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People's Daily Online>>China Society

Chinese court rejects lending scam compensation suit

(Xinhua)

16:13, March 02, 2012

HANGZHOU, March 2 (Xinhua) -- An east China court on Friday refused to hear a lawsuit from nearly 150 creditors who intended to seek state compensation over a large-scale lending scam, a lawyer said.

A loan default by Liren, a Chinese company that previously operated in the education, real estate and mining industries, is estimated to have cost 7,000 private creditors a whopping 4.5 billion yuan (714 million U.S. dollars) in Zhejiang province.

A total of 147 lenders filed the suit on Monday in the Intermediate Court of Wenzhou, accusing the county government of Taishun and its police department of failing to take action against Liren. The lenders are seeking 68.64 million yuan in compensation.

Zhang Ren, an attorney representing the creditors, said the court refused to take the case, stating that the lawsuit "does not fall within the scope of administrative litigation."

However, Zhang said that the group plans to file a similar suit in the Provincial Higher People's Court.

The creditors believed that the county government and police turned a blind eye to Liren's lending scam, allowing the company to collect nearly 900 million yuan from private creditors after making false promises of high returns during a four-month period before the company went bankrupt.

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