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To: TobagoJack who wrote (34679)	6/3/2003 7:18:00 AM
From: Pogeu Mahone	Respond to of 74559

June 3, 2003 China and Hong Kong Investigate a Well-Connected Real Estate Tycoon By JOSEPH KAHN HANGHAI, June 2 — Chinese and Hong Kong authorities have begun a broad investigation of the real estate and livestock empire of Zhou Zhengyi, a Chinese businessman whose high-level political and financial ties helped him become Shanghai's wealthiest deal maker. Mr. Zhou, 42, was detained in Shanghai and his wife and business partner, Mao Yuping, was arrested in Hong Kong on suspicion of obtaining loans from mainland Chinese banks through fraudulent means, including a $200 million loan from the Bank of China, Chinese government media and Hong Kong officials said. Hong Kong's Independent Commission Against Corruption announced tonight that 20 people had been arrested in Hong Kong in connection with the case. It did not identify them, but specified that the list included the chairwoman of a company whose stock is traded in Hong Kong, which most likely referred to Ms. Mao. She is the chairwoman of Shanghai Merchant Holdings, one of Mr. Zhou's two Hong Kong-listed companies. "The I.C.A.C. commenced an investigation after receiving a corruption complaint alleging that some employees of the listed company might have offered advantages to bank staff for obtaining huge sums of loans and conniving at fraudulent business transactions," the anticorruption panel said in a statement. Hong Kong officials said their investigation was not directly related to the mainland Chinese investigation of the same people and companies, but they appear to stem from the same allegations. The case is the first major corruption inquiry that has come to light in mainland China since President Hu Jintao and Prime Minister Wen Jiabao succeeded Jiang Zemin and Zhu Rongji, both former Shanghai leaders, in March. The investigation may cast a shadow on Huang Ju, a senior leader who oversaw Shanghai's development as the city's mayor and Communist Party chief in the 1990's. It was during that time that Mr. Zhou emerged from obscurity to become one of the city's largest real estate developers, in partnership with the city government in some projects. Mr. Huang, considered an acolyte of Mr. Jiang, was recently appointed a vice premier and given a seat on the Standing Committee of the party's governing Politburo. He is unlikely to benefit politically from an investigation of illegal loans by government banks during his tenure as Shanghai's top boss. Mr. Zhou had close ties to Liu Jinbao, who ran Bank of China's Shanghai branch before becoming head of the bank's Hong Kong operation, according to reports in the official press. Mr. Liu, a prominent figure in Hong Kong banking circles, was abruptly recalled to Beijing last month in what Bank of China officials described as a routine transfer. Official Chinese media reported that Bank of China had extended loans to Mr. Zhou valued at about $200 million, which he used last year to acquire a controlling stake in a Hong Kong-listed company, Shanghai Land Holdings. While the reports did not detail the allegations about Mr. Zhou, The China Business Post said the authorities had found that he did not have enough collateral for a loan of that size. Public documents show that Mr. Zhou used his 75 percent equity stake in Shanghai Land and his 44 percent stake in another Hong Kong-listed company, Shanghai Merchant Holdings, as collateral for his loans. The China Business Post said that he still owed Bank of China as much as 800 million yuan, about $97 million, and that the loan matures next month, raising the possibility that Mr. Zhou was facing a cash crunch. Shanghai Land and Shanghai Merchant were suspended from trading today pending clarification of reports about the investigation. Officials of Shanghai Land and Shanghai Merchant declined to comment. Mr. Zhou, who is known in Hong Kong by the Cantonese name Chau Ching Ngai, could not be reached. Mr. Zhou's problems may also involve his protracted efforts to develop a prime property along Beijing Road in Shanghai's central business district, and a lawsuit over the relocation of more than 2,000 residents who live on the sprawling parcel. Copyright 2003 The New York Times Company \| Home \| Privacy Policy \| Search \| Corrections \| Help \| Back to Top