Caixin
Dec 09, 2016 07:31 PM
BUSINESS & TECH

Electric-Car Maker Officials Investigated, Charged

(Beijing) — Executives at Suzhou Gemsea Car Manufacturing Co., the Suzhou electric-car maker accused of improperly taking "green" subsidies, have been taken into custody and charged with fraud, the first known arrests following a recent wave of crackdowns on clean-energy scams.

Yang Shuiping, who controls Gemsea, and two other executives at the company were arrested along with a Suzhou traffic police officer in mid-August on suspicion of fraud, according to documents shown exclusively to Caixin.

Government audits have found Gemsea to be one of the five most fraudulent new-energy car makers. They fabricated car production and sales figures to illegally take advantage of nationwide subsidies aimed to promote low carbon vehicles.

The Finance Ministry ruled in September that Gemsea took 260 million yuan ($37.7 million) in subsidies by falsely reporting 1,131 electric-vehicle car sales. All of the subsidies given to the company are being recovered, and any promised subsidies withdrawn, the ministry said.

However, Gemsea said it plans to take the ministry to court for unjust punishment, as it claims that the penalties are disproportionate to the actual amount of the fraud. Gemsea asserts that it reduced the amount of subsidies it applied for following its initial application, and should be charged according to the final reduced figure, as opposed to the original. The court has yet to accept the case.

A ministry correspondence with Gemsea obtained by Caixin stated that the company's "financial figures are heavily bloated, and veracity highly doubtful." The letter also retorted to the company's objections, saying that the car maker retracted its original applications only after it was aware that its figures were under scrutiny.

Overwhelmed by the Gemsea's "malicious fraud," the Finance Ministry said that, unlike other companies that cheated in the sense of failing to complete production of certain car parts, Gemsea "blatantly lacks the capacity to manufacture at all."

Contact reporter April Ma (fangjingma@caixin.com)

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