Published September 25, 2008

Yanlord shares hit by graft trial of China ex-official

Allegations include accused buying apartment at deep discount

By LYNETTE KHOO
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SHARES of Yanlord Group went into a tailspin yesterday, hurt by market rumours linking it to a corruption trial in Shanghai involving a former Chinese official.

Following a request by Yanlord, share trading was halted at 2 pm, pending an announcement in response to the market talk. But the stock had by then plummeted as low as 99 cents before ending the morning session at $1.04, down 22 cents or 17.5 per cent.

According to a China magazine, Caijing, the group allegedly allowed a former Shanghai official - currently on trial for suspected corruption - to buy an apartment at a price substantially below market levels.

Caijing said in an online report that Yanlord allegedly allowed Kang Huijun, former deputy chief of the Pudong district in Shanghai, to buy a luxury apartment at Yanlord Riverside Garden in the prosperous Lujiazui area, at a steeply discounted price of 8,300 yuan (S$1,719) per square metre in 2001, at a time when the prevailing market price was 11,000-12,000 yuan per sq m.

In 2006, Yanlord allegedly bought back the apartment from Kang at a price of 8,300 yuan per sq m and later sold him a larger apartment measuring over 300 sq m at the same price. The gap between purchase price and market price totalled about 4.89 million yuan, according to Caijing.

Kang was reportedly detained in November last year because of allegations that he used his position to help Yanlord secure land use rights to several plots of land in Pudong. He has been accused of taking bribes worth a combined 5.99 million yuan in six separate instances and was alleged to have 11.84 million yuan of personal property of unexplained origin.

The official was also the general manager of Lujiazui Group, a government company that is in charge of developing the Lujiazui financial district in Pudong. Kang was also said to be accused of helping Yanlord to gain permission for blocks SB4-1, 2, 3 and 4 as well as SB5-1 and 2 in Pudong.

The Shanghai Daily reported earlier yesterday that government prosecutors alleged that the former deputy chief of Shanghai's Pudong district accepted a 189 sq m apartment at the Yanlord Gardens complex in exchange for help in securing land development rights.

Besides the Yanlord case, Kang also allegedly received bribes from staff and friends in exchange for offering employment or providing other 'inappropriate' assistance, Caijing said.