Caixin
Feb 06, 2018 08:08 PM
FINANCE

Firm Accuses Affiliate of Fraud as Chairman Jumps to Death

Zhou Jiancan (center), chairman of Zhejiang Jindun Fans Holding Co. Ltd. and Zhejiang Jindun Holding Group Co. Ltd., jumped to his death on Jan. 30 in the middle of a week that was the worst for Chinese mainland stocks in 14 months. Photo: VCG
Zhou Jiancan (center), chairman of Zhejiang Jindun Fans Holding Co. Ltd. and Zhejiang Jindun Holding Group Co. Ltd., jumped to his death on Jan. 30 in the middle of a week that was the worst for Chinese mainland stocks in 14 months. Photo: VCG

*Zhejiang Jindun Fans Holding Co. Ltd. accuses affiliate and its executives of forging Jindun Fans seals to borrow money

*Zhou Jiancan, 55, chairman of both of the companies, jumped to his death on Jan. 30

(Beijing) — A Chinese ventilation system manufacturer on Tuesday accused an affiliate of forging its official seals to borrow money, after the chairman of both of the companies jumped to his death, with rumors blaming his suicide on failed stock investments.

Zhejiang Jindun Fans Holding Co. Ltd., listed on the Growth Enterprise Board in Shenzhen, reported to police that it suspects Zhejiang Jindun Holding Group Co. Ltd. and its executives fabricated its seals to take on debt from various lenders, it said in a filing with the stock exchange. The listed fan company appeared as either the borrower or the guarantor in those deals, the statement said, adding that it could not confirm the number of loans involved or the total amount borrowed.

Companies in China use carved seals as a way of establishing the authenticity of documents.

Jindun Fans, a maker of ventilation systems used in tunnels, nuclear power plants and ships, told Caixin earlier that the group does not hold any shares in the company.

A total of 489.8 million yuan ($77.82 million) of Jindun funds parked in four bank accounts have been frozen, which led the firm to face the risk of “other special treatment,” it said in the stock exchange filing. The company did not explain why its funds have been frozen.

Police agreed on Monday to investigate the case, the statement said.

Jindun Fans’ announcement came after Zhou Jiancan, 55, chairman of both of the companies, jumped to his death on Jan. 30 in the middle of a week that was the worst for Chinese mainland stocks in 14 months. The rout was due to profit warnings for small caps, and sell-offs triggered by renewed concerns over tighter regulations on risky investment by trusts.

Rumors soon circulated on China’s social media platforms that Zhou committed suicide because he had borrowed 4 billion yuan to buy shares of the listed unit of indebted online video firm LeEco. Stock of the LeEco arm slumped by its daily 10% limit for the 10th consecutive day on Tuesday after resuming trade from a prolonged suspension.

Jindun Fans denied the rumors in a filing with the Shenzhen bourse on Thursday. But it revealed that Zhou and his son, Zhou Chun, pledged almost all of their 26.25% stake in the company as collateral for securities companies, a bank and other lenders.

A source close to the local government of Shangyu district in Shaoxing in East China’s Zhejiang province, where the two companies are based, told Caixin earlier that Zhou might have been facing “investment and financial troubles.”

In a statement sent to Caixin on Thursday, Jindun Fans said Zhou Jiancan was just a financial investor and was not involved in its daily management.

“We are not sure yet whether Zhou Jiancan and Zhou Chun were involved” in the fabrication of the seals, Chen Mengjie, securities affairs representative of Jindun Fans, told Caixin. “We are waiting for the result of the police investigation.”

The company’s shares were suspended for 10 trading days on Thursday.

Contact reporter Fran Wang (fangwang@caixin.com)

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