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February 19, 2011

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Shanghai official removed from post

A TOP official of Jiangqiao Town in Shanghai has been removed from office after an investment company owned by the town was found to have embezzled 2 billion yuan (US$304 million) in loans.

Fu Yifeng, the Party chief of the town, was "deposed without further punishment," people close to the issue said. It remains unclear whether Fu was involved in the embezzlement.

Local officials said other town-level officials were also under investigation over possible corruption.

The embezzlement was first exposed in 2009 when the national audit authority began investigating the under-construction Shanghai-Beijing High-Speed Railway project.

Jiangqiao Town, which the railway cuts through, received loans from two banks in the name of the railway project. The money was to be used for demolition work and relocation.

However, part of the money was later transferred to Jiangqiao Urban Construction Investment Co, the town's financing platform, and used for real estate development, the 21st Century Business Herald reported earlier.

More than 234 million yuan was used for developing Jiangqiao Wanda Plaza, the town's landmark business hub, and about 100 million yuan was lent to Dalian Wanda Group Co for bidding for land usage rights, said the report.

Another some 252 million yuan was spent on demolition, relocation and infrastructure projects which were not related to the railway project.
The audit authority said this violated loan and land management regulations.

The investment company said "it was under heavy pressure of financing then." But it insisted it did not embezzle the money which was designated for the railway project.

"We just loaned more money in the name of the railway," said the company.

The amount of money the investment company needed to find increased from 800 million yuan in 2006 to 2 billion in 2009 due to mounting construction projects in the town, according to the 21st Century Business Herald.

A town government report in early 2010 acknowledged "such difficulties," saying the town needed more money mainly for demolitions and relocation in recent years.

In 2009 the town demolished a total of 672 households related to railway construction, said the report.


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