A business owner fleeing 800 million yuan in debt from China’s Jiangsu highlights financial transparency issues the city is having

Company Head Flees 800 Million Yuan Debt – Economic Observer Online 

By Jing Tian (景天)
Issue 623, June 10, 2013

Xu Cailiang (许才良), owner of Rong Tai Oil Technology Ltd. (融泰石油科技股份有限公司), fled to the U.S. last month leaving behind 800 million yuan in debt. A source at the local financing office said that the company was founded in 2007 in Jiangyin (江阴), Jiangsu and has been losing money ever since. It’s been able to receive loans from banks because of its close relationship with Jiangyin City Construction and Comprehensive Development Ltd. (江阴市城镇建设综合开发有限公司), also known as City Constriction. “The owner of Rong Tai and the owner of City Constriction are the same person: Xu Cailiang,” the source said. The state-run City Construction was founded in 1984 and Xu became its CEO in 1998. Then in 2007, he bought it for 20 million yuan in cash and became the company’s sole shareholder. Xu was also a supervisor in Jiangyin Agricultural Bank, one of Rong Tai’s investors. City Construction provided 470 million yuan to Rong Tai as a loan guarantee on top of a 3.2 million yuan deposit and a mortgage guarantee allegedly worth 763 million yuan. However, according to a source in a local bank, the mortgage written in the loan application was much higher than the actual value. Two similar cases have happened in Jiangyin within the past six months. A local official said that the economic environment of Jiangsu is much less transparent than that of its neighbor, Zhejiang, making problems like these less likely to be discovered before it’s too late. Jiangyin, a town with 34 public corporations, has been held up as a model for economic development in recent years. However, it’s likely that the city’s economy isn’t as healthy as it appears on the surface.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

One Response to A business owner fleeing 800 million yuan in debt from China’s Jiangsu highlights financial transparency issues the city is having

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