BEIJING May 4 Creditor banks are taking legal
action to freeze the assets of Dalian Shide Group, a
plastics-to-property conglomerate founded by a close business
ally of disgraced Chinese politician Bo Xilai, Chinese
publications reported this week.
The lawsuits are one of the first signs of economic fallout
from Bo's ouster in China's largest political scandal in
decades. Reuters reported this week that Bo's political
stronghold, Chongqing, is hoping to sell distressed property
assets and shore up its finances.
Shide owes about 8 billion yuan ($1.27 billion) in debt,
respected financial publication Caixin Magazine reported, much
of it borrowed against its PVC production lines in order to
finance real estate projects.
Shide's founder Xu Ming was detained the day before Bo was
ousted as party secretary of the inland port city. Bo, whose
wife is under investigation for the murder of a British citizen
last year, has not been seen in public since.
Authorities are now investigating the relationship between
Bo and Xu as part of their wider probe of the ambitious
politician. Forbes estimated Xu was worth $650 million in 2010.
A search of public records has not revealed any public
financial links between Bo and Xu's businesses. But Xu's
companies won contracts when Bo was Dalian's mayor and his
businesses prospered as the politician moved up the political
ladder, according to sources and media.
Three of Shide's biggest lenders have sued the group in a
court in Liaoning Province, in northeast China, Caixin reported.
Shide is based in Liaoning's port city of Dalian, and is a
shareholder in the Bank of Dalian, which, despite its status as
a local city bank, opened eight national branches and was
planning an initial public offering this year.
In April, Shide denied Chinese media reports of its
financial troubles and posted a statement on its website saying
operations continued normally.
A call made to the telephone number listed on Shide's web
site did not connect. An employee who answered the phone at
Shide's Beijing office said she did not have information
regarding Shide in Dalian and refused to give contact
information for its Dalian headquarters.
Five banks in the central province of Henan have also sued
in a Zhengzhou court to freeze assets related to Dahe Xinxing
Construction Products Co, a production line owned by two Shide
subsidiaries. Caixin said the local Bank of China
branch is exposed to 60 million yuan in debt related to that
(Editing by Neil Fullick)