Founder of online Chinese lender sentenced to life for fraud

In this Jan. 1, 2016 file photo, policemen watch as depositors from Ezubo gather outside the State Bureau for Letters and Calls Reception Division office in Beijing. (AP)
Updated 14 September 2017
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Founder of online Chinese lender sentenced to life for fraud

BEIJING: The founder of a Chinese online peer-to-peer lender has been sentenced to life in prison on charges he defrauded investors of $7.7 billion in one of China’s biggest financial scams.
Ezubo was the biggest competitor in an informal finance industry that Chinese authorities allowed to flourish with little oversight over the past decade to support entrepreneurs who cannot get loans from state banks. A series of lenders have collapsed as economic growth slowed, leaving authorities struggling to defuse protests by depositors.
Ezubo’s founder, Ding Ning, and his younger brother, Ding Dian, were sentenced Tuesday to life by the Beijing No. 1 Intermediate People’s Court for “fundraising fraud,” according to the official Xinhua News Agency.
It said another 24 executives were sentenced to prison terms ranging from three to 15 years.
Two companies affiliated with Ezubo were fined a total of 1.9 billion yuan ($291 million), Xinhua said. It said some defendants also were convicted of offenses including smuggling precious metals and illegal gun possession.
Regulators seized Ezubo in December 2015 on charges of taking deposits without a license. Xinhua said authorities have confiscated the company’s assets to repay depositors but gave no indication how much money was recovered.
Regulators allowed private sector lending to support entrepreneurs who create China’s new jobs and wealth but are largely shut out of lending by the state-owned banking industry. The national bank regulator estimated in 2015 the industry had grown to $1.5 trillion.
Beijing tightened control as defaults mounted following the 2008 financial crisis. The finance industry as a whole has come under tougher scrutiny after a plunge in stock prices in 2015 led to accusations of insider trading and other offenses.
Ding, 34, was a high school dropout who worked at his mother’s hardware factory, where he gained experience running online sales, according to media reports. With no technical or financial training, Ding launched Ezubo in July 2014 and opened marketing offices across China.
Ezubo appeared to gain Beijing’s endorsement when the Cabinet website, gov.cn, published an interview with Ding discussing his life as an entrepreneur. That interview has since been removed.
The seizure of Ezubo prompted protests by depositors who complained the government failed to protect them.
Depositors traveled to Beijing to protest at government offices and the headquarters of state television, which had broadcast advertisements for Ezubo.
Ezubo attracted deposits by promising returns of 9 to 14.6 percent, according to investigators. But authorities say a former executive admitted 95 percent of those borrowers were fictional entities created by Ezubo. In a confession broadcast by state television in February 2016, the executive called the company “a fraud ... a typical Ponzi scheme.”
The court said Ding and other defendants “inflicted huge losses on investors in many parts of China and disrupted the national financial management system,” according to Xinhua.
The Internet has helped lenders attract money from working class or rural depositors, many of them financial novices with little knowledge of the risks involved.
After Ezubo depositors poured out their anger on Chinese social media, police phoned some Internet users to warn them against criticizing the Communist Party online.
One investor from northeastern China who lost 480,000 yuan ($76,000) told The Associated Press that police confiscated her computer and cell phone after she posted online that she might file a petition with the central government.
Earlier, two businesswomen in southern China were sentenced to death in 2012 and 2013 in separate cases on charges of “illegal fundraising.” The penalty for the first was converted to a prison term following an outcry online that it was too severe.


‘Makkah Road Initiative’ to fast-track Malaysian and Indonesian Hajj pilgrims

Updated 17 min 47 sec ago
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‘Makkah Road Initiative’ to fast-track Malaysian and Indonesian Hajj pilgrims

  • Saudi Arabia, Malaysia and Indonesia join forces to launch the “Makkah Road Initiative"
  • It will help Hajj pilgrims to fast-track journeys to the Holy Land

KUALA LUMPUR: Saudi Arabia, Malaysia and Indonesia have joined forces to launch the “Makkah Road Initiative” this year, a pre-clearance system that will help Hajj pilgrims to fast-track journeys to the Holy Land.
Two flights carrying Hajj pilgrims were commissioned at the Kuala Lumpur International Airport to mark the official launch, which was attended by officials from Malaysia, Indonesia and Saudi Arabia.
According to Minister in the Malaysian Prime Minister’s Office for Islamic Affairs, Dr. Mujahid Yusuf, who also launched the Makkah Road Initiative, pilgrims will no longer have to wait in long queues to finalize documentation such as visa stamps, customs, and health screenings.
“All these will be sorted out in KLIA, and when our (Malaysian) pilgrims arrive (in Madinah), they can just take the bus to the hotel. Their luggage will be managed by the Saudi authorities,” Dr. Yusuf added.
A world first, the initiative has been made possible by multi-agency collaboration within Saudi Arabia, as well as weeks of preparation by officials in the Kingdom, Malaysia and Indonesia.
The Makkah Road Initiative will cut time and entrance procedures for pilgrims from Malaysia and Indonesia to Saudi Arabia through a “unified electronic paths” and “pre-clearance procedures” before arrival at Madinah airport, according to officials.
The services provided under the initiative include issuing visas, customs and passport procedures, facilitating health requirements, baggage management, and housing arrangements in Makkah.
The initiative also involves checking off the pilgrims’ entry visas into the Kingdom at the airport when the flight departs. Travel arrangements will be “confirmed electronically”, including health requirements where pilgrims can skip the paper documents on vaccines at the airport in their own country.
Fingerprints and passports are to be taken and stamped “electronically” in their home country before departure. Pilgrims will fly from either the Kuala Lumpur International Airport or the Soekarno-Hatta International Airport, and will arrive at the Prince Mohammed bin Abdul Aziz in Madinah.
The pilgrims will check out at the airport arrival hall “like a domestic flight” while their luggage will be sorted to their places of residence by the Ministry of Hajj.
With an increasing number of Muslim pilgrims to Makkah each year, the Saudi Arabian government has made serious efforts to streamline the process.
“We really appreciate this progress by the Kingdom,” said Zainol Rahim Zainuddin, Malaysian ambassador to the Kingdom, adding that the initiative showcased the close partnership between the governments of the Kingdom and Malaysia.
Indonesia, which has the biggest Muslim population in the world, had 221,000 of pilgrims arriving in Makkah last year. Malaysia, a Muslim majority nation, increased its number of pilgrims to 31,300 in 2017 from an initial projection of 30,200.
The Makkah Road Initiative is part of the National Transition Programs (2020). It aims to fulfil the Vision 2030 objective of having well-developed public services and infrastructure throughout the Kingdom.