Some 2,000 Angry Investors Protest Losses in China's Sichuan

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Investors call for an investigation of their missing money outside the police department in Chengdu, capital of southwest China's Sichuan province, May 3, 2015.
Investors call for an investigation of their missing money outside the police department in Chengdu, capital of southwest China's Sichuan province, May 3, 2015.
(Photo courtesy of the human rights website)

Around 2,000 disgruntled creditors gathered outside government buildings in the southwestern Chinese province of Sichuan on Wednesday in protest over lost investments in a local finance company, participants said.

More than 3,000 small investors had poured a total of 1.2 billion yuan (U.S. $193 million) into the Chengdu Aobang Financial Guarantee Co. to act as a property developer and lender to small and medium-sized enterprises seeking credit, protesters said.

"More than 2,000 are here today," protester Li Min told RFA from the protest outside the municipal police department in the provincial capital, Chengdu.

"This is about the Aobang investment company, which is a developer investing in property, and a number of other forms of investment," he said.

"The police chiefs have come out, and a few of them are talking to our representatives and spokespeople right now," Li said.

"Some 3,000 people have been negatively affected by this."

He said the protesters were being watched by several dozen police.

"There are more than 1,000 people here today, and more than 3,000 people are affected, amounting to more than a billion yuan [U.S. 161.2 million]," investor Yan Tafeng said from the scene.

"There haven't been any clashes of any kind," she added.

The investors are accusing the company, and related companies, of fraudulent borrowing and of undermining financial stability, as well as cheating ordinary people out of their hard-earned life-savings.

They are calling on police to investigate the case fully for possible collusion between officials and local business.

Aobang denied the accusations in a statement issued last December, and threatened to pursue those responsible for them through legal channels.

Repeated calls to the Aobang Financial Guarantee Co. rang unanswered during office hours on Wednesday.

An investor surnamed Tian said similar, though smaller, protests had already taken place in recent months.

She said she and a group of several dozen investors are currently gathering evidence to support a lawsuit to reclaim their lost funds.

"This is a nationwide phenomenon, but these companies that raise money, then abscond, have basically been given their business licenses by the provincial bureau of industry and commerce," Tian said.

‘Cheating tens of thousands’

Sichuan-based rights activist Huang Qi, who founded the Tianwang rights website, said the problem lies with too-close ties between companies and local government officials.

"Government regulation of the market is also lackluster, leading to large numbers of illegal fund-raising operations across China," Huang told RFA.

"[They are] cheating thousands, tens of thousands, of ordinary people, giving rise to mass incidents of involving thousands of people," he said.

Huang called for greater supervision at the highest levels of government.

"[They should] supervise the handling of the aftermath of illegal fund-raising cases, pursue those who are responsible, and restore financial losses sustained by the general public," he said.

Such protests highlight the financial risks of China's shadow banking system, where high yields are offered by nonlicensed investment schemes and private lending firms to attract individual investors looking for a high return on their savings.

China's shadow banking sector—which comprises licensed banks' off-book lending arms, trust companies, and other informal lenders—had an estimated 31.2 trillion yuan (U.S. $5.03 trillion) in assets outstanding at the end of 2013, according to consulting firm Oliver Wyman.

But a wave of recent scandals among private lending firms and investment schemes has prompted mass protests by thousands of people who have lost their savings or who say they are victims of fraud.

Many blame ineffectual government regulation or official corruption as their money disappears into overseas bank accounts, according to former investors.

Reported by Qiao Long for RFA's Mandarin Service, and by Hai Nan for the Cantonese Service. Translated and written in English by Luisetta Mudie.





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