Scandal-plagued Shantou sets up credibility agency

PUBLISHED : Saturday, 11 May, 2002, 12:00am
UPDATED : Saturday, 11 May, 2002, 12:00am

Guangdong's port city of Shantou has set up a credit-rating system for corporations and individuals to help clean up the city's image, which has been tarnished by rampant tax fraud, smuggling and other illegal activity, according to a senior official.

Executive vice-mayor Huang Ronghan said in Guangzhou yesterday that information concerning more than 20,000 enterprises and credit-rating agencies had been gathered on a government-sponsored Web site.

Companies that had defaulted on loans, forged financial documents, manufactured counterfeit goods, smuggled products and evaded taxes would be put on a blacklist, Mr Huang said.

Companies would be segregated into six categories: national brand-name enterprises; high-technology concerns; the top-50 quality product businesses; those which fulfilled contractual obligations; blacklisted firms; and those whose business licences had been cancelled.

Foreign investors and business associates can access the site to check the credit history of a company or individual.

The network would include all enterprises and business people in the city by year-end, Mr Huang said.

The system, which began a trial run on April 1, was said to be the first in the country as Beijing urged the city to set an example by rectifying its credibility.

Notorious as a haven for smugglers, counterfeiters and tax-evaders, Shantou has been the focus of a government investigation ever since a smuggling ring in the western Guangdong port of Zhanjiang was broken up in 1999.

As a result of that crackdown, Zhanjiang's then party secretary Chen Tongqing received a death sentence that was commuted to life in jail.

The city was the centre of a massive value-added tax (VAT) scam said to have been the largest tax-fraud case since 1949. The wide-ranging fraud is believed to have cost the Government 4.2 billion yuan (about HK$3.93 billion).

The lawless activities in Shantou have shattered the city's image and undermined foreign investment, plunging the once booming city into economic recession.

The credit-rating system is said to have produced positive results since the trial started last month. Enterprises had gone to taxation bureaus voluntarily to pay taxes, rather than be chased by authorities, Mr Huang said.

A few companies with bad records had lobbied banks and government departments to get a clean credit sheet by promising to behave better.

The system, if proven effective at improving the city's credibility and serving as a deterrent for those who break the law, will be adopted in other parts of the country, it is believed.

Beijing realises that a lack of credibility is costing the country dearly.

Xinhua said that of the 60,000 firms that had accounts with China's four state-owned commercial banks, half had a history of debt evasion.

It also estimated economic losses due to counterfeit goods amounted to more than 200 billion yuan annually.