By Zhao Hongmei, Wang Liming
Published: 2008-06-26
Translated by Liu Peng
Original articles:
[Chinese] [Chinese]

A sum of 64 million yuan siphoned off a developmental loan was believed to have sparked off a probe into the corruption case involving China Development Bank (CDB) vice president Wang Yi.  

Since news of Wang, aged 52, being investigated by the Chinese Communist Party's disciplinary committee broke in early June, rumors have circulated that the case was closely linked to the listing of a securities firm and illegal stock transactions.

The EO learned that both the above clues could be traced back to Wang's former secretary Meng Tao and younger brother Wang Lei.

Possible Origins of Probe
Meng was the first domino, according to in-circle sources. He was investigated in February after the state audit agency discovered he had skimmed 40,000 yuan off of a loan given by the state policy bank to Henan province.

As investigators dug further, it finally led to a 64 million yuan "consultancy fee" paid to Wang's younger brother, Wang Lei.

Sources told the EO that of a 2.5 billion-yuan-loan provided by CDB for Henan's tourism development, only about 200 million yuan were delivered to the intended projects. How the rest of the money was used was unclear.

The missing funds were said to have triggered investigations that ultimately led to Wang, according to sources.

The loan was meant for Henan's Zhengzhou region, famed as the base of Shaolin kungfu, to develop a cultural heritage tourism site and strengthen its identity as the Chinese martial art city.

Yet, another version of the story had it that the case was linked to the listing of Pacific Securities Company.

Despite having been in the red for three consecutive years with losses totaling 84.82 million yuan, Pacific Securities succeeded in being listed in the A-share market on December 28, 2007.

According to an insider's account, subsequently, the company's IPO sales brought enormous fortune for its shareholders, among whom included relatives of Wang.

According to Pacific Securities' listing report, before its listing, 1% or 15.03 million of its shares were held by Tianjin Shunying Technology Investment Company, which based on records from the Industrial and Commercial Information Department, has a registered capital of 5 million yuan, with Wang Lei was the company's legal representative. Wang's sister Wang Wei was also one of the shareholders.

Another widely circulated story in the market was that Wang's case was related to insider trading of Guangfa Securities and the listing of Sinolink Securities. The former case had been brought to court in late-May, and the proceeding would likely begin in late June or early July.

There were also rumors that Wang's case would ultimately involve many other high level officials, and could expose irregularities in securities regulatory management that might be linked to the current slump in the stock markets.

However, industry sources generally discounted the talk of Wang's case having to do with the dampened markets.

The Other Side of Wang Yi
Between 1992 and 1995, Wang Yi was the deputy director of Securities Regulatory Commission office of State Council, and from November 1995 to February 1999, he was the vice-chairman of China Securities Regulatory Commission.

He built up an extensive and strong network within the securities markets during his seven-year career with the stock markets watchdog agency.

Apart from the securities and banking circles, Wang has also gained a reputation in classical music circles.

Though never had formal musical training and could not read musical scores, Wang has made a name as composer and songwriter. His most known work is a symphony entitled Ode to the Divide Land, which had toured across the country and performed some 30 times.

Rumor had it that some of the major sponsors for his musical tour and performances had also been under investigation.

Presently, Wang's case seems to have just played out its prelude, with the Party officials and CDB yet to make formal comments on the case. CDB, though keeping mum, has quietly removed Wang's profile from the list of higher management personnel.