2014-07-01

Hebei Rural Cooperatives Go Bust

Hebei's economy is experiencing a serious slowdown due to the weakness in heavy industry, particularly steel. Rural cooperatives pay up to 5 times the interest rates that banks pay. They are supposed to help develop the agricultural economy, but there's no way they're doing that at 16% interest. Furthermore, the rural cooperatives employed agents to drum up deposits and many urban residents also deposited money. A big cooperative went down at the end of March in Handan. Now the bosses of other cooperatives have fled (the other type of bank run) and the whereabouts of the depositors money is unknown. A wild guess: they invested it in real estate, either directly or through high interest (20% and up) loans to developers.

One local described the situation this way: when the big rural cooperative in Handan went down in April (see Handan Farm Cooperative Goes Bust; 100,000 Rural Households Invested Over ¥140 million; Boss Has Fled) that was the aircraft carrier going down. With the carrier sunk, it's hard for the smaller boats to escape. Especially when the smaller cooperatives have invested in the larger cooperative.

河北多家农村合作社“跑路”村民称利息是银行5倍
In April this year, according to the "Morning News" and other media reports, Handan County wide Weiguang vegetable cooperatives Legal running, swept away more than 140 million yuan of funds. Subsequently, Shandong Linqing Dongxu vegetable cooperatives foot event occurred, involving capital of more than 2000 million.

  This is just the tip of the iceberg. Recently, the "Daily Economic News" reporter learned that the investigation in Hebei Guantao, gaoyi, linzhang other places, these counties this year are co-owners Paolu phenomenon. Linzhang Junhong mushroom cooperatives appeared on foot, the 30 million yuan of funds can not be cashed; gaoyi Hongyun planting cooperatives appeared on foot, swept capital of 14 million yuan.

  Also Handan, Quang Binh cooperatives occurred after foot event hall 陶正信 cooperatives boss lost contact, and 124 million yuan of funds can not be cashed, and trigger other local cooperatives closed tide appeared most cooperative funds were unable to extract the phenomenon. Local residents said: "is believed to be the carrier, the aircraft carrier sunk boat were spared."

  These cooperatives appear Paolu common feature is the presence of deposit-taking behavior are behind on foot phenomenon of refraction is the lack of cooperative systems and regulation.

  Co-owner of the frequency "lost contact" /

  May, the North China Plain wheat harvest season, farmers mown wheat ready for planting corn, seeds and fertilizers are in need of money, take money Rural appear peak, but many farmers found that they could not withdraw money cooperatives exist, the legal representative also missing.

  Liu Zhuang located Guantao County, less than 10 miles from the county road, there are hundreds of families are believed members of cooperatives. Villagers said Liu Yan Gang, originally wanted harvester update, the existence of cooperatives money but they can not be extracted. Then, "the president lost contact", "co-foot" message in the surrounding Guantao spread.

  Liu Yan Gang Show took on a positive letter cooperative capital stock certificate: Share Capital 10,000 shares of No. 622, shares time is October 2, 2013; booking bonus is 18%, for a period of one year.

  "Although not yet expired, but the constitution of a cooperative agreement, when money can be withdrawn, but the interest to be low." Said Liu Yan Gang, to cooperatives to save money, no contract, only capital stock certificates, specific work by the village of agency staff completed.

  Masanobu cooperatives stands for "Hebei Museum Taozheng Xin agricultural marketing service cooperatives' legal representative Cuihuan Ting. Headquarters are located in the county cooperatives letter No. 63 Chinese New Street, but the "Daily Economic News" reporter on the scene saw two words is the letter written cooperative stores closed the door, next to belong 崔焕亭 of Fidelity Investments also closed the door .

  Masanobu local rural cooperatives to conduct business there for three years, from last year, more and more villagers will deposit the money into cooperatives. According to incomplete statistics, the foot incident resulted in more than 500 million yuan of funds can not be cashed.

