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Shanghai Residents File Formal Complaint Suggesting Official Collusion in Zhou Zhengyi Fraud

August 29, 2006

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

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.

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.

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.

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
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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