Canada Historical Deportation
“China Top 10 Most Wanted Fraudster Fugitive Zeng Han Lin”
Amazing Inside Story of Contract Fraud Case
I was the ex-management executive of Sichuan Chengdu Lianyi Group (hereafter referred as Chengdu Lianyi). Back then, the Guangdong Flying Dragon Group (hereafter referred as Guangdong Flying Dragon) Contract Fraud Case against Chengdu Lianyi was in fact, a little-known injustice case of framing. It was actually a simple civil dispute that was deliberately fabricated into a criminal fraud and concluded as a Contract Fraud Case.
Relevant information on the case has recently been exposed. Many of them contain deliberately concealed evidence that leads to Chengdu Intermediate People’s Court not been able to establish an objective judgment on the verdict. I believe the central government has launched a thorough investigation of this case already.
This case involved Chengdu Lianyi's Chairman Xu Huaizhong and his subordinate Zhou Guangjun effectively planned and manipulated the outcome of the trial to achieve their unscrupulous hidden agenda. Xu Huaizhong lies towards the Chengdu People’s Procuratorate as a deception to cover up the truth. After making a police report against Guangdong Flying Dragon (ie, after August 17, 1999), Chengdu Lianyi signed a Repayment Agreement with Guangdong Flying Dragon. The Repayment Agreement also mentioned: Considering both parties earlier mutual working relationship and business collaboration, Chengdu Lianyi voluntarily gave up the 67 million yuan debt. The Repayment Agreement reveals another unknown secret of behind the scenes of Chengdu Lianyi equity transactions after filing the police report with Chengdu Police Station.
2nd day after Chengdu Lianyi’s filing of police report against Guangdong Flying Dragon, Xu Huaizhong flew to Guangzhou and entered into a share transfer agreement with Bank of Communication Jiangnan Branch office, Guangdong Flying Dragon and Sanjiu Enterprise Group. It is peculiar when the relevant aspects of the transaction have never been mentioned in the Chengdu Intermediate People’s Court verdict. The Chengdu Intermediate People’s Court pass a judgement that whatever equity that Guangdong Flying Dragon had injected into the Chengdu Lianyi be treated as stolen assets to be returned back to Chengdu Lianyi. The Chengdu Intermediate People’s Court ruled out against Guangdong Flying Dragon and enforced a penalty of 8 million yuan compensation fine to be paid to Chengdu Lainyi. This penalty amount even hit a record breaking high in Chengdu. There is also another fact that was never mentioned in the verdict. That is during the evidence gathering stage, there are substantial evidences showing Zeng Hanlin did not embezzle the proceeds of the mortgage loans of 35 million yuan. Apart from the amount of 600 million yuan paid to Chengdu Lianyi, all the rest of the proceeds are put back into the company's daily operations. Moreover, from date of the proceeds on the mortgage loans to the filing of police case of fraud was a year apart. If Guangdong Flying Dragon had deliberately planned to defraud its equity or loans, why didn't Zeng Hanlin absconded with the proceeds immediately, isn't he a fool not to escape after committing a fraud? The whereabouts of the original loan amount are traceable through all bank transactions and the bank has all related documents to prove that Chengdu Lianyi has been involved in using the loan amount. At that time, Guangdong Flying Dragon was the main assets and saviour for Chengdu Lianyi. The continued losses of Chengdu Lianyi, a listed company, are relying on Guangdong Flying Dragon capital injection to turn its book from red to black. In fact, the no payment or non-compliance of the agreement was on the common ground of mutual understanding during the signing of the agreement by both parties. The entire equity trading and contract fraud was a bunch of baloney.
