Official fraud in scrutiny as netizen exposes shareholder scandal
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An online post revealing that a major shareholder of a privatized company is actually the dead relative of an official has again trained the spotlight on corruption in China's state-owned enterprise (SOE) reform.
An online post appeared on several popular Chinese forums and Web portals earlier this month, claiming that Qi Mingzhen, a local official and board chairman of Zhonghong Property Co. Ltd, used his deceased mother-in-law's name to buy shares of a state-owned enterprise in 2004.
"Qi urged the privatization of the property company at a time when it was making huge profits, and then used the name of his late mother-in-law to essentially take over the company with only 5.4 million yuan," said Tan Hongxia, the post's author and an ex-employee of the company.
Tan posted several photocopies of documents to show that Qi used the name Zhou Mingjin to purchase shares. Zhou Mingjin is the name of Qi's deceased mother-in-law.
Qi reaped nearly 60 million yuan in personal gains after he became a major shareholder and sold large portions of the company, Tan said in the post.
Tan reported the fraud to local authorities in Hubei Province in 2005. Authorities later confirmed the claim and slapped a 100,000 fine on the company, a penalty Tan deemed as too lenient.
However, Tan had to cease to expose the scandal after she, her father and her brother were arrested on graft charges. The charges were dropped in 2010.
"Once we were cleared of the charges and received compensation, I posted my report online," Tan told Xinhua.
Tan's post provoked a heated response from Chinese Internet users, and the local government has launched an investigation into the case.
Qi declined to comment on the case, but Wang Yuanping, a spokesman with Zhongfu, said Qi's investment was aimed at helping the moribund company, which was losing money before becoming privatized.
All shares registered under Qi's mother-in-law have been sold to another shareholder, said Wang.
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