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Property firm accused of shady mortgage loans
The Bank of China (BOC) has accused a Beijing-based real estate firm of fraudulently getting around 645 million yuan (US$78 million) mortgage loans, Xinhua reported.
Wang Zhaowen, a bank spokesman, said on Saturday that the firm, Beijing Huayuanda Real Estate Development Company, obtained the money for its "Senhao Apartment Project" between December 2000 and June 2002. It got the money from the BOC's Beijing Branch using falsified housing purchase contracts. The loans were then diverted by the company to unspecified places outside Beijing and the project was suspended, said the spokesman. The bank said it reported the case to local police in September 2002 after it discovered what it called risky loans. The bank has sacked Xu Weilian, deputy chief of the branch's retailing sector, due to his role in offering the loans, said the spokesman. Other employees involved in the scam have also been demoted as punishment. The Guangzhou-based Nanfang Weekend reported that the procuratorate in Beijing has placed the case on file for investigation and prosecution. Zou Qing, chairman of the Huayuanda company, Xu, and two lawyers, Kong Weidong and Zhan Jun, were arrested, the report said. Zou, a Hong Kong businessman, was charged with fraudulently getting a loan, the Nanfang Weekend reported. The Beijing Huayuanda company, according to the report, was invested in by the Hong Kong Huayuanda Group. Insiders said Xu received over 8 million yuan (US$966,000) from the Huayuanda company. But the procuratorate has not decided whether he was taking bribes or participating in swindling, the report said. Kong, from the Beijing Jiahui Law Firm and Zhan, from the Beijing Huayi Law Firm, were accused of providing fake documents to the bank which were used to apply for the mortgage loans.. Kong provided fake documents for 600 million yuan (US$73 million) and Zhan was involved in documents for more than 30 million yuan (US$3.6 million), the report said. The Senhao Apartment Project suspended construction in 2002, leaving an uncompleted building at Beijing's Chaoyangmen area nearby the east Second Ring Road. The Nanfang Weekend reported that the fraud case was unveiled in auditing by the National Audit Office in 2004. Xu was removed from office in 2002 when the BOC realized the huge risks involved in the project. The paper predicted the Huayuanda company may have falsified about 300 purchase contracts and used 300 fake ID cards. The China Banking Regulatory Commission, the country's banking sector watchdog, issued a circular last month urging all banks to do more to prevent and control risks, Xinhua reported. The commission said some banks have encountered frequent and major fraudulent cases which cause huge losses. Leading management and those found to be responsible have to be punished, the circular said. It added that the public should be given access to reports about such cases. |
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