Debtors arrested, returned from Vietnam

Two suspects charged with illegally absorbing public funds were transferred from Vietnam to the Wenzhou detention center on Sunday, marking the first arrest of the absconding suspects this year in the city's crackdown on debtors.

Zhang Fulin, 46, the former chairman of Wenzhou Mincheng Financing Guarantee Company, and his wife, Ye Tingying, were arrested by local police in a rental house in the suburbs of Mong Cai in Vietnam on Wednesday, and were transferred to Dongxing, Guangxi Zhuang Autonomous Region, on Thursday.

The arrest was made after a two-month joint investigation between police in the cross-border cities of Dongxing and Mong Cai. Wenzhou police assisted the investigation.

The couple is suspected of illegally collecting public savings of more than 30 million yuan ($4.8 million) since 2010. They invested the money in the real estate, energy and pharmaceutical industries, according to a Monday press release by the city's public security bureau.

Zhang suffered a cash crisis during the city's private lending crisis in 2011 and decided to flee to Mong Cai, Vietnam, in January, and his wife followed later, after they failed to pay back over 100 million yuan in debt and became enmeshed in a series of lawsuits.

Zhang confessed that he gathered a large amount of money from friends and relatives, promising to pay them back at a high interest rate.

Zhu Xiaofeng, a Shanghai-based lawyer, explained that the key to charges is that Zhang aimed to make profits from the interest margins by setting up private financial agencies unauthorized by the central bank using massive amounts of money.

Zhang's arrest is seen as a symbol that the private lending and credit guarantee industries in Wenzhou are still suffering from the 2011 private lending crisis.

"The whole industry is struggling this year, and the credit loss to Wenzhou enterprises is much more devastating than the economic loss. Loan sharking has basically vanished," Hu Tianyan, secretary-general of the Wenzhou Credit Guarantee Trade Association, told the Global Times Monday.

Hu said that major clients of credit guarantee companies are usually small- and medium-sized enterprises (SMEs) that have difficulties getting loans from the bank. "Our members have lost 130 million yuan in compensation this year and it takes too long for a judicial resolution. We get subsidies from the city government, but right now, we're trying to survive and wait for the spring," said Hu.

Zhou Dewen, chairman of the Wenzhou Development Promotion Association for SMEs, also said that Zhang's case reflected the unstable market situation and that formal regulation of private lending is imperative.