Officials investigated over massive illegal fund-raising scheme

By Li Xinran  |   2008-11-4  |     ONLINE EDITION

MORE than 100 officials in central China are being investigated for their alleged involvement in an illegal fund-raising scheme worth billions of yuan, according to Beijing-based Caijing magazine.

Teng Wancui, a former big shot and senior Party official in Xiangxi Autonomous Prefecture, Hunan Province, is under double designation status, according to the report.

Double designation is a special procedure of the Communist Party of China. A member or official of the Party is ordered to explain or confess his/her alleged involvement in a discipline-violation or corruption case at a designated time and in a designated place.

Teng, 49, was formerly the No. 4 ranking official in Xiangxi. Her husband, a clerk at China Agricultural Bank Xiangxi Branch, is also under investigation, the report said.

Teng’s family reportedly participated in the illegal fund-raising scheme in which 100,000 families were allegedly involved. The money was pooled together and loaned at high interest rates to businesses that may otherwise not have qualified for a bank loan, according to Caijing.

Teng’s family allegedly withdrew its capital and received interest payments ahead of other investors, which caused a crisis in Jiashou City.

Thousands of investors in the scheme blocked the prefecture government in Jishou on September 3 and blocked city streets the following day after learning Teng and other officials were repaid 1 billion yuan (US$147 million) from the illegal scheme, the report said.

A task force found Teng and her family intentionally lied about their involvement in the scheme and other businesses including mines and tourism, the report said.

Teng also reportedly accepted bribes, according to Caijing.

The scheme started in 2002 and the monthly interest payment was 8 percent this year although some businesses were promised 10 or 12 percent, the report said.