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August 13, 2013

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Firm linked with scandal bagged 3 court projects

The Shanghai No. 4 Construction (Group) Co Ltd, whose senior official was sacked over the prostitution scandal involving four court officials, had won the contracts for three major construction projects for local courts, it was revealed yesterday.

The projects included the construction of the Shanghai Higher People’s Court, the complex building of the Shanghai Maritime Court and the trial court building of the Shanghai No. 1 Intermediate People’s  Court. The contracts were awarded in 2005, 2006 and 2004, respectively, according to company’s website.

No illegal activity relating to the contracts have been found.

Guo Xianghua, the deputy general manager of the company’s administrative department, was said to have organized the dinner for the three judges and a court official of the Shanghai Higher People’s Court, and arranging for prostitutes for them at the Hengshan Resort hotel in Pudong on June 9.

The case came to light after a whistleblower uploaded footages from the hotel online.

The three judges and the discipline official were sacked from their jobs and expelled from the Communist Party of China.

Guo was also sacked by his company and expelled from the Party.

According to The Beijing News, Guo had organized the get-together, giving rise to speculation that he may have billed the company after treating the officials.

Not submitted receipts

But Shanghai Construction Group, the parent company of Shanghai No.4 Construction (Group), yesterday denied Guo had submitted receipts after the dinner. SCG said it had no financial record showing Guo had submitted any restaurant or hotel receipts and neither was the company planning to reimburse them.

You Weiping, an SCG official, told the 21st Century Business Herald that Guo’s decision to invite the judges out for dinner was his personal choice and had nothing to do with the company.

Guo was also given a 10-day administrative detention after the scandal broke out.

Though Guo was not involved in any criminal investigation, there are speculations that Guo maintained ties with the court officials which benefitted the company.

The Beijing News said SCG spent a whopping 178 million yuan (US$29 million) as business entertainment expenses in 2012, the fourth-highest among all A-Share companies.

The figure accounted for 11.12 percent of SCG’s net profit, the highest among all A-Share companies, according to the report.

SCG said the reasons for the high number of business-related entertainment expenses was that the company was growing fast, which meant they needed to deal with many newer clients.



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