Tuesday, August 24, 2004
There is a very interesting SCMP article on the D'Long saga. According to the account, we see Zhu's technocratic team stepping in to fix the whole mess. Wu Xiaoling, still just the deputy governor of the PBOC, and Xie Ping, newly appointed to the head of risk department at the PBOC, are taking charge of the bailout. Sigh......sometimes I do miss the good ol'days with Zhu. We certainly would be hearing colorful stories of Zhu screaming at the CBRC or PBOC for failing to catch such a major scandal by now.
Tuesday, August 24, 2004RESTRUCTURINGD'Long officials placed under house arrest Founder returns to help regulators save the technically bankrupt conglomerate
MARK O'NEIL in Shanghai
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The president of troubled D'Long group and several of his top managers have been placed under house arrest and the authorities are preparing the biggest debt-restructuring package since the 1998 collapse of Guangdong International Trust & Investment Corp.
Tang Wanxin, the president of D'Long Strategic Investment, and other directors of the firm are being held at home in Beijing, according to banking sources and Caijing magazine.
They can hold meetings, including those of the company board, but only with approval and under official supervision.
Other D'Long group officials arrested included He Guipin, the chairman of Jinxin Trust in Urumqi; Li Qiang, a vice-president of the group; and Wang Haiqin, a manager at Kunming Commercial Bank, the sources said.
D'Long executives could not be reached for comment.
"Their office is closed and no one is coming to work. There used to be 200 to 300 people working here. The office has been disbanded," said a man who claimed to be a security guard.
"Court officials have come here to investigate but we have not had investors coming here to demand the return of their investments."
The debts of D'Long Strategic, a private company set up by Tang and his three brothers in 1986, run into billions of yuan, owed to thousands of individual and corporate clients of the 21 financial institutions it owns and creditors of hundreds of other companies.
The D'Long crisis broke in April when creditor banks demanded repayment of loans.
As the most important of the four brothers, Tang was put on a police wanted list to prevent him fleeing the country. But Wang escaped to Burma in May, and many thought he would not return.
However, he flew back to Beijing on July 18 and was met at the airport by Xie Ping, a director of the stabilisation bureau of the central bank.
It is not clear what persuaded Tang to return but the official explanation is that the authorities told him that he was the only person who could unravel the company's complex organisational structure and debts.
Another possibility is that, as a close ally of Beijing, Burma helped to track down Tang and left him no alternative but to return.
Since then, he has met officials of the central bank, China Banking Regulatory Commission and China Securities Regulatory Commission to help form a rescue package.
In June, the government set up a committee to deal with D'Long's debt, headed by Wu Xiaoling, a deputy governor of the central bank, Mr Xie and representatives of the 15 major creditor banks.
Bankers say that D'Long is technically bankrupt, with liabilities far exceeding its assets, but the government dares not let it enter bankruptcy due to the effect on other firms and the anger this would provoke among individual investors.
A rescue could take the form of new loans from the central bank or creditor banks, to keep the group afloat and allow the sale of its assets to raise money. Another proposal is to hand over D'Long to Huarong Asset Management Corp and give it the job of selling its assets. Huarong is one of four asset management firms set up to take over bad debts of the Big Four state banks.
In the past, it has been policy to give priority to individual investors, especially of financial institutions.
Bankers estimate that since the end of 2002, mainland financial institutions lent up to 30 billion yuan to D'Long firms.
Tuesday, August 24, 2004RESTRUCTURINGD'Long officials placed under house arrest Founder returns to help regulators save the technically bankrupt conglomerate
MARK O'NEIL in Shanghai
Prev. Story Next Story
The president of troubled D'Long group and several of his top managers have been placed under house arrest and the authorities are preparing the biggest debt-restructuring package since the 1998 collapse of Guangdong International Trust & Investment Corp.
Tang Wanxin, the president of D'Long Strategic Investment, and other directors of the firm are being held at home in Beijing, according to banking sources and Caijing magazine.
They can hold meetings, including those of the company board, but only with approval and under official supervision.
Other D'Long group officials arrested included He Guipin, the chairman of Jinxin Trust in Urumqi; Li Qiang, a vice-president of the group; and Wang Haiqin, a manager at Kunming Commercial Bank, the sources said.
D'Long executives could not be reached for comment.
"Their office is closed and no one is coming to work. There used to be 200 to 300 people working here. The office has been disbanded," said a man who claimed to be a security guard.
"Court officials have come here to investigate but we have not had investors coming here to demand the return of their investments."
The debts of D'Long Strategic, a private company set up by Tang and his three brothers in 1986, run into billions of yuan, owed to thousands of individual and corporate clients of the 21 financial institutions it owns and creditors of hundreds of other companies.
The D'Long crisis broke in April when creditor banks demanded repayment of loans.
As the most important of the four brothers, Tang was put on a police wanted list to prevent him fleeing the country. But Wang escaped to Burma in May, and many thought he would not return.
However, he flew back to Beijing on July 18 and was met at the airport by Xie Ping, a director of the stabilisation bureau of the central bank.
It is not clear what persuaded Tang to return but the official explanation is that the authorities told him that he was the only person who could unravel the company's complex organisational structure and debts.
Another possibility is that, as a close ally of Beijing, Burma helped to track down Tang and left him no alternative but to return.
Since then, he has met officials of the central bank, China Banking Regulatory Commission and China Securities Regulatory Commission to help form a rescue package.
In June, the government set up a committee to deal with D'Long's debt, headed by Wu Xiaoling, a deputy governor of the central bank, Mr Xie and representatives of the 15 major creditor banks.
Bankers say that D'Long is technically bankrupt, with liabilities far exceeding its assets, but the government dares not let it enter bankruptcy due to the effect on other firms and the anger this would provoke among individual investors.
A rescue could take the form of new loans from the central bank or creditor banks, to keep the group afloat and allow the sale of its assets to raise money. Another proposal is to hand over D'Long to Huarong Asset Management Corp and give it the job of selling its assets. Huarong is one of four asset management firms set up to take over bad debts of the Big Four state banks.
In the past, it has been policy to give priority to individual investors, especially of financial institutions.
Bankers estimate that since the end of 2002, mainland financial institutions lent up to 30 billion yuan to D'Long firms.
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