main area in which environmental assessment reports fall victim to fabrication and fudging is public inquiry. While public participation and investigation are a required element of any environmental impact assessment according to official regulations, typically all materials originate with enterprises, with local communities kept in the dark.

According to Peng Yingdeng, a senior EIA engineer with the Beijing Municipal Research Institute of Environmental Protection under the Beijing Municipal Environmental Protection Bureau, a fundamental reason behind corruption in the EIA industry is an almost total lack of public participation and transparency across the board.

Although the MEP issued guidelines for the publication of EIA reports in 2013 which required all companies and related environmental protection authorities to publish the full text of both reports and approvals, in practice, many reports were either heavily edited before publication or simply remained inaccessible to the public.

“No matter whether agencies are government-backed or not, the current EIA [process] has shifted [its focus] onto helping companies get their EIA report approved by the government,” Xie Xinyuan, a research fellow from the Beijing-based NGO Green Beagle, told the Global Times in late March.

“EIA should be conducted by a third party comprised of EIA engineers, residents’ representatives and NGOs to ensure authenticity, and the relevant departments should organise public hearings once the report has been approved,” Xie added.

Tough

For some enterprises, however, bending or breaking nationally set rules is a necessary evil. Operators in key industries, textiles in particular, have acknowledged that technological limitations effectively mean their businesses can never comply with national waste management standards. ChinaReport recently travelled to Shengze, Jiangsu Province, a place famous for its prosperous textile industry. The town boasts a total of over 10,000 companies and some 2,500 textile factories, with over 60 percent of local residents employed in the industry. Xi Danli, lecturer at Donghua University’s Environmental Science and Engineering Institute in Shanghai, explained in a recent interview with ChinaReport that most of China’s 40,000 printing and dyeing enterprises are smallscale businesses with around 200 employees. They lack the resources to invest in adequate waste water treatment procedures.

The chairman of a Shengze textile company, speaking on condition of anonymity, told ChinaReport that installing a complete waste water recycling system would cost his company more than 10 million yuan (US$1.6m), not accounting for ongoing follow-up assessments. “Because of technical limitations and the high costs of operating a recycling system, our production cannot meet tightened national [waste water] discharge standards,” he said, adding that “we had to fabricate our EIA report.”

Indeed, in some cases, strict environmental standards have simply exacerbated pollution. For example, central government regulations prohibit the construction of hazardous waste treatment plants within 800 metres of rivers, and within 500 metres of residential areas. One district-level environmental bureau chief in Shanghai interviewed by ChinaReport disclosed that limited land resources in his district means it is impossible to treat hazardous waste locally. Rather than relocate, however, enterprises simply dump their waste illegally or transport it to be dumped in other provinces.

He also added that his local environmental bureau, despite being designated as the MEP’s sole local enforcement agency, faces too many obstacles in practice. He claimed that increasingly tightening standards and regulations in recent years have simply piled pressure on an already overburdened system, with environmental impact assessments becoming merely another bureaucratic formality rather than the first line of defence against unscrupulous enterprises.

According to a report issued by the official Xinhua News Agency, a total of 159 agencies and 169 engineers in China have been disciplined over the past two years for violations that threatened environmental safety. Speaking in February, Chen Jining, China’s new Minister of Environmental Protection, stressed the need to curb corruption in the field of EIA. In an announcement released on March 23, the MEP demanded that all government-backed EIA institutes either “disassociate themselves” from local environmental protection authorities or pull out of the EIA market entirely by the end of 2016. Engineers employed by such institutes, the statement read, would have to resign if they wished to retain their EIA status.

The MEP itself has vowed to disassociate itself from all eight of its affiliated EIA institutes before the end of 2015. China Green Enterprise Ltd. was the ministry’s first target.

However, some environmentalists have expressed doubt as to whether simply forcing government-backed EIA agencies to disassociate themselves from the State will have any positive impact on what, by all accounts, appears to be a bureaucratic chain that is riddled with corruption, idiosyncrasies and special interests.