A Chinese lawmaker has called for a ban on illegal fund-raising to prevent
people's money from flowing into the pockets of frauds.
"We should
impose severer punishment on illegal fund-raising to maintain good economic and
financial order," said Xiao Yuhuai, head of the Jiangxi bureau of the China Banking Regulatory Commission and a deputy to the
National People's Congress (NPC), China's legislature.
From January to
November 2006, the Ministry of Public Security filed nearly 1,500 cases on
collecting public money through illegal means, which involved 28.1 billion yuan
(3.63 billion U.S. dollars).
Illegal fund-raising was made in the forms
of joint breeding or planting, underground banking, and illegal financing and
bond- issuing, said Xiao.
The latest case was discovered in east China's
booming Zhejiang Province, where a 26-year-old billionairess pooled
funds illegally by promising investors lucrative returns ranging from three to
ten percent per month. But several of her creditors failed to reclaim their
investment.
In an earlier report, a company in northeast China raised a
huge amount equaling some 379 million U.S. dollars from gullible members of the
public by absorbing them in a fraudulent ant- breeding project.
Xiao
noted that illegal fund-raising cases are hard to define due to absence of
relevant clauses in current laws and regulations. The lack of effective
information exchange channels between governmental departments further increases
the difficulty in handling such cases.
Meanwhile, people with extra
money but inadequate financial and legal knowledge and low risk awareness would
give frauds chances, Xiao added.
The State Council has approved a
proposal to set up a ministerial joint meeting mechanism to jointly fight
illegal fund- raising.
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