A Shanghai company allegedly used an illicit loan from a city pension fund to invest in one of China's biggest shopping malls, the state-run newspaper Shanghai Securities News said in a report carried by other state media yesterday.
The allegations are over a 2.7 billion yuan (US$345 million) loan from the city's corporate annuity fund to an investment company, Shanghai Dehong Investment Co.
The company allegedly used the funds to buy a 70 percent stake in the 430,000m3 Bailian Zhonghuan Commerical Plaza, the Shanghai Securities News reported.
The report quoted Yan Liyan, a tycoon who owns a stake in Shanghai Dehong, as saying that the loan, made by an unnamed bank, had already been repaid.
Mortgage documents showed that originally the loan had been due to be repaid in 2008, said the newspaper, which is affiliated with the Shanghai Stock Exchange.
Growing scandal
Shanghai's Communist Party secretary, Chen Liangyu (
City officials have refused comment on the investigation.
Dozens of officials and businessmen have been linked to the scandal, subject of a corruption probe by top party investigators sent by Beijing.
At the time that the alleged loans were made, pension funds could only legally be kept in banks or invested in government bonds.
The government has since tightened control of pension funds while allowing broader investment options.
Shanghai Securities News did not name its sources.
The shopping mall, which is located in northern Shanghai, opened for business on Dec. 21.
It is now worth about 6 billion yuan, the report said.
Shanghai Securities News said that Shanghai Dehong bought its stake in the shopping mall from Shanghai Xinchangzheng Group, which is controlled by Changzheng, a town in Shanghai's suburbs.
It later bought Xinchangzheng Group outright, and then sold 51 percent share in the project to Shanghai Bailian Group, the city's biggest retail conglomerate, the report said.
Resignation
In related news, the chairman of China's fourth-largest life insurance company has resigned amid an investigation into unauthorized real estate investments, state media said yesterday.
The board of New China Life Insurance Co has accepted chairman Guan Guoliang's resignation, the Xinhua news agency reported.
The resignation was related to unauthorized investments, the report said, citing unnamed sources. It did not give any details.
The newspaper Financial News -- controlled by China's central bank -- reported that Guan was under investigation for unauthorized investments in the real estate market.
The business magazine Caijing said in an article published in October that regulators were investigating Guan and investments about which New China Life's board was unaware.
New China Life's shareholders include Zurich Insurance Co, the World Bank's International Finance Corp and China's Shanghai Baosteel Group and Orient Group Inc, the company's Web site says.
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