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4 billion Yuan scam involving Hua Guang
Guangdong Province - A huge financial scandal involving over 4 billion yuan was recently uncovered in the Nan Hai District in Guangdong Province, according to a report from Hong Kong’s Sinqpao.
The Hua Guang Company, the largest veneer manufacturer in Asia, is suspected of illegal trading in foreign currencies, forgery, and bribery.
More than one hundred people from Nan Hai government’s financial department have been detained, resulting in a temporary shutdown of the government's daily business. Feng Mingchang, chairman of Hua Guang, is also under investigation.
According to the report, the main culprit in the scheme is Hua Guang Board Material Manufacturer. In 1990, Hua Guang reportedly bought 45,000 acres of forest in New Zealand with deforestation rights for up to 99 years. In 1999, Huan Gunag Board Material started to expand and invested 4 billion yuan to buy a forest in Malaysia with deforestation rights up to 10 years making it the largest plywood-manufacturing base in Asia.
But the forest in Malaysia was not worth 4 billion, and
The scam may have started with a private company, but it now involves local government officers in the finance department who have now been detained on bribery charges.
“The Nan Hai government also holds shares in the company so they are connected,” said financial officer from Nan Hai.
According to the report, the highly publicized overseas investment created quite a stir at the time. Deng Yaohua, Nan Hai top government official, had requested several banks to provide loans to Hua Guang. Within a short period, the loans were secured with the help of local government officials.
The 4 billion yuan scam was uncovered during the merging of the two cities Nan Hia and Fo Shan early this year. During the process of the financial handover, large amounts of bad debts and overdue loans were found in many local banks.
Numerous banks have suffered heavy losses.
Hua Guang has also had its share of financial problems. In March the company began falling behind in payment of employees wages, with over 10,000 workers being owed half a year’s wages totaling 60 million yuan. Employee strife followed, with workers holding a sit down strike in the factories owned by Hua Guang. It was reported that the Nan Hai and Fo Shan government paid part of the employee’s wages to ease the social discontent. Currently, all five factories of Hua Guang have been completely shut down.
Ironically, in February, Feng Mingchang, chairman of Hua Guang, was given the “excellent private entrepreneur” award.
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