  Hebei Linzhang, local cooperatives Junhong leading mushroom cooperatives also had legal foot. Linzhang an official, chairman Guo Junjie swept capital of 30 million yuan. Public information, the cooperatives by Chinese Rural Cooperative Construction Management approved the establishment of the center.

  Why give money to the cooperative? With guide villager Wang Teng first argument is fairly representative: "You can do free cable TV, you can also get free wheat seed or corn seed, saved ten thousand acre of land free of charge to the seeds." The most important thing is more or cooperatives rates. Wang Teng first said: "If my (ten thousand) money in the bank just over 300 dollars a year, but on cooperatives, 1,600 dollars a year, the equivalent of an acre of wheat." Calculated according to this argument, cooperatives to Interest is almost five times the bank.

  The true identity of agency staff /

  In Handan area, there are a lot of agency staff, they are to contact the cooperative ties between farmers and villagers access to services completed by the agency staff.

  Many agents who also co-own customers. WANG Xian village agency staff with printed guide introduced himself saved 50,000 yuan, 10,000 yuan if you do a deposit of $ 360 can get commission.

According to him, there were agents who are believed more than 180 cooperatives active in every corner of the countryside. Daming County in Hebei, Qiuxian, Feixiang even some counties in Shandong have agents who are believed active agent point, Absorbing some village scale up to thousands of yuan.

  According to general understanding, it is because of the high interest rates coupled with the temptation of agency staff lobbying money will be credited to the farmer cooperatives. But the "Daily Economic News" reporter learned that the investigation, it is not so simple.

  April of this year, Gao Yi County Hongyun planting cooperatives boss running, involving capital of 14 million yuan. Among them, the Temple family owned village involving 1.95 million yuan, 2.9 million yuan Ma village, the villagers said, "devastated" when referring to the matter.

  Reporters from Hongyun planting cooperatives see the receipts, the annual rate of return in 2013 was only 4.5% deposit. Chuang Ma Temple, the book division, said the villagers, agency staff said there is no risk of deposit, cooperatives have registered in the Trade and Industry Bureau, the staff has the record with the county government support, but regulators have Banking Bureau.
  
Branch and other horse books villagers assured there is an important reason to save money, these agents who have a "credit union people."

  In many rural areas of Hebei, in the past there has been a member of the agency system, each village an agency staff. However, with the reform of Hebei credit unions, financial services and gradually withdraw from the country. Gaoyi County Banking Bureau responsible person in the "Daily Economic News" reporter, said: "Those agents who are not loan officers, they may have some relationship with the bank, but then all of a sudden reforms laid off, the agency and bank staff no relationship. "
  
Baixiang County farmer entrepreneur tied Lau said that agency staff system is easy to illiterate villagers, if farmers need to deposit the money directly to the agency staff, and agency staff time to collect the money as long as say the line. "According to the Associated Press in 2006, Hebei Province, documentation requirements, gaoyi County revoked the agent stations, but this group has always existed."
 
 Reporters learned that, like a horse village Renjing Shen, Temple Mayu Chang Chuang are past members of the Credit Union agency. In addition a number of agents who have Guantao bank credit experience. In the eyes of the villagers, the agency staff has always been a link between farmers and financial linkages. "No credit union near the teller to the county but also queuing delay farm."
  
After exiting the rural credit cooperatives in the market, there will be money after the financial needs of farmers, cooperatives bring it to market, slightly higher than bank interest rates as long as farmers are willing to deposit money into cooperatives.

  For agency staff on behalf of farmers to save money business, these sources said the Banking Bureau, agency staff in rural areas is more like a salesman, anyone can do, for example, introduce you to the bank deposits, some banks give you a referral fee, which is marketing costs, This is permitted.
  
Everywhere cooperatives /
 
 Cooperative development of China's early, but really the rapid development in the new cooperative law enacted in 2006, the implementation of the cooperative system of registration, registration of charge. Reporters learned that in many, this operation becomes extremely simple, farmers only need to bring your ID card to the local industrial and commercial bureau on the line.
  
