A real estate development company has been fined 1.82 million yuan (US$234,000) for illegal fundraising that incited an angry crowd of homebuyers to smash public property last weekend in southwest China's Chongqing Municipality.

Chongqing Environment Protection Construction Development Corporation Ltd., the developer of a planned downtown property project known as "Shangpin 16," was also told to refund more than 18 million yuan (US$2.3 million) it had raised from 2,700 homebuyers, said an official with the local bureau of land resources and housing management.

In June, two months before the company was given the government's go-ahead for the planned project, it collected a 6,666 yuan (US$855) down payment from each of the potential buyers, promising them a preemptive right to choose apartments at a discounted price.

Problems emerged because the planned project had only 1,158 apartments for sale.

The 2,700 homebuyers gathered at a stadium near the development project on Aug. 5 for a proposed lucky draw to decide who must give up the purchase plan.

However, the event was poorly organized and the unlucky customers questioned its fairness. An angry crowd of several hundred people smashed public property at the stadium and later broke into the sales office to destroy more equipment.

The local bureau of land resources and housing management immediately started an investigation, and demanded all illegally raised funds be repaid.

The event has triggered an overhaul of Chongqing's real estate market, and the bureau has ordered several additional developers to repay illegally raised funds before Aug. 15 under penalty of fines.
 
(Xinhua News Agency August 10, 2007)