Regarding Guangdong Flying Dragon fraud case, Bank of Communication appointed legal representative at that point of time had made the following observations to the media: Guangdong Flying Dragon in this case does not constitute a fraud charges. In 1997 when Chengdu Lianyi transferred the shares equity to Guangdong Flying Dragon, it is done following the legal procedure and therefore, the transfer of these shares is legal, valid and effective. If the accused Guangdong Flying Dragon really did not make payment for such a long time in regards to the transfer of shares, this case should only belong within the perimeter of economic contract disputes, not part of the equity fraud. Bank of Communication legal representative has doubts on Chengdu police establishing this civil dispute as a criminal case on August 17, 1999. Bank of Communication regards the case being listed as fraud case "questionable." He said, on August 19, 1999, Chengdu Lianyi Group Chairman, Guangdong Flying Dragon Group authorized person, the bank official and Sanjiu Enterprise Group, an official team of four parties are in Guangzhou holding talks on Guangdong Flying Dragon transferring Chengdu Lianyi shares equity issues. Chengdu Lianyi Group Chairman was also present, but Chengdu Lianyi did not raise any alert on Guangdong Flying Dragon so called "fraud" issue on its equity. Bank of Communication has also made a pledge on the loan amount according to the sum of equity shares under legal proceeding. The Shenzhen Stock Exchange and the Stock Pledge is the result of examination and approval according to law, and official announcements were made. Chengdu Lianyi responsible person had also made an official announcement to the public as a listed company and there is no excuse that Chengdu Lianyi was not aware of the equity transfer in advanced.
Before and after the accused Guangdong Flying Dragon fraud, within a span of two years dated from both parties signing on the contract till a month after lodging a police report on the fraud by Chengdu Lianyi, both parties had communicated and addressed the breach of repayment agreement and debt issues through further signing of treaty. Chengdu Lianyi is also due to fulfill a payment of 74 million yuan to Guangdong Flying Dragon group owned Guangdong High-speed Shipping for transfer of shares as compared to the 68 million yuan that Guangdong Flying Dragon owe to Chengdu Lianyi. For computation purpose, Chengdu Lianyi still owes more than 6 million yuan to Guangdong Flying Dragon but Chengdu Lianyi had never fulfill its payment obligations.
Not even a single penny was paid to Guangdong Flying Dragon.
During that time, ST Lianyi was a well-known listed company associated with revenue losses in the market; it was a debt company in need to find quality companies to inject capital for asset restructuring. It was clearly stated in the 1997 Annual Report of Listed companies: In view of Chengdu Lianyi funding constraints, the payment of 74 million yuan to Guangdong Flying Dragon for the acquisition of Guangdong Flying Dragon High-speed Shipping shares transfer will be suspended. In this case, does that also constitute a fraud offense by Chengdu Lianyi? Does that mean Guangdong Flying Dragon Group was able to charge Chengdu Lianyi for entering into shares transfer contract deal of 74 million yuan knowingly that Chengdu Lianyi will not be able to fulfill its obligation? Isn’t this an accused fraud case of Zeng Hanlin and Guangdong Flying Dragon, in fact their losses is far more than that of Chengdu Lianyi.
Therefore, as a matter of fact, is Zeng Hanlin a victim or a suspect?
During that time, dozens of national law experts and authorities had express suspicions on this case. The Guangdong Flying Dragon fraud case had later became a classic case study and can be downloaded from the Internet. The whole fraud case was a riddle, whether it was the Chengdu Intermediate People’s Court failure to acknowledge the truth or Chengdu Lianyi deliberately concealing the truth, till today, it remains a mystery!
The so call evidence in this criminal fraud case was suspected to be fabricated.
At that time, Guangdong Securities Investment Bank had even protested against the evidence presented by Chengdu Intermediate People’s Court as published in the media. As well as the so-called "supplementary agreement" signed by Guangdong Flying Dragon was obviously signed a month later after Guangdong Flying Dragon had pledge its equity as collateral to Bank of Communication to obtain the loan and the Shenzhen Stock Exchange had even made a public announcement according to the transaction, it is retroactive. The supplementary agreement did not even obtain the Guangdong Flying Dragon company seal even though the supplementary agreement also states that it requires both parties companies stamp to be effective. So, can this supplementary agreement still be considered as a valid legal document to be use as court evidence? This fabricated evidence clearly is illogical and a violation of the laws. Only if the supplementary document was signed during the first equity transfer agreement or in the presence of Bank of Communication before pledging the equity to the bank as collateral for loan be considered as a reasonable and fair transaction. A one-sided signed agreement is an incomplete agreement and has no legal enforcement effect on the other parties.
