May 28, 2008
Dirty dealings in Shanghai real estate
Here's an interesting article from the English-language on-line edition of Caijing on corruption and cronyism in Shanghai real estate deals (surprise, surprise). Here are the first few paragraphs:
A massive villa project advertised in glowing terms as a “super large-scale community” -- an appeal designed to attract investors and house-hunters alike -- is still under construction in Shanghai's Jia Ding District, nearly two years after its confident developer launched an initial public offering to kick-start financing.
Today, the unfinished project stands as a sprawling testimony to the cronyism and greed that spread through city hall and the real estate sector in recent years, infecting business leaders as well as top officials including, authorities say, Yin Guoyuan.
On April 4, a Shanghai intermediate court indicted Yin, a former deputy director of the city's Real Estate Department, on charges of abuse of power, illegal possession of ammunition, accepting 36.7 million yuan in bribes, and holding US$47,900 in cash as well as more than 8 million yuan in property that could not be legally accounted for.
Yin had been under investigation for an unrelated social security issue in April 2007 when authorities tied him to players in the now 2-year-old Shanghai pension scandal, which involved the illegal diversion of city pension funds for real estate deals and led to convictions for several ex-officials including former party boss and mayor Chen Liangyu and wealthy tycoon Zhou Zhengyi.
Officials connected Yin's activity to the ex-mayor's brother Chen Liangjun and city land officials including Zhu Wenjin, who worked as director of planning and management in Yin's department.
The case dates to December 2002, when Yin was in charge of a restoration in Shanghai's old city. Authorities said he violated regulations on behalf of Chen and Zhou by ruling that a land plot in Gao Jing City, Bao Shan District, met conditions for restoration, when in fact it failed to meet the criteria, costing the state about 46 million yuan in land transfer fees.
After reselling the plot, Chen pocketed a cool 118 million yuan profit. Now he's now being investigated -- and may become the next member of the real estate web to face trial. Zhu Wenjin, convicted of accepting bribes, is already serving a 15-year jail term following a conviction last year.
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We're about to launch a Chinese blog for investors interested in U.S. real estate.
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Posted by: John Harper | Aug 3, 2008 2:52:37 PM
Today, it is the same thing in the real estate world in China. It is all about connection and cronies. Real estate industry is one of the most corrupt sectors in Chinese economy. But so what? We don't see any hope in clearing the filth there. No one wants to do this.
Posted by: Jason | Oct 27, 2012 7:14:38 AM