chairman of Shanghai Nongkai Development Group and reputed-ly the city's richest man,
was placed under house arrest while central government authorities investigated
questionable loans made by Bank of China. Zhou, who gives his name as Chau Ching
Ngai in filings to the Hong Kong Stock Exchange, was known to have close links to Liu
Jinbao, former head of Bank of China in Hong Kong. Liu was recalled from his post in May
and was also reported to be under investigation.
The investigation was initially reported
to he in connection with loans made by the hank in Hong Kong, including one for about
HK$2. L bn which Zhou used to help acquire Shanghai Land Holdings, a Hong Kong-list-
ed company. However, it later was widened to include loans made to Zhou when Liu was
head of the hank's branch in Shanghai. Zhou's wife, Mao Yuping, was also arrested by
Hong Kong's Independent Commission Against Corruption but later released on hail.
the wake of the scandal, Shanghai municipal government announced that it was going to
review all large commercial land transactions signed since May 2001. The locus of the
investigation was the open bid-ding system' under which the city govern-ment can ignore
the highest bidder, without having to give reasons. The head of the Shanghai Housing and
Land Administrative Bureau said that the system had been abused to give land at low
prices to some developers who were later able to make huge profits.
For its part. Bank of
China Hong Kong) responded to market concerns by appointing accountancy firms KPMG
and Moores Rowland to review its credit control and risk management
Shanghai tycoon faces probe
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