Highway 'King' under investigation

A SHANGHAI highway mogul is under investigation for allegedly swindling 4.3 billion yuan (US$627 million), the Oriental Morning Post reported today.

Liu Genshan, 51, the chairman of a Hong Kong listed company and the 36th richest guy on Rupert Hoogewerf's 2004 list of "The 100 Richest People in China," once funded seven highways in Shanghai and neighboring Zhejiang Province.

Liu was reported to be involved in fraudulent bank loans and money laundry and was been taken away for questioning by officials a week ago, according to the newspaper.

A report to Hong Kong's Independent Commission Against Corruption at the beginning of 2005 said Liu moved 3 billion yuan in bank loans for highway projects overseas using illegal channels.

Liu used part of the money to buy a Hong Kong listed company and named it Maosheng Holdings.

Liu's two highway projects in Shanghai and Zhejiang's Ningbo stopped construction due to a lack of funds.

The Maosheng Group also pulled money from a highway project in Ningbo and stopped maintenance on another Ningbo highway it funded.

Liu won his first highway project in 1999 and his Maosheng Group invested in seven highways over the next few years.

Maosheng paid no more than 50 million yuan in the Jiading-liuhe project to set up a joint project company with the Shanghai Urban Construction Group. The company's registered capital was 100 million and the total investment in the project was 450 million yuan.

The Maosheng Group was also reportedly the biggest shareholder in the Huqingping Highway, a road linking Shanghai's downtown and industrial zones in suburban Qingpu.

The road cost Maosheng 420 million yuan and its total investment amounted to 3.5 billion yuan. Maosheng accounted for 67 percent of the project, while the state-owned Shanghai Urban Construction took only 25 percent of the shares.

Source: Shanghai Daily