Profile of a Highway Tycoon Under Investigation

By EO reporters
Published: 2008-07-17
By Zhang Yong, Wan Xiaoxiao, Zhang Xiaohui, Chen Zhouxi
From Corporation, page 27, issue 376, July 14 2008
Translated by Zuo Maohong
Original article: [Chinese]

More corrupt government officials might be unearthed as a probe into Shanghai-based tycoon Liu Genshan, suspected of embezzlement, continued. 

The 51-year-old Liu, known in China as the Highway King, was arrested in early June following a more than year-long investigation into corruption among transportation authorties in Zhejiang, a province bordering Shanghai. 

Well-connected with government officials, Liu was the president of Shanghai-based Maosheng Group, a diversified company with interests in
highway construction, housing development, investment consultancy, asset management, trading, restaurants, and more. Major assets of the company include four highways in Shanghai, three in Zhejiang, and land properties in downtown Chongqing.

Cause of Trouble
Liu was arrested for fraud in Shaoxing, Zhejiang province on June 5, the EO has learned.

According to Maosheng's vice president Yang Fuguo, Liu had been investigated because of his involvement in swindling funds for a construction project in Zhejiang.

The EO learned that the missing registered capital of Shaoxing Yongjin Highway Construction and Development Company (henceforth Shaoxing Yongjin), a company dedicated to the construction of the Yongjin Highway (Ningbo-Jinhua Highway) Shaoxing stretch, was what prompted the police probe.

Statistics showed 840 million yuan of registered capital for Yongjin Highway's Shaoxing stretch, which was funded jointly by Maosheng and the Shaoxing Communications Investment Company. The two held 70% and 30% shares respectively.

Maosheng later purchased its partner's 30% shares and thereby became the exclusive owner of the highway company.

"Maosheng might not have prepared enough funds at the very beginning when Shaoxing Yongjin was registered," one source told the EO. Liu had put no more than just 200 million yuan into the company at first, and he later filled in its account with loans he obtained by mortgaging its highway toll right, said this source.

During the investigation into Zhejiang's transportation system, some officials exposed the discrepancy. The Shaoxing Administration of Industry and Commerce (SAIC) thus launched an investigation into Liu's company, and found the company's registered capital, which stood at over 800 million yuan, had vanished.

According to one source, Liu might have taken out the cash in the name of purchasing equipment and attempted to compensate with non-cash assets.

"What Liu has done, either mortgaging the highway toll right or drawing out registered capital, can be suspected as a crime. And he managed to do so partly due to his connections with certain officials," said the source, claiming Liu had even hired a former transportation official, former director of the Shaoxing Communications Bureau Cai Jidong, with a yearly pay of some one million yuan.

Liu Genshan the PR Player
Like many investors, outstanding public relations skills had won Liu a big part of what he owned today.

"Usually when there's a highway to be built, there should be about 200 million yuan at first to register a company dedicated to the project. This company would be initiated by a parent company, which should be approved by government authorities first. Liu had connections in the government," said a source close to Liu.

The source added that Liu was bold and had ways to get funding, as he also enjoyed good relations with banks. The source said
Liu would work out an assessment report of an uncompleted highway and mortgaged it for a new project. "Sometimes he also trusted the toll rights of a highway to raise funds," the source said.

"Usually a highway isn't accepted as a repayment of debt, so one needs other assets for repayment. Many problems will arise during this, for example, the amount and the term of a loan. But unlike other people, most of the time Liu gets big loans, which is really interesting," he added.

According to a source close to the Shanghai Public Security Bureau, the Shanghai police would engage in the investigation once Liu revealed an official in Shanghai. Not long ago, Shanghai and Zhejiang had exchanged their top justice officials, which improved anti-corruption cooperation between the two sides, he said.

Based on the 2007 Richest People in China Report by Hurun, a luxury business publishing and events group, Liu was listed at the 590th spot with 1.2 billion yuan to his name. 

Liu has become the latest among a string of prominent businessmen in Shanghai to be targeted by a corruption probe. A source close to Liu said the highway magnate had already dodged several "disasters" in the past, adding: "He will get into trouble sooner or later."

Previous cases included that of Liu's longtime friend Zhou Zhengyi, once the richest man in Shanghai, who was convicted with bribery and faking value-added tax receipts in 2003. Zhang Enzhao, former board chairman of China Construction Bank, was also convicted with of bribery in 2005.
Another highway magnate Zhang Rongkun was imprisoned for bribery and fraud in 2006, his case related to the massive pension fund that also implicated Shanghai's former Communist Party chief Chen Liangyu, who was convicted of abuse of power and taking bribes. More than a dozen officials and businessmen were implicated in the scandal that shook the nation. 

Liu had been stranded in Hong Kong for half a year when Zhou's case was exposed, and thanks to loopholes in the law, Liu also escaped Zhang Enzhao's case. 

reditors had flocked to Maosheng to claim repayment after the news of Liu's arrest broke. "It shouldn't have been difficult for Liu to handle the registered capital. But now that he is under arrest and claims for repayment surge all of a sudden, the company may not be able to scrape by," said one of its senior managers. 

Highway Projects Under Liu Genshan's Company




Registered Capital 

Total Investment  

Jiading, Shanghai-Liuhe, Jiangsu Highway 

Shanghai Urban Construction 51%; Shanghai Maosheng 49%


100 million 

450 million 

Shanghai-Qingpu-Pingwang Highway 

Shanghai Maosheng 67%; Shanghai Urban Construction 25%; Shanghai Construction 8%


620 million 

3.5 billion 

Tongjiang, Heilongjiang-Sanya, Hainan Highway, Shanghai Stretch 

Shanghai Construction 47.75%; Shanghai Urban Construction 26.25%; Shanghai Maosheng 26%


960 million 

2.88 billion 

South Ring Highway of Shanghai 

Shanghai Maosheng 100%


800 million 

3.618 billion 

Loop Highway of Ningbo 

Shanghai Maosheng 80%; Ningbo Communications Investment Holdings 20%


1.2 billion 

First and second phases of construction: 8.75 billion 

Ningbo-Jinhua Highway, Shaoxing Stretch 

Shanghai Maosheng 70%; Shaoxing Communications Investment 30%

840 million 

2.8 billion 

Beilun Port Highway of Ningbo 

Shanghai Maosheng and its subsidiaries 100%



Valued at 2.5 billion