Guantao County Business Council to the "Daily Economic News" data is: Guantao officially registered cooperatives with more than 160. Throughout the Handan City, various farmers' cooperatives have registered thousands of much.

  As the villagers mutual aid cooperative economic organizations, serving as a farmer, because farmers need to raise funds to buy fertilizers, pesticides, mutual funds function began to appear.

  Long-term mutual funds concerned community experts Jiang Bolin believes that the development of cooperatives to mutual funds is inevitable, "co-operatives is not simply to help farmers buy buy seeds, fertilizer, capital of farmers cooperatives is to production, distribution, supply and consumption together, to foster agricultural the city, to support agriculture, integrated rural development. "

  But in reality, the development of mutual funds deviate from the expected track club.

  In Guantao County, a number of agency staff holding documents to prove the legitimacy to carry out co-deposit business. Reporters saw the document by the CBRC and the Ministry of Agriculture in 2009 jointly issued "on the good work of Farmer Cooperatives financial services advice," Handan City have also introduced the relevant documents.

  Joint paper referred to encourage qualified farmer cooperatives development of credit cooperation. "Select the formation of farmer cooperatives in rural areas on the basis of the pilot union's funds, under the supervision of the banking regulatory agency, the real stake in accomplishing voluntary membership, democratic management, service members for the purpose of seeking membership interests of cooperative financial organizations."

  In the specification of these documents, the cooperative began with the rapid development of financial nature in the Hebei region, like faith, Weiguang such cooperatives in Handan everywhere, the name of tricks, but much the same way: the establishment of co-operatives to high rebates as bait, a large number of farmers to absorb funds' shares. "

  In Handan area, not just farmers, including deposits of urban residents also joined the ranks. In Guantao, customers are believed cooperatives have engaged drivers, civil servants, teachers and other professions.

  In the open rental Guantao Master Wang told reporters that he himself saved thousands of dollars to a positive letter. "Are believed to be the key support of cooperatives, cooperative Masanobu hardly unknown."

  Different from ordinary registered cooperatives, these cooperatives registered capital of more Handan, in millions of dollars more.

  "Daily Economic News" reporter learned that the query registration documents, museum Taozheng Xin cooperatives registered capital of 300 million yuan, registered time is February 14, 2011; operating range is required for members of the procurement and supply organization of production, the organization acquired selling members products; introduce members required advanced technology. Gaoyi Hongyun food grain cultivation cooperatives registered capital of 5 million yuan, the legal representative of Raymond Cheung, operating range of planting, tissue procurement, acquisition, sale of agricultural products and the introduction of new technologies and new varieties.

  Reporters noted that the registration information did not mention storage class business. In this regard, Trade and Industry Bureau said that cooperatives to carry out financial business is illegal. However, according to co-regulation, members of the cooperative funding to carry out mutual funds is not illegal.
  Is the case, the cooperative had a huge room for maneuver.

  Secretary for Trade and Industry Bureau Guantao surnamed Wang told the "Daily Economic News" reporter, said, "members of the cooperatives to attract funds, the cooperative law is possible, and who said they would not deposit, and now co-operatives without inspection Therefore, the function is hidden funds, non-trouble will come to say. "

  Hebei Guantao, gaoyi other counties, there are still a lot of streets for business cooperatives, these cooperatives and banks similar to capital stock and settlement into the hall there is a window. Guantao formosa cooperative staff that take deposits interest is 16%.

  Although these cooperatives are open to the public storage business, but gaoyi County Banking Bureau, responsible person, if go to these cooperatives, they do not say they are illegal fund-raising, they will say that it is the members also return materials used for the purchase of fertilizer funds "They have legitimacy."
  Type of financial operation highlights the regulatory vacuum /

  In fact, the reporter learned that the cooperatives are now in the regulatory vacuum. Although the cooperative's business license issued by the Trade and Industry Bureau, but no regulatory responsibility. Wang, deputy director of the above in the "Daily Economic News" reporter, said that cooperatives need only register, Guantao county and national registration as cooperatives without inspection, specific regulation is COAG thing.

