ISLAMABAD: Finally, the fraud of Chinese company Jiangsu Yabaite Technology Co Ltd had a drop scene as the China Securities Regulatory Commission (CSRC) blacklisted it forever and awarded the maximum penalties to the company and its owner.
On December 17 2017, the owner of the Chinese company Yabaite published an apology on its official website and confessed that he had defrauded the public and accepted the CSRC decision of penalty and lifetime ban on his entry in the security market.
When contacted, Deputy Chief of Mission Chinese Embassy Lijian Zhau verified that the CSRC had announced its decision and the public apology of the owner of Yabaite was authentic. He said he had already clarified that the said Chinese company was involved in some fraudulent activities and the foreign office of China had also already clarified the matter.
The Chinese company’s fraud was highlighted when the Pakistani media reported that Punjab Chief Minister Shahbaz Sharif was allegedly involved in money laundering and sent a
huge amount of kickback money to China through Yabaite. However, the Shahbaz Sharif not only strongly rebutted the media reports but also sent legal notices to the media organisations which was involved in alleged misreporting. The case of alleged money laundering was then referred to FIA by SECP and now Multan NAB had started its investigation into the Multan Metro Bus project to verify any alleged money laundering.
The CSRC on December 15, 2017 issued a statement which said it had imposed a fine of 600,000 Yuan to Yabaite and Lu Yong, the owner of Yabaite had also been fined 300,000 Yuan. The Chinese regulatory body had barred him from the securities market for life. Similarly other employees involved in the case received administrative penalties or were banned from the market.
According to China Central Television (CCTV) and other Chinese media reports, “An investigation showed that from 2015 to September 2016, Yabaite inflated its revenue and profit by 58 million Yuan and 26 million Yuan respectively by announcing non-existent transaction such as Multan Metro Bus project and other deals”.
According to these reports, the inflated profits accounted for 73 percent and 20 percent in 2015 and 2016 respectively. The company claimed that Multan Metro Bus project was undertaken by it with the cooperation of the local government. It also claimed that the company received $35 million. To cover up the fraud, Yabaite exported construction materials during the period the project was supposedly in progress, claiming that those materials were used for the Multan Metro Bus project. However, the CSRC investigation found that the material was then imported back to China through a third party company and Yabaite employees had not even visited the site themselves.
“The money was mostly remitted through Yabaite-controlled companies or other domestic enterprises rather than what the company claimed had been payments from Pakistan. All the company’s bank transactions were completed in a 20 square-meter apartment in Shanghai. Yabaite transferred funds through more than 100 bank accounts and 50 companies in seven countries and regions which complicated the investigation process”, reported CCTV while quoting a CSRC employee.
According to the CSRC statement, originally in Chinese which was translated through google translation by this scribe, “China Securities Regulatory Commission (CSRC) investigated the illegal conduct of Jiangsu Yabaite Science and Technology Co Ltd which lied about its business income by fabricating project overseas and making up domestic and foreign trade in construction materials to fake financial statement. CRSC found out that Yabaite falsely reported its newly-added business revenues of 580 million RMB and profits of roughly 260 million RMB by making up its Multan Metro Bus project in Punjab, Pakistan, and its international and domestic trade from 2015 to September 2016. CSRC decided to impose a fine of 600,000 RMB on Yabaite and 300,000 RMB on Lu Yong, the person directly in charge of the company, which are the highest amounts stipulated by the Securities Law, and ban the company from entry into securities market”. The link of the original statement on CSRC website is http://www.csrc.gov.cn/pub/newsite/zjhxwfb/xwdd/201712/t20171215_328942.html
Similarly, the Yabaite’s owner Lu Yong published an apology on his official website and said, “On December 15, 2017, Jiangsu Yabaite Science and Technology Co Ltd concerned managers of the company and I received the decision of Administrative Penalty made by CSRC. I accept the decision made by CSRC about the company and myself, and apologise to all the shareholders and staff of the company. I recognise my misconducts and firmly support supervision authorities to strictly regulate public companies and market order, so as to create a sound legal environment for the positive development of the capital market”. The link of the original statement on CSRC website is http://www.yabaite.com/index.php?c=article&id=179
Earlier, when the Chinese company’s fraud was reported by the local media, The News Investigation Cell probed the matter and solved the puzzle of this entire saga. According to The News’ investigation the Chinese company had never been involved in any project in Pakistan. However with the help of some cronies in Pakistan, the Chinese company’s owner managed some fake and forged documents to prove its claim of working in Pakistan. The News Investigation Cell revealed that partner of the Chinese company in Pakistan i.e. Capital Engineering and Construction Company never existed though Lu Yong and his Pakistani acquaintances tried to get it registered with SECP but failed due to non-availability of the name.
It is pertinent to mention here that the two partners who allegedly helped Lu Yong to manage fake and forged documents were arrested.