In fact, the whole Guangdong Flying Dragon fraud was filled with twists and turns, it was a discrimination against them. It begins with the capital injection by Guangdong Flying Dragon into Chengdu Lianyi and successfully turn this listed company around with profitability. In 1997, Chengdu Lianyi rely on Guangdong Flying Dragon funding and managed to increased the retained earnings by another 27.92 million yuen and thus launched a 1997 annual allocation plan of each 10 shares will be allocated 3 shares free of charge to upsize your share allotment by another 3 shares. All shareholders big and small, major or minority had all gained from this irreversible beneficial result. Not only that, Guangdong Flying Dragon had also induced this listed company to achieve the desired share placement financing qualifications. Share placement in 1999 was expected to amount up to about 2 billion yuan. However, the interests of the share placement program distribution were the fundamental reason for the breakdown of both parties working relationship. Chengdu Lianyi Chairman Xu Huaizhong personally feels that the funding from the share placement program will emphasize on the development in Guangdong which may result in most of the funding being controlled by Guangdong Flying Dragon.
Unfortunately, Guangdong Flying Dragon Group was hit by the 1998 Asian financial crisis, coupled with construction of new improved highway, the waterway and land passenger transport industry had became very highly competitive. The advantage from the monopolize ferry passenger business suddenly disappear and this has a chain reaction on the cash flow of Guangdong Flying Dragon. Originally, the share placement program was expected to solve the financial problem for Guangdong Flying Dragon. In the first equity transfer agreement signed between Chengdu Lianyi and Guangdong Flying Dragon, since the share placement program was expected to occur: the third and fourth equity transfers repayment fee to Chengdu Lianyi will be financed by the fund from the 1st allotment of this share placement exercise. Who would have thought that the Chengdu Lianyi Chairman Xu Huaizhong had decided on a death sentence for Guangdong Flying Dragon by coming to his own conclusion that Guangdong Flying Dragon was caught in financial crisis and is no longer of value to his listed company. The sudden operational crisis of Guangdong Flying Dragon was made known by the listed company through a related announcement issued in 1998.
Xu Huaizhong took into account the situation at that time and ruthlessly orchestrates the entire process of Guangdong Flying Dragon fraud conspiracy.
The first step, the use of extraordinary measures to reject the share placement program proposed by Guangdong Flying Dragon in order to avoid the allotment fund from falling into the hands of the Guangdong Flying Dragon. The strange thing was, Guangdong Flying Dragon holds 40% stake in Chengdu Lianyi and was the largest single shareholder. Logically speaking, the share placement program was supposedly to benefit them all and was absolutely imperative to proceed on which basically no one can oppose. But the fact that Chengdu Lianyi Chairman Xu Huaizhong actually uses unconventional means to gather 63% equity votes in shareholders general meeting (including the 40% equity votes held by Guangdong Flying Dragon) to rejected share placement program.
It seems an illogical thing to do as perceived by the public as apparently the dispute of this share placement program was considered an absurd act of harming others without any self-interest and not benefiting any shareholders at all. The media feel bizarre. This also reveals the internal management dispute among Chengdu Lianyi board members. In fact, before the Chengdu Lianyi Board rejected the share placement program, it has secretly gone into contact with the then well-known Sanjiu Enterprise Group to privately discuss the acquisition of the shares held by Chengdu Lianyi of 21.6% and Guangdong Flying Dragon of 40% stake. Through the several years of hard work by Guangdong Flying Dragon management team, it has successfully promoted the listed company to share placement eligibility. To Sanjiu Enterprise Group, it was a very lucrative deal. If the agreement went smoothly according to plan, Chengdu Lianyi will expected pocket a 100 million yuan profit, while Sanjiu Enterprise Group will only need to pay the price of a 100 million yuan to gain control of a listed company with more than 500 million market capitalization with expectation of getting over 200 million share placement proceeds to fund for future development within six months time.
