Company in China fraud probe ‘sent money to war-torn area in Myanmar’

(From Caixin Online)

Yucheng Group, a holding firm being probed by police around China, may have sent money from a troubled lending website, sources say

By staff reporters Wu Hongyuran and Zhang Yu

A financial holding company facing an investigation for bilking investors of billions of yuan sent money to a war-torn area of Myanmar and it may have come from a subsidiary’s lending website that has been closed, people with knowledge of the probe into the firm say.

Yucheng International Holdings Group Ltd. and a subsidiary that ran a peer-to-peer lending platform called Ezubo are at the center of a coordinated fraud investigation by police in Beijing and Shanghai and the provinces of Anhui, Guangdong and Yunnan.

Ezubo says it has facilitated more than 70 billion yuan in loans from individual lenders to companies since its establishment in 2014. It was shut on December 8, when police raided the firm’s offices in several cities and detained executives, including its chairman Ding Ning, who was born in the eastern province of Anhui and is now a citizen of Myanmar, the nation that used to be called Burma.

The people familiar with the investigation into Yucheng Group said it is known to have sent money to Myanmar’s Wa State, a conflict-torn area next to China that is known for involvement in the drug trade. The sources said the money may have come from Ezubo.

United Wa State Army soldiers in Myanmar

United Wa State Army soldiers in Myanmar

The area is controlled by rebel military groups including the United Wa State Army (UWSA), a military group composed mainly of ethnic Chinese soldiers. The Myanmar Times has reported that the UWSA has a standing army of 20,000 solders, making it the largest of the armed groups that have fought Myanmar’s military in recent years.

Yucheng Group sent nearly 10 billion yuan to Myanmar, the sources said. It is unclear who received the funds, and police in China are still following the money trail, they said.

Yucheng Group says on its website it reached an agreement this year with the authorities in Wa State to invest 40 billion yuan to build a free-trade zone near Pangkham, a city on the China-Myanmar border about 700 kilometers southwest of Kunming that used to be known as Pangsang.

It also said it had the permission of authorities in the area to operate a commercial bank – the only one of its kind in the area – to take deposits and lend to individuals and companies. Read more

 



Categories: Asia Unhedged, China, Southeast Asia

Tags: , , , , , ,