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November 27, 2010

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Discount row linked to shamed official

A DISPUTE between two shareholders in the real estate company that developed the Dijingyuan project in Shanghai's Xujiahui area is attracting media attention because of its link to Tao Xiaoxing, a former official in charge of Shanghai's land-use approvals who was arrested for corruption more than a week ago.

A number of government officials or family members are involved in the dispute for buying apartments at prices much lower than the market price, according to, a business media website based in Beijing.

Shanghai No.1 Intermediate People's Court held a preliminary hearing into the shareholders dispute on November 2.

Chinese Indonesian businessman Huang Jinyi, board chairman of Shanghai Rongfu Real Estate Development Co Ltd, is suing Tsai Ching-feng, the company's general manager, accusing him of harming the company's interests by selling apartments at discounted prices.

Huang is also suing eight people, including some government workers, said to have bought apartments at low prices and seeking 21 million yuan (US$3.15 million) from them to make up the price they should pay.

Huang formed Rongfu in 1993. The Dijingyuan project was suspended due to shortage of capital and the Asian financial crisis. In 1999 Tsai bought shares in the company and took over the project.

The construction area of the project was first approved to be 64,124 square meters in 2002 but was expanded to 90,297 square meters in 2004, and the fee Rongfu paid for the land use was cut, bringing the company more than 200 million yuan worth of income. The official who approved the expansion was Tao, then deputy director of the Shanghai Housing, Land and Resources Administrative Bureau.

Tao was arrested on November 17 for taking bribes described as a "massive amount" and abusing his position of power. He was also reported to own 29 high-grade apartments and villas.

The project started to be sold in July 2002. Altogether 22 buyers got discounts from 30 percent to 50 percent and most were government officials, according to Caijing.

It named the eight people being sued by Huang as Yang Yuanping, general manager of Shanghai Jinjiang International Industrial Investment Co Ltd; Zhang Zhijiao, deputy Party secretary of the Bank of Shanghai; Xu Yan, an officer of the Shanghai Finance Bureau, whose husband Fei Binhai was deputy director of Xuhui District in charge of taxation; Lu Tianming, former general manager of Shanghai SVA Real Estate Development Co Ltd who was jailed 15 years for being involved in Shanghai's social welfare fund corruption cases; Zheng Weimin, former employee of the Huangpu District sub-branch of China Construction Bank; Zhu Wenjin, ex-chief of the Land Division of the city housing administrative bureau who was also jailed 15 years due to the social welfare fund scandal; Li Zhengjing, Party secretary of Shanghai Riot Police General Team; and Du Guigen, chief economist of the Shanghai Industrial and Commercial Administrative Bureau.


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