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Ningbo officials charged after failed investment scheme

TWO officials in Ningbo City have been charged with taking bribes from a securities firm to have it operate the city's housing fund, an illegal scheme that resulted in the loss of more than 200 million yuan (US$29.27 million) in public money.

The dean of Ningbo City Housing Fund Management Center, surnamed Wang and the center's economic chief, surnamed Chen, were also charged with dereliction of duty, according to Zhejiang Province's leading portal Website

According to state rules enacted in 1999, public housing funds, which are to help local residents purchase a home, are only allowed to invest in government bonds or be kept in bank accounts.

Prosecutors told the Website that Wang and Chen had Ningbo-based Tianyi Securities Co Ltd help operate the center's fund in 2001. The fund was worth 206 million yuan at the time and most of the money was invested in bonds.

Tianyi used the bonds to start a bond redemption business. The brokerage promised interest rates from 1.5 percent to 8 percent to the center. This breaks a state rule that states brokerage firms are not allowed to promise interest rates to clients, prosecutors told the Website.

Wang and Chen accepted 270,000 yuan and 90,000 yuan respectively from Tianyi before agreeing to the investment pact, according to the report.

The investment scheme turned sour in 2005 when Tianyi, then Zhejiang's No.1 securities firm, was hit with a financial crisis.

The firm froze the center's account to protect its assets and the bonds were eventually sold in July 2006. In December 2008, Tianyi went bankrupt and the center was unable to retrieve its money.

Ningbo's audit authority had warned the officials in 2004 against the investment, citing its high risk. But Wang and Chen dismissed the warning, prosecutors told the Website.


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