Businessman detained over fraudulent trade deals
Print Edition
A MAN has been detained for allegedly using fake international trade deals between shell companies he established and making 10 million yuan (US$1.5 million), Shanghai police said yesterday.
The man, surnamed Chen, who is from Wenzhou City in Zhejiang Province, allegedly exchanged Chinese yuan for over US$212 million at a local bank in seven transactions between August 21 and 25 last year using fake business contracts and bills of lading from a foreign shipping company.
Police said Chen’s nonferrous metal company in Fengxian District made an “agreement” with a science and technology company he had registered in Hong Kong to sell goods to another company he had registered in the Republic of Seychelles.
The suspect submitted those fake contracts and invoices between the companies with fake shipping bills to the bank and exchanged yuan for US dollars to pay the company in Hong Kong.
He then allegedly exchanged the US dollars offshore for Chinese yuan in a cross-border yuan settlement and profited from the difference in foreign exchange rates.
Police launched an investigation in June when officers found that a nonferrous metal trade company registered in Qingpu District had transferred unusually large amounts of money to the Fengxian company in mid-August last year. It turned out that the Qingpu company was also owned by Chen.
A large number of company registration and bank account documents were found in a raid on his offices in Pudong in June, police said.
Under China’s foreign-exchange control rules, the equivalent of US$50,000 per year is allowed for each person in foreign exchange transactions.
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