Exiled tycoon's loans secured fraudulently, staff tell China court

Billionaire businessman Guo Wengui has emerged in recent months as a political threat to the Chinese government, after unleashing corruption allegations against high-level Communist Party officials through Twitter posts and video blogs. However, he h
Billionaire businessman Guo Wengui has emerged in recent months as a political threat to the Chinese government, after unleashing corruption allegations against high-level Communist Party officials through Twitter posts and video blogs. However, he has provided scant evidence to back up his claims.PHOTO: REUTERS

Three senior employees say Guo Wengui instructed them to use falsified documents

DALIAN, China • Exiled billionaire Guo Wengui instructed his employees to fraudulently obtain hundreds of millions of dollars in loans, senior employees of his real estate firm told a court in China's north- eastern Liaoning province.

Appearing in the Dalian Xigang People's Court yesterday, the three staff members from Mr Guo's Beijing Pangu Investment confessed in a four-hour trial to obtaining 3.2 billion yuan (S$652 million) from the Agricultural Bank of China in 2010 by using falsified company contracts, official seals and receipts.

The loan was repaid in full in 2014. Two of the defendants also admitted to the false purchase of foreign currency.

In an online video posted yesterday, Mr Guo said the facts were "completely different" from the charges. "(They) want the loan to go through, want to impress their boss," he said, adding that China's banking regulations sometimes forced people to do things that they would not otherwise do.

The businessman has emerged in recent months as a political threat to the Chinese government, after unleashing corruption claims against high-level Communist Party officials through Twitter posts and video blogs. He has made it clear he wants to disrupt a five-yearly congress to be held this autumn.

Mr Guo, who resides in a sprawling US$68 million (S$94 million) apartment overlooking New York's Central Park, has provided scant evidence to back up his claims. But his standing as a former billionaire insider and his close ties with one of China's most senior intelligence officials, the disgraced former state security vice-minister Ma Jian, have tantalised a large online following and made him the centre of attention in Beijing political circles.

While he was not named as a defendant in yesterday's trial, he featured prominently in the prosecution's line of questioning, with the three employees repeatedly asked to confirm that he was the ultimate controller of Pangu and made all major business decisions, including to go ahead with the alleged fraud.

The Chinese government has been engaged in a sustained effort to discredit and tighten pressure on Mr Guo. In a highly unusual move showing its determination in countering Mr Guo's damaging allegations online, foreign media was granted access to watch a live feed of proceedings from a media room established in the courthouse.

Transcripts and footage of proceedings were also posted on the court's Weibo account.

The trial yesterday was the first criminal case brought against Mr Guo's company since Beijing requested Interpol issue a global "red notice" in April for his arrest.

One of Mr Guo's chief demands has been that his staff, who have been held indefinitely since they were first detained in early 2015, be freed or at least have a trial in accordance with Chinese law. "As long as they are given back their freedom, they can say they committed murder and arson - that's fine, as long as they go home," he told Reuters yesterday through a messaging service, saying "leaders" handling the case had expedited the hearing.

The court prosecution summary said Mr Guo would be dealt with "in another case".

Pangu's former finance director Yang Yin told the court: "Finances at the time were tight and we needed funds... Guo Wengui already contacted the bank, we were just instructed to prepare documents... All the decisions are made by him."

The defendants expressed regret, pleaded for leniency, and spoke of the impact their lengthy detention had on their families. The court said a verdict would be handed down at an unspecified later date.

The head of Agricultural Bank of China at the time of the loans, Xiang Junbo, who went on to head China's insurance regulator, was investigated for corruption in April.

Mr Guo had previously suggested that he has been in negotiations with Chinese officials, and has pointed to the fact that his wife and daughter were allowed to visit him in New York as an outcome of those talks.

The legal backlash in the case has not just been felt in China. Other high-profile figures caught in the crossfire of Mr Guo's online allegations have filed defamation suits against him in New York, including the chairman of property developer Soho China, Mr Pan Shiyi, and prominent journalist and founder of Caixin Media, Ms Hu Shuli.

Australian designer Yuge Bromley also told Reuters she is considering suing Mr Guo, after he said she was an illegitimate child of a senior Communist Party official.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 10, 2017, with the headline 'Exiled tycoon's loans secured fraudulently, staff tell China court'. Print Edition | Subscribe