ICBC Seeks Debt Recovery in Shanghai Pension Fraud Case

Posted 30 August 2006 @ 10:55 am EET     Print     Reprint     E-Mail     Comments

Shanghai (Reuters) - The Industrial and Commercial Bank of China has met with creditors over the repayment of 125 million dollars in corporate bills from troubled debtor Fuxi Investment.

ICBC, the nation's biggest lender and the major underwriter of the debt sold to Chinese institutional investors and insurers, was seeking authorization from creditors to handle the recovery of Fuxi's debt, the Shanghai Securities News said. Fuxi Investment Holdings, a large Shanghai private investment firm, is unable to repay the debt in the wake of a major corruption scandal over the mismanagement of Shanghai's public pension fund, the newspaper said.

The messy scandal has implicated some of the city's top party brass and three top executives from state-run Shanghai Electric, China's largest producer of power machinery.

Two officials, including the local labor and social security bureau chief and a city district boss have been sacked for alleged misuse of the fund in Shanghai, the country's financial hub. The country's leading financial magazine Caijing reported this week that the money had been used to invest in speculative real-estate deals.

Beijing has sent more than 100 investigators to Shanghai to look into the corruption case that first began to emerge in July. Last week Shanghai's municipal government sued two companies controlled by Zhang Rongkun, a former non-executive director of state-run Shanghai Electric Group, for his alleged role in the mismanagement of the city's pension funds.

Shanghai aims to recover 3.45 million yuan (430,000 dollars) of misused social security funds from Zhang's two companies, Fuxi Investment and its parent. The city's Corporate Pension Fund Development Center, which manages the city's pension funds, has sued Fuxi and shareholder Shanghai Feidian Investment Development Co., according to China's Yuandong credit rating agency.