Unrest risk from internet financial fraud rise
Study reveals number of online investor rackets is increasing and without better monitoring by authorities could become a major source of protests
Internet financial fraud emerged as a major source of protest on the mainland last year and if not handled properly carries a greater risk of creating unrest than grievances in other areas, according to a report by the Guangdong-based University of Jinan.
Other sources of protest over the past year included land compensation, labour disputes, pollution, rows over property ownership and medical conflicts, according to the report.
Internet financial fraud was especially notable as it involves huge amounts of money among a large number of people spread across the country and it has only recently come to the fore, the study said.
The Communist Party agency that oversees the courts and police is to launch a nationwide crackdown to clean up internet finance schemes, Xinhua reported yesterday.
The Central Political and Legal Affairs Commission has told its local offices to set up teams to handle cases of alleged internet financial fraud.
Shanghai along with Shandong and Jiangsu provinces have already setting up “leading groups” to improve the supervision of internet fundraising schemes, the article said.
The Jinan University report raised the case of a series of protests among investors sparked by alleged fraud at the Fanya Metals Exchange based in Yunnan province.
The case involves 40 billion yuan (HK$47 billion) placed by 220,000 investors from 20 provinces, it said, citing the mainland-based newspaper the Securities Daily.
A protest staged on September 21 last year saw more than 1,000 people gather outside the State Bureau for Letters and Calls, the department responsible for handling petitions to the government.
The Fanya exchange offered investors the chance to speculate on increased metal prices, promising double-digit returns on their investments.
But with commodities plunging worldwide, metals prices fell last year and investors said they were unable to withdraw funds as promised.
The protests have lasted for months with no resolution in sight.
One investor from Shanxi province who was outside the bureau for letters and calls told the South China Morning Post earlier this month: “I’m here to sign for my family. They lost more than 200,000 yuan. An uncle of mine lost 10 million yuan, another 8 million.”
Another investor from Sichuan province said she invested after seeing official documents that appeared to official endorse the metal exchange.
“More than a dozen of us came [from Sichuan]. We lost about 2 million yuan in total, but the government said nothing. We almost invested all our life savings after we saw official documents that endorsed the company.”
Investors in Ezubo, a peer-to-peer lender placed under investigation in December for alleged illegal operations, are also trying to get their money back.
The company had like Fanya promised investors double-digit returns before the authorities in several cities including Beijing and Shanghai seized its assets.
It had amassed 73 billion yuan from 4.9 million investors.
“Investors in Ezubo can’t check in at hotels in Beijing. They were all told not to let us stay. I’m staying in my friend’s place,” said one investor in his thirties who was trying to get his case heard at the bureau for letters and calls.
