Inner Mongolia Property Mogul Bites the Dust; The real estate empire Li Guomin built in Bayan Nur has withered in the heat of a corruption scandal

07.24.2013 19:13

Inner Mongolia Property Mogul Bites the Dust

The real estate empire Li Guomin built in Bayan Nur has withered in the heat of a corruption scandal

By staff reporter Wang Heyan


Bayan Nur is a city nestled in the crook of a crescent-shaped valley, between the Yellow River and a desert, and surrounded by productive farms. It’s name is Mongolian for “fertile lake,” owing to the swampy Lake Wuliangsu on the crescent’s eastern edge. Bayan Nur is also an economic hub for north-central Inner Mongolia Autonomous Region that’s prospered in recent years on the back of a local real estate boom. But these days, unlike the fertile crescent’s well-watered farms, Bayan Nur’s real estate industry as well as its economy are gathering dust in the dry heat of a corruption scandal.The scandal’s long-term influence took center stage in March when an appeals court ruled against a businessman once revered as the city’s biggest real estate mogul, Li Guomin.

Li has started serving a five-and-a-half-year term after the Ordos appeals court upheld his 2012 conviction on gambling and prostitution charges, which were indirectly connected to his business dealings. Authorities involved in the two-year crackdown have also focused attention on several government officials who worked closely with Li to build up Bayan Nur.

The scandal’s latest development came June 30, when the Communist Party’s Central Commission for Discipline Inspection announced that they were investigating Wang Suyi, former director of the party’s regional United Front Work Department and a former standing member of the Inner Mongolia Autonomous Region Party Committee, on unspecified charges.

Investigators earlier probed and convicted Bayan Nur’s former deputy mayor Li Shigui, and a former chief of the city’s Linhe District, Xue Weilin. The city’s former secretary-general Li Maolong is awaiting trial.

Each suspect while in office apparently enjoyed close ties to Li’s business empire, which today is crumbling in the face of frozen construction projects, unpaid bills, and unfilled orders for glass, concrete and other building materials.

Signs of the empire’s unfolding were obvious recently when Caixin visited Bayan Nur for this report: The cityscape is pock-marked with half-finished and unoccupied buildings – rows of buildings that in some places stretch to the horizon. Also left undone is a city government office complex where new buildings share plots with farm fields.

In its heyday, Li’s company was at the center of Bayan Nur’s economic boom. It chalked up several notable accomplishments by, for example, spearheading construction of the Guotai Fashion Plaza and the city’s only five-star hotel.

Li succeeded in business by leveraging high-level connections and arranging credit deals that helped Guotai acquire prime land for real estate developments, sources told Caixin.

Rather than use his own money, sources said, Li convinced building contractors to front the funds needed for building projects, then repaid them with dividends from real estate sales. He also rallied government support for projects that required land-clearing and infrastructure.

“In many places where others were unable, he found ways to have old structures razed,” said an insider close to Li. Usually in China, real estate development company “bosses need five or six years to finish a building. Not Li Guomin. His Four Seasons Flower complex went from land acquisition to completion in only two years.”

Li’s game worked remarkably well for several years. But he was forced to turn in his chips in May 2011, when police from the Inner Mongolia Public Security Bureau put him under house arrest.

Empire Building

An Inner Mongolia native, Li was born in the city of Chifeng in 1962 and later served in the military. After returning to civilian life, he got a job in the late 1980s at the Linhe District branch of the Industrial and Commercial Bank of China (ICBC) in Bayan Nur.

Li spent 10 years with ICBC, rising to the position of local branch manager. In the course of approving business loans, he “made a lot of friends,” said a source. “He also had some messy accounts.”

Li quit the bank in early 1990s’ after being tipped off that ICBC superiors were planning to investigate him for corruption. The probe apparently fizzled.

Li then changed careers by setting up Guotai Group’s predecessor, a company called Bayan Nur City Guotai Real Estate Development Co. Ltd. It was a gamble because the local real estate market at that time had yet to take off.

A breakthrough came in March 2002, when Li’s company bought out a rug factory in Linhe District and tore down the buildings to make way for a shopping center called Guotai Fashion Plaza. The project inspired city government approval for more developments in Linhe, including a new office center for the municipal government.

In 2004, Bayan Nur officials decided to move the entire city center westward with an all-new, 20-square-kilometer development that combined office, commercial, government, residential and entertainment functions. An area for information technology companies was envisaged near apartment buildings, conference centers and sports facilities.

Li took advantage of the opportunity, and by June 2007 had finished work on a residential compound called Jintai Garden at the heart of the development zone.

Builders blazed ahead for the next few years, and Guotai Group benefited. Work on the 1.2-million-square-meter Four Seasons Flower residential complex started in 2008 and was completed just two years later.

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