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Guo Wengui

Guo Wengui told niece and other executives to fraudulently obtain loans, court hears

Defendants tell trial in the city of Kaifeng they were instructed to apply for US$205 million in loans using fake contracts between shell corporations

PUBLISHED : Wednesday, 12 July, 2017, 5:51pm
UPDATED : Wednesday, 12 July, 2017, 10:46pm

The niece of exiled tycoon Guo Wengui was one of three executives he instructed to use fake documents to obtain loans for his Henan real estate firm, a court in central China heard on Wednesday.

A handful of mainland media outlets and three Hong Kong-based news organisations were invited to watch the trial in a live broadcast near the court, a rare event for such a case.

It is the second recent case in China involving a company run by Guo, a property developer who is living in the United States and wanted by Beijing over allegations of corruption.

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The three executives of Henan Yuda Real Estate said Guo told them to obtain loans of 1.4 billion yuan (US$205.79 million) from banks in Henan province between 2008 and 2015, the Kaifeng Intermediate People’s Court heard.

Forty loans were subsequently obtained using fake contracts between shell corporations, they said.

Some 1.2 billion yuan of those loans had since been repaid.

The three defendants were Zhang Xincheng, the company’s chief financial officer, Guo Lijie, deputy manager and the niece of Guo Wengui, and Xiao Yanling, its deputy financial officer.

The real estate company was founded and formerly owned by Guo, who transferred the business to his brother in 2004, according to court documents. The three executives said Guo had retained full control of the company.

The loans were mostly used to repay debts, while around 350 million yuan was transferred to another company controlled by Guo, Beijing Pangu Investment, the court heard.

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The defendants, who were not handcuffed and wore plain white shirts, admitted they had used fake contracts and board resolutions to obtain the loans, but said they were following orders from Guo and did not have much say in decision-making at the company.

Guo Lijie wept as she made her final statement, saying she deeply regretted breaking the law.

“I was blindly following instructions from Guo Wengui when I crossed the line,” she said.

The case follows a trial in June, in the northeastern city of Dalian, in which three employees of Beijing Pangu Investment were found guilty of fraudulently obtaining loans.

Meanwhile, state media reported earlier this week that Chinese authorities had ­detained two people working in the aviation sector for ­allegedly giving Guo confidential passenger information from Hainan Airlines, the carrier at the centre of his claims detailing corruption at the top ranks of the Communist Party.

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Guo has made a series of corruption allegations via social media against senior party officials but has yet to provide evidence to support those claims. He said earlier that he would make public his evidence on Monday – about a week before the party elite gather for their annual closed-door Beidaihe meeting at the resort town in Hebei province. The Chinese government meanwhile has launched a campaign to discredit Guo through state media.