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Chinese Executive Who Was Once Kidnapped By Angry Investors Disappears

Tyler Durden's picture




 

Back in August, angry investors captured Shan Jiuliang, the head of Fanya Metals Exchange, in a daring predawn raid on a luxury hotel in Shanghai.

The citizen's arrest (depicted in the rather dramatic image shown below) came after Fanya stopped making payments on WMPs it issued. As we reminded readers at the time, WMPs are marketed to investors through as a high yielding alternative to savings deposits. Investors aren’t often aware of exactly what they’re investing in or how risky it might be or that in many cases, issuers borrow short to lend long resulting in a perpetual case of maturity mismatch. 

“Fanya, based in the southwestern city of Kunming, bought and stockpiled minor metals such as indium and bismuth, while also offering high interest, highly-liquid WMPs from its offices in Shanghai and its financing branch in Kunming,” FT explained. Over the summer, the exchange ran into “liquidity problems” at which point those who had bought the company’s financial products had their funds (billions worth) frozen. Investors began to protest.

The situation began to deteriorate rapidly after that, and within a month, investors decided to take matters into their own hands by flying in from all corners of the country to ambush Shan and deliver him to local authorities. He was later released.

As the RBA put it in a report out earlier this year, "a key issue is whether the presumption of implicit [state] guarantees is upheld or the authorities allow failing WMPs to default and investors to experience losses arising from these products." That may indeed be a key issue, but as we noted in "The 8 Trillion Black Swan: Is China's Shadow Banking System About To Collapse?," in the event investors are forced to take losses, the key issue is what those investors will do next.

Similarly, FT says that "one of the risks posed by high interest rate shadow banking in China is the possibility that it will erode support for the Communist party among the urban middle classes who have benefited most from China’s increasing prosperity."

In other words: if China's multi-trillion dollar WMP market implodes and the state doesn't step in to bail investors out, there's a very real risk of social upheaval as evidenced by what happened to Shan in August.

Well, if Xi and his attack dog Fu Zhenghua are serious about rooting out corruption in China's financial markets, you'd think they'd spend a little more time getting to the bottom of things like $6.4 billion in missing funds tied to WMPs issued by an indium exchange than on arresting securities officials for frontrunning the national team. 

Sure enough, Imagi Animation Studies (another company run by Shan) now says it can't locate its leader. "In a filing to the Hong Kong stock exchange, Imagi Animation Studies, a company controlled by Shan Jiuliang, said it had “lost contact” with the Fanya founder. It said he last attended a board meeting on October 15 but did not turn up for a meeting on December 11 and had not been reachable," FT reports, adding that "announcements that a company has 'lost contact' with its leader are usually the first and sometimes only sign that a Chinese executive has become ensnared in the country’s three-year anti-corruption campaign." 

Party officials have reportedly occupied Fanya's offices and are now rummaging through files and documents presumably in an effort to figure out where the money is and what happened over the summer that forced Shan to freeze the WMP payouts. 

As noted above, the Politburo isn't particularly keen on the witnessing a popular revolt triggered by some kind of dramatic meltdown in financial markets. Indeed, the main reason the PBoC spent CNY1.5 trillion in Q3 propping up the SHCOMP was to keep the legions of farmers and housewives-turned day traders (who China encouraged to leverage their life savings by buying grossly overvalued stocks on margin) from losing their minds in the midst of the summer selloff. 

Given that, it seems likely that Beijing will end up bailing out Fanya's disgruntled investors rather than risk ongoing protests - or worse. As for Shan, we imagine Xi will be none to pleased about having to shell out CNY36 billion to fix a problem that very well might have arisen from mismanagement, greed, or both. On that note, we'll close with a quote from an attorney who helps foreign firms ensnared by Xi's anti-corruption probe:

"The best thing you can do is establish processes for who is likely to be taken away, and how to make sure they aren't disappeared forever."

*  *  *

Full Imagi filing

Imagi Filing

 

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Tue, 12/22/2015 - 20:45 | 6954728 OldPhart
OldPhart's picture

Sum Ting Wong

Horry Fuk

Sum Dim Foo

 

Let's start the inanity.

