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Buying by proxy allegation raises ire

0 CommentsPrint E-mail Xinhua, April 23, 2011
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An online post alleging that a major shareholder of a privatized company is actually the dead relative of an official has again raised cries of corruption in China's State-owned enterprise reform.

An online post appeared on several popular Chinese forums and Web portals earlier this month, claiming that Qi Mingzhen, board chairman of Zhongfu Property Co Ltd, used his deceased mother-in-law's name to buy shares of the State-owned enterprise in 2004.

"Qi urged the privatization of the property company at a time when it was making huge profits, and then used the name of his late mother-in-law to essentially take over the company with only 5.4 million yuan ($830,000)," said Tan Hongxia, the post's author and an ex-employee of the company.

Tan posted several photocopies of documents to support her claim that Qi used the name Zhou Mingjin, Qi's deceased mother-in-law, to purchase shares.

Qi reaped nearly 60 million yuan in personal gains after he became a major shareholder and sold large portions of the company, Tan said in the post.

Tan reported the alleged fraud to local authorities in the province in 2005. Authorities later confirmed the claim and slapped a 100,000-yuan fine on the company, a penalty Tan deemed as too lenient.

However, Tan had to cease her expos after she, her father and her brother were arrested on graft charges. Those charges were dropped in 2010.

"Once we were cleared of the charges and received compensation, I posted my report online," Tan said.

Tan's post provoked a heated response from Chinese Internet users, and the local government has launched an investigation into the case.

Qi declined to comment on the case, but Wang Yuanping, an official with China National Welfare Enterprise Corp, Zhongfu's holding company, said Qi's investment was aimed at helping the moribund company, which was losing money before becoming privatized.

All shares registered under Qi's mother-in-law have been sold to another shareholder, said Wang.

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