Xiao Shih is kind enough to republish the solid article by James Areddy on the fallout of the pension fund scandal that would otherwise have been hidden behind firewall of the Wall Street Journal. As Xiao Shih says, not that much real news, apart from the names of some participants including Hong Kong developer en Xintiandi inventor, who seems to have real trouble. Here is what James writes:
Vincent Lo, a Hong Kong magnate who used to boast about his political connections, has warned investors that his company faces legal risks for accepting pension money to try to build a Shanghai version of Silicon Valley. In contrast to the U.S., China bars the investment of pension money in real estate, to keep retirees' money from being squandered in chancy projects.
Shanghai's mayor and acting party secretary, Han Zheng, says real-estate investors are still welcome. But now, extravagance is out, and "prominent use will be made of
caps and ceilings" to control economic growth, he said in a recent address.
When the scandal broke, Mr. Lo of Hong Kong was in the midst of building the "Knowledge & Innovation Community," an ultramodern apartment and office complex adapted to high-tech tenants. Oracle Corp. and Cisco Systems Inc. called it Shanghai's version of Silicon Valley and agreed to help build it.
Among his financing: $190 million from the Shanghai pension fund. It had been funneled through Shanghai Pudong Development Bank Co., a local-government-run bank part-owned by Citigroup Inc., and masked as commercial lending, according to regulatory notices. Pudong Development and Citigroup had no comment.
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