  June 23, reporter to interview Guantao County Farmers Working Committee, Agriculture Committee responsible person, cooperatives specific piece of work by the Agricultural Association to be responsible. Reporters then to farm co-op, but the agricultural association office staff said there was no co-op work in this area, "we NACF total of only four people, hundreds of cooperatives how regulators can get through."

  The office staff also revealed that before the promulgation of the law on cooperatives, agricultural co-supervision before, but after the promulgation of change registered by the Trade and Industry Bureau, "but also to regulatory inquiries cooperatives specific address."

  Handan City Agriculture Committee also answer specific work by the Agricultural Association is responsible for co-operatives. Handan City Farmers Co officials Jinghai Feng told the "Daily Economic News" reporter, said NACF is a mass organization of cooperatives comprehensive guidance services, primarily to guide the healthy development of cooperation, "but we do not have administrative authority . "

  Since the launch of the cooperative financial services, the financial sector should have regulatory responsibilities. However, Gao Yi County Banking Bureau expressly Banking Board to discipline cooperatives, there will be financial licenses Banking Bureau pipe. "For example, the real estate market risk, notify the CBRC to banks, but not under notice to cooperatives. Cooperatives are not our approval, how?"

  Of cooperatives Hebei probably similar in unsupervised state. Baoding, a co-president, told reporters that funds are raised to 300 yuan, a lot of the higher authorities, but who never managed before.

  Cooperative funds are gone? /

  Typically, members of the cooperative funds primarily for their own development. Jinghai Feng said the club's funds like mutual funds is limited to the interior, limited to the development of related industries. "In principle no deposit-taking cooperatives suck stocks, shares may be land, labor shares, funds are limited to the interior."

  Jiang Bolin believes that more than 18% of the normal market interest margins, especially in the agricultural sector. "Society is also the principle of mutual funds deposits from members, loans lent members, rather than the funds together to engage in the project, the project risk is now doing great, and if that fails, the entire collapse of the cooperatives on."

  Li Changping agriculture experts believe that some cooperatives are now operating across the county, not regulation can not prevent risks. "I advocate and support the development of both pension priority functions village built-financial, internal funds financial cooperatives can only run in the village, a village only a co-op, and the whole village, against any form of cooperation and mutual assistance in rural finance."

  Reporters learned that, like most cooperatives are in Handan County, registered capital, the formation of "Head Office - Branch - agent point" three-tier system, the flow of agency business throughout the county, and even counties interprovincial operations, primary-level transmission .

  A local well-known in this business insider said, Handan cooperatives such operations is the earliest, Hebei cooperatives elsewhere in Hebei Handan many people do, or copy mode. Hongyun cooperatives is the legal representative of Handan Raymond Cheung Man.

  But most of the cooperatives operating conditions are bad, like Quang Binh Weiguang vegetable cooperatives grow vegetables less than a year, spend the land, the construction of greenhouses and other costs of more than 30 million yuan, basically lose everything. The Junhong cooperatives mushroom business has been a lack of funding, in 2013 publicly reported that the agricultural cooperatives to achieve wealth through mutual funds gorgeous transformation.

  As funding for these cooperatives are gone? Local spread of multiple versions, cooperative funds for stocks, futures speculation, investment in mining, real estate and so on. There Handan insider, the real estate downturn, the funding strand breaks, cooperative funds can not be removed.

  "Daily Economic News" reporter learned that, Masanobu cooperatives and local "Squeak shopping" relevant, Masanobu after running, this shopping plaza is also closed. Guantao Public Security Bureau insiders also confirmed that there had been looting Squeak phenomenon.

  Some funds may flow directly into the pockets of the owners of cooperatives. Linzhang a government official said, before Junhong cooperatives running, Guo Junjie three consecutive withdraw money in the bank. "These farmers cooperatives pit dead, there is no regulation according to which the chaos in the financial sector."

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