Economy

Ji gets liquidated

Mayor embroiled in high-profile bankruptcy

Ji Jianye w

Ji: not bulldozing so much now

As the Party Secretary of Yangzhou, Ji Jianye’s approach to urban planning earned him a nickname as “the Bulldozer”. The moniker stuck when he arrived in Nanjing as mayor, where he earned few admirers for a mass felling of the city’s wutong trees (see WiC100).

So when Ji was nabbed in October by anti-corruption officials, Nanjing residents celebrated with fireworks, reports Century Weekly magazine.

In typical Party-speak, Ji is alleged to have committed “grave disciplinary violations”, making him the latest victim of President Xi Jinping’s campaign to tackle graft. Late last month, the Beijing News reported that businessmen are being dragged into the case, all of whom have connections to Ji or benefited from his largesse in Suzhou, Yangzhou and Nanjing.

Comparisons are even being drawn with the jailed cadre Bo Xilai, who forged a lucrative partnership with tycoon Xu Ming.

Both cases highlight a major flaw in China’s development model, the Beijing News says, as local politicians and business cronies enrich one another in the dash for growth with improper contracts and elaborate kickbacks.

But what may have finally brought Ji down was abuse of the bankruptcy code. It looks like wronged creditors appealed to anti-graft officials, bringing his questionable behaviour to their attention.

The liquidation in question is one of Nanjing’s most publicised bankruptcies. According to Want China Times, the creditors of Nanjing Huafei Colour Display claim they were “cheated” of the company’s most valuable asset – its land.

Journalists were quick to spot the connection with Ji. Just one day after the city boss was detained, the sale of a plot thought to be linked to Huafei was postponed. The local land bureau then confirmed that the land was one of the Huafei assets set to be auctioned after its bankruptcy, with a reserve price of Rmb1.8 billion ($296.4 million).

Investigating further, the Economic Observer points out that the plot had recently been re-zoned from industrial to residential use, resulting in a significant appreciation in its value. This was particularly aggravating for the company’s creditors as the land was valued a year ago at just Rmb163 million.

Back then the plot ended up being sold to Nanjing New Industrial Investment Group. Huafei’s creditors saw none of the proceeds.

The tussle over the land is a longstanding issue – after Huafei went bust owing Rmb850 million to more than 200 suppliers. The creditors argued that plots of land had been mortgaged to the company’s suppliers and should be included in the liquidation of Huafei’s assets.

In April the administrator responsible for the bankruptcy procedure declared that the land did not belong to the liquidated firm, but to the state (Huafei only had the ‘right’ to use it).

“We have been continuously petitioning, and it is clear that the [96,000 square metre] plot’s valuation at Rmb163 million was suspected of manipulation and that it was deliberately undervalued,” one of the creditors told the Economic Observer, further alleging that Ji took control of the bankruptcy case.

Bankruptcy experts speaking to the newspaper said that the land rights had an intrinsic market value and that the subsequent auction should have been conducted in a way that maximised proceeds for creditors.

Instead, creditors were offered a sum of Rmb100 million to settle, but the majority refused the cash.

What happens next in Nanjing isn’t clear.

But if the land in question is sold once again, Huafei’s creditors will be hoping for a major claim on the proceeds.

Nothing has been heard from Ji since he was detained. Whether his charge sheet will include rigging the bankruptcy process is unclear, but local media smell a rat, and assume he and his cronies were set to make big gains from the coveted land.


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