Human Rights in China (HRIC) has learned that a group of Shanghai residents displaced in a redevelopment project controlled by Shanghai tycoon Zhou Zhengyi filed a formal complaint with the Supreme People’s Procuratorate on August 25, alleging that well-connected local officials are implicated in Zhou’s fraudulent leasing of the redeveloped property. The petitioners present their case as a test of the Hu Jintao government’s resolve in fulfilling its pledge to “put people first” and “use the people’s basic interests as a starting point” in cracking down on corruption.

The complaint, filed by Zhou Daye and other former residents of the neighborhood known as Dongbakuai, provides the first detailed allegations that local officials may have assisted Zhou Zhengyi in his fraudulent procurement of a land lease and massive bank loans for a piece of prime urban land valued at several billion yuan.

The redevelopment involved eight land lease agreements signed on May 28, 2002 between Zhou Zhengyi’s Hong Kong company Fine Time Investments Ltd. and Shanghai’s Jing’an District government (represented by District Chairman Jiang Yaxin, and Vice-Chairman Shi Mingfang). The displaced residents’ complaint alleges that Fine Time Investments Ltd. never existed as a legally registered company in Hong Kong, and that the lease agreements, which involved dividing the neighborhood into eight sections, did not go through the necessary oversight procedures by central government and Shanghai finance officials. The complaint notes further that Jiang Yaxin was formerly personal secretary to Huang Ju, who is now a member of the Politburo’s Standing Committee.

The complaint further notes that one of the stipulations of the lease agreements was that original residents of the Dongbakuai neighborhood should be encouraged to move back into the neighborhood, and it was on that basis that 2,159 households were convinced to leave the property. But in fact, the complaint says, any residents who demanded to move back were forcibly resettled elsewhere or detained, and the lawyer who assisted hundreds of householders in their claims, Zheng Enchong, was eventually detained and imprisoned for three years.

The questionable legality of the lease agreements was never examined in Zhou Zhengyi’s fraud trial. On June 1, 2004, the Shanghai No. 1 Intermediate People’s Court issued a relatively light sentence of three years’ imprisonment for Zhou.

On May 28, 2003, displaced Dongbakuai residents sued Zhou Zhengyi and Jing’an District officials, but the court ruled against them. On July 26, 2005, residents represented by Zhou Daye attempted to file an appeal at the Letters and Petitions Office of the Supreme People’s Procuratorate, but an official there refused to accept it. Subsequently, the law firm advising the petitioners came under heavy pressure. Finding their legal recourse limited on the mainland, Zhou Daye and about a dozen others prepared to go to Hong Kong at the end of October and early November 2005 to file a lawsuit against Zhou Zhengyi, who is a Hong Kong resident. However, Shanghai police prevented them from boarding the train, and they never reached Hong Kong.

Sources told HRIC that a double standard has been applied to compensation for residents displaced from the Dongbakuai neighborhood. A few residents with relatively greater influence locally and abroad have reportedly been able to bring pressure to bear on local authorities, and as a result have enjoyed better compensation and resettlement terms. But less influential former residents such as Zhou Daye have never received the compensation promised to them. Deprived of legal and administrative remedies, they hope that raising their case with the central government and in the media and international community will help them finally obtain some measure of justice.

At a time when the government is emphasizing anti-corruption and “harmonious society,” the Shanghai authorities’ lenient treatment of Zhou contrasts sharply with its harsh suppression of the petitioners who have been protesting their forcible removal and inadequate compensation, and of their lawyer Zheng Enchong. Zheng was released from prison in June this year after completing his three-year prison term on charges of revealing state secrets overseas. However, he remains under effective house arrest, with dozens of police officers ensuring that he never leaves the neighborhood where he lives. He has not even been allowed to visit his mother, buy groceries or attend church services, much less seek employment. The entire family is now reliant on the earnings of Zheng’s wife, Jiang Meili.

HRIC calls on Chinese authorities respond to the detailed allegations provided in this complaint and conduct a full and transparent investigation into the alleged official collusion of Shanghai officials in this serious fraud.

The full text of the residents’ complaint is attached to the Chinese version of this press release.

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