On the contrary, Guangdong Flying Dragon will lose it control of Chengdu Lianyi through this one time equity trading. The supplementary agreement also declare that Guangdong Flying Dragon was supposed to fast track the profit earnings for first half of 1999 earnings to ensure Chengdu Lianyi interim net capital gains rate achieved more than 3% so that Chengdu Lianyi continued to stay qualified for the share placement. Ultimately, Chengdu Lianyi even insisted that Guangdong Flying Dragon have to hand over the 75% Guangdong Flying Dragon High-speed Shipping equity that was injected into Chengdu Lianyi unconditionally to Chengdu Lianyi. This unfair and unreasonable supplementary agreement was deemed as "hijack agreement" by Bank of Communication at that time.
Man proposes, God disposes. The inability to raise fund by Sanjiu Enterprise Group resulted in the still birth of this unorthodox equity transaction. With the withdrawal of Sanju Enterprise Group, Chengdu Lianyi lodges a police report against Guangdong Flying Dragon Group alleging an equity fraud that had never happened. Chengdu Lianyi take advantage of their local influences and uses illegal means to misrepresent a civil dispute as criminal case to resolve the equity transaction aftermath. Its intention was to repossess the Chengdu Lianyi shares held by Guangdong Flying Dragon and pilfered the Guangdong Flying Dragon High-speed Shipping’s assets.
In the end, Guangdong Intermediate People’s Court does not agreed with the Chengdu Intermediate People’s Court decision to treat it as stolen assets to be return to Chengdu Lianyi view point. It refused to return to Chengdu Lianyi the 40% Chengdu Lianyi equity held by Guangdong Flying Dragon that was frozen in the bank.
Looking at all these facts, after the lodging with police on the fraud case, all underground transaction performed by Chengdu Lianyi and associated collection agreement were deliberately concealed and the Chengdu People’s Procuratorate was not even aware of the existence of the agreement. This resulted in Chengdu Intermediate People’s Court not able to give a fair trial to Guangdong Flying Dragon and pass a verdict objectively. The supplementary agreement was archived by the Bank of Communication Jiangnan Branch office. But it has now been made known to public.
Pertaining to this Guangdong Flying Dragon Fraud case and making an objective analysis of it, assuming that the Sanjiu Enterprise Group equity trading progress smoothly as planned and Chengdu Lianyi had reap the profit out of it, do you think Chengdu Lianyi will still be making false accusation on Guangdong Flying Dragon on a fraud case? Regardless of whether the equity trading was successful or flopped,
Guangdong Flying Dragon had lost hundreds of millions through this shares transaction, is Guangdong Flying Dragon considered a victims or scammer? According to law, this only be considered as a civil contract dispute. Many authoritative legal experts had made the following observations on this case: If the Guangdong Flying Dragon fraud case was trial in Guangdong Magistrate Court, the results will certainly be different. "Guangdong Flying Dragon does not constitute a contract fraud." As many unknown information had recently been exposed, it will draw the attention of many parties and legal experts to perform in-depth anatomy on this case. Whatever the outcome maybe, Guangdong Flying Dragon fraud case is a learning lesson for China's financial markets.
I recently learned through the news media that the suspect Zeng Hanlin was repatriated by the Canadian government back to China, which means that the case is re-trial again. Given the much attention from the current domestic and international media, Zeng Hanlin's case relates the fate of many China's fugitive that seek asylum in overseas. The outcome of this case is likely to directly affect China's image in the international arena. To avoid conscience pricking, and implicating more innocent parties, I am willing to reveal the truth to the public, hoping the relevant authorities is willing to provide an in-depth investigation to show the fairness of China's judicial system, the erroneous will be remorseful.
A convincing start to an international fair trial.
Hopefully, the media can also act as an administrator to a fair and just society.
Court case Date: November 17, 2011 8:30 am Thursday
Court cases Location: Sichuan Province, Chengdu City Intermediate People's Court
Sincerely,
Informant
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