A Shanghai tycoon who made his fortune from highways is under investigation for allegedly swindling 4.3 billion yuan (US$627.64 million).
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Liu Genshan [File photo] |
Liu Genshan, 51, chairman of a Hong Kong-listed company and 36th on Rupert Hoogewerf's 2004 list of the 100 richest people on China's mainland, once funded seven highways in Shanghai and Zhejiang Province.
Liu, accused of being involved in fraudulent bank loans and money-laundering, was detained for questioning by officials in Shanghai a week ago, the Oriental Morning Post reported yesterday.
The first questions about Liu's activities were raised at the start of 2005 in a report of Hong Kong's Independent Commission Against Corruption that alleged he moved 3 billion yuan in bank loans for highway projects overseas via illegal channels.
He allegedly used part of the money to buy a Hong Kong-listed company and renamed it Maosheng Holdings.
Construction on two of Liu's highway projects, in Shanghai and Zhejiang's Ningbo, was halted due to a lack of funds.
Maosheng reportedly paid no more than 50 million yuan into the Jiading-Liuhe project to set up a joint-venture company with the Shanghai Urban Construction Group. The company's registered capital was 100 million yuan and total investment in the project was 450 million yuan.
The Maosheng Group was also reportedly the biggest shareholder in the Huqingping Highway linking Shanghai's downtown and industrial zones in suburban Qingpu.
The road cost Maosheng 420 million yuan, yet its total investment was officially listed as 3.5 billion yuan. Maosheng accounted for 67 percent of the project, while the state-owned Shanghai Urban Construction took only 25 percent of the shares.
Maosheng then invested nearly 3.62 billion yuan in Liu's third highway in Shanghai and became the sole shareholder of that project.
Liu reportedly set out to fulfill his business strategy step by step: Buy highways and turn them into listed companies. As most of his investment money came from bank loans, he was reported to be in close touch with several state cadres.
Liu was born in Shanghai but is now a permanent resident of Hong Kong.
He set up the Hong Kong Maosheng International Co Ltd in 1988 and returned to Shanghai to establish Shanghai Maosheng in 1991 for real-estate development.
Liu spent HK$1.13 billion (US$145 million) buying a Hong Kong-listed real-estate and hotel-development company in 2003.
He had planned to bring his highway business into Maosheng Holdings but failed under Hong Kong's regulations.
(Shanghai Daily July 9, 2008)