Shanghai Public Security Bureau officially arrested Zhou
Zhengyi, chairman of Shanghai Nongkai Development Group, yesterday
on two charges.
The first charge accused Zhou of falsely reporting the
registered capital of his company when applying for registration to
authorities. False reporting is usually performed by using fake
certificates and documents, or through other fraudulent methods to
acquire the company registration.
The second charge claims Zhou manipulated the stock trading
price.
Local authorities, however, did not mention specifically which
company Zhou falsely registered or which stock Zhou
manipulated.
Since Zhou was arrested in Shanghai, he will be tried in the
city where he built up his fortune in the 1990s.
Last year, Forbes magazine named Zhou the Chinese
mainland's 11th richest person with a fortune estimated at US$320
million.
According to Chinese Criminal Law, Zhou, if convicted, may face
a maximum term of three years behind bars for false company
registration, and/or a penalty fine, usually between 1 to 5 percent
of the bloated registered capital in the false registration. For
the stock trading price manipulation, the maximum term could reach
five years, and/or a penalty fine equal to, or up to five times the
illegal earnings.
Zhou, 42, known in Hong Kong as Chau Ching-ngai, was detained in
May in Shanghai over the funding of his business, mainly focused on
properties.
Zhou's arrest came the same day a Bank of China special
committee said in Hong Kong that former executive Liu Jinbao
exercised bad judgment in approving a US$226.9 million loan to
Zhou.
Liu, former chief executive and vice chairman of Bank of China
(Hong Kong) Ltd, was transferred back to Beijing in May. The probe
committee also recommended the bank accept the resignation of
another executive, Or Man-ah, involved in the granting of the loan,
The Associated Press reported.
The special committee was formed to examine the lending
practices of Bank of China (Hong Kong) after questions surfaced
about a 1.77 billion Hong Kong dollar (US$226.9 million) loan
issued to New Nongkai Global Investments Ltd, fully owned by
Zhou.
Zhou sought the loan, granted in June 2002, to buy a controlling
stake in Hong Kong-listed Shanghai Land Holdings Ltd, which is now
in receivership.
The committee criticized Or, deputy chief executive for
corporate banking, for backing the loan without regard for risk.
The investigation also found that while bank officials followed
procedure in making the loan, Liu had shown poor judgment.
It was reported that Liu was still under investigation by Bank
of China.
(eastday.com September 6, 2003)