Property developer Yonghuang Group. (Internet photo)
Apparel maker turned property developer Yonghuang Group, the company that provided Chongqing's local officials and executives of state-owned enterprises with young women in order to film their sexual encounters to blackmail them later, has grown its asset value a thousand-fold over the past five years, reports Shanghai's First Financial Daily.
Although Yonghuang reported having fixed assets of 1 billion yuan (US$160 million) just before 2008, the company's two founders Xiao Ye and Yan Peng were running an clothing company with registered capital of just 1 million yuan (US$160,000), Guangzhou's Southern Metropolis Daily said. The firm, founded in 2005, entered a steady decline in 2006, its growth slowing and its books racking up losses as the price of materials rose and its commercial agent delayed distributing its products.
Xiao and Yan, determined to reverse the situation, set a honeytrap to extort business from local officials. In 2008 they allegedly arranged several of their own lovers and employees to seduce officials and executives at state-owned enterprises and film the trysts. The pair used the videos to secure preferential treatment from powerful men, allowing the company to win lucrative construction contracts.
Yonghuang claims on its website that it has registered assets of 51.7 million yuan (US$8.3 million) and is involved in property construction and city development projects.
The company successfully won bids for 32 projects in the city representing a total value of 132 million yuan (US$21 million), according to First Financial Daily. At least 10 of the 32 are believed to be linked to three officials who appeared in secretly filmed sex tapes, according to the newspaper.
Yonghuang allegedly also obtained several urban development contracts, each worth several million yuan from other district officials who were blackmailed in the same way.
From rags to riches, Xiao has been transformed from a struggling apparel seller to a property developer worth 1 billion yuan. A reporter at the Daily visited the company in Chongqing's Beipei district and was informed by an employee that the company used to be run out of a small house with just three floors.
The employee said Yonghuang was invited in 2008 by the district bureau for Commerce and Industry to invest in Beipei. The district government offered also the office space for free use just eight months after district party chief Lei Zhengfu, the first to be exposed in the scandal, was filmed having sex with of one the young women. Xiao later bought several companies in the district.
Xiao Ye 肖燁
Yan Peng 嚴鵬
Lei Zhengfu 雷政富