Tue, 12/22/2015 - 21:34 | 6954882 MrNosey
MrNosey's picture

This is just the beginning, a breakout of global civil unrest will occur as we embark on a clash of civilizations and a fight for survival in the new year, as it has just been reported that German Chancellor Angela Merkel is allegedly ‘Hitler’s Daughter’ and the Fourth Reich is about to become a reality......

http://beforeitsnews.com/conspiracy-theories/2015/12/the-fix-is-in-franc...

Tue, 12/22/2015 - 21:50 | 6954926 PrezTrump
PrezTrump's picture

absolutely. wrong.

globalist banksters are not for anarchy..

Tue, 12/22/2015 - 21:39 | 6954891 PrezTrump
PrezTrump's picture

all your moneys are belong to us

 

Tue, 12/22/2015 - 20:52 | 6954746 nmewn
nmewn's picture

Disappeared you say?

Thank you Vice Public Security Minister Meng Qingfeng!

I think ;-)

Tue, 12/22/2015 - 22:36 | 6955049 Handful of Dust
Handful of Dust's picture

Nothing is too good for a corrupt financial exec. Be preapred to read future Fortune Cookies:

 

"Help me preeze... i've been disappeared and am being held in Wang Fu's basement."

Wed, 12/23/2015 - 00:28 | 6955366 DeadFred
DeadFred's picture

When will they ever learn? Escape to your luxury apartment in Manhatten or San Francisco BEFORE they come after you with pitchforks and ropes.

Wed, 12/23/2015 - 03:16 | 6955587 Irish Yoga
Irish Yoga's picture

The fekkin chinks will deny he ever existed.

Tue, 12/22/2015 - 20:55 | 6954756 booboo
booboo's picture

me duc tape  

Tue, 12/22/2015 - 23:43 | 6955249 Mr. Magoo
Mr. Magoo's picture

Cheney needed another fresh heart transplant

Tue, 12/22/2015 - 21:41 | 6954780 Normalcy Bias
Normalcy Bias's picture

Tommy Chan: We hit the deer and his paw... What do you call it? The paw.

Jimmy Wang: [Speaking through a mouth full of pasta] The hoof.

Tommy Chan: It got caught in the grill. I got to hack it off.

Tue, 12/22/2015 - 21:06 | 6954788 delete entry
delete entry's picture

why are all the signs in German?

Tue, 12/22/2015 - 21:19 | 6954835 nmewn
nmewn's picture

lol...because English speaking "journalists" only use German photographers of course, see...thats why the shirts are printed up in French!

Hey, if the whole world has gone Huff-Po batshit stoopid crazy we might as well join them, so we don't get disappeared too ;-) 

Tue, 12/22/2015 - 21:37 | 6954880 delete entry
delete entry's picture

thanx and Merry Christmas

Tue, 12/22/2015 - 21:57 | 6954949 nmewn
nmewn's picture

And a Merry Christmas to you too.

Ya know, you could have just gone with the ole "Hey look, it says Product of PRC right there in the corner of the sign dammit!" but you let everyone figure it out for themselves.

I like that, welcome to ZH ;-)

Tue, 12/22/2015 - 23:21 | 6955185 uhland62
uhland62's picture

Somebody must have changed the signs because I couldn't see any German and it's my old language. Signs are usually written in the language of the targets i.e. who is to be impressed with your message. English signs are usually meant for the world press and international public. If you want to send a message to the Chinese government, that must be in Chinese etc. If Ukrainians want to impress the world public they shouldn't write signs in Cyrillic, but most of them don't know much else.

Tue, 12/22/2015 - 21:10 | 6954792 FireBrander
FireBrander's picture

String the fucker up a lamp post...I wonder how much property he owns in CA?

Tue, 12/22/2015 - 21:22 | 6954844 nmewn
nmewn's picture

Not to worry, Vice Public Security Minister Meng Qingfeng is on the case ;-)

Tue, 12/22/2015 - 21:14 | 6954813 Montani Semper ...
Montani Semper Liberi's picture

 We are keep money!

 No check!

Tue, 12/22/2015 - 22:18 | 6954994 WTFUD
WTFUD's picture

OR we are keep your money!

Do NOT follow this link or you will be banned from the site!