New | Red Cross admits illegally renting out warehouse space in Beijing district

The Red Cross Society of China, which has been in a financial crisis for a few years and in public relations trouble, is accused of having violated the law by leasing a large warehouse in Beijing municipality for profit for the past two years, the news portal QQ.com reports.

The charity’s executive vice-president, Zhao Baige, said they put the warehouse, which is usually used to store disaster-relief materials but was empty, into commercial use because they needed funding to pay staff.

The warehouse, with a total floor space of 62,157 square metres in Shunyi district, was built in September 2008 after the deadly Sichuan earthquake. The entire 117 million yuan (HK$147 million) construction cost came from the central government.

Zhao said since the central government’s subsidies to the Red Cross fall roughly one-third short of storage costs, the organisation took advantage of this idle storage to make money so that staff can get paid.

The QQ report, based on a fourth-month-long undercover investigation, said there were no quilts, tents, buckets or other disaster-relief materials in storage. Instead, many workers dressed in uniforms bearing logistics companies’ names moved boxes containing electric products.

The Red Cross and a company named the Beijing Zhongxun Yuhua Commercial Management Company signed two agreements in 2012. One was a “strategic cooperation agreement” that allowed Zhongxun Yuhua to lease storage space in the warehouse, and it then sublet the space to logistics companies, including the international courier company DHL, the report said. However, the agreement said that logistics for the Red Cross always had priority.

Although neither side had to pay any fees, the second agreement said Zhongxun Yuhua promised to donate 900,000 yuan every year, with the money first going to pay for storage and operational costs.