To ensure the economic and financial security of the state, crack down strongly on the cross-border flow of hot money, and maintain order in the foreign exchange market, on November 1, 2010 the State Administration of Foreign Exchange (hereinafter referred to as the SAFE) announced a first batch of cases involving some enterprises and individuals that carried out illegal foreign exchange transactions and were subjected to penalty. Now a second batch of such cases, based on the progress in the relevant inspections, is announced as follows:
From early 2009 to March 2010, Xinya Electronic Technology Co., Ltd. in Dongguan city, Guangdong province, collected 65 advance payments worth USD4.8313 million but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on the administration of the verification and writing-off of export proceeds in foreign exchange. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations on the Administration of the Foreign Exchange System of the Peoples Republic of China (hereinafter referred to as the Regulations).
In September 2009, Dading Handbags Co., Ltd. in Zengcheng city, Guangdong province, was found holding 2 payments totaling USD1.05 million in foreign exchange for the processing of imported materials, but the verification and writing-off formalities were six months overdue, which violated the relevant provisions on administration of the verification and writing-off of export proceeds in foreign exchange. In addition, the said company overcharged in foreign currency for the processing of imported materials and used some amounts of Renminbi settled thereof for stocks and securities investments. In light of this, the SAFE rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
In May 2009, Feihua Textiles Co., Ltd. in Haimen city, Jiangsu province, due to a fake purchase and sales contract signed with Meidan Construction Materials Trading Co., Ltd. in Haimen city, had USD3.0679 million-worth of foreign exchange from foreign investors settled through 11 transactions, and Meidan Construction Materials Trading Co., Ltd. in Haimen city transferred the settled capital in the amount of RMB20.9103 million via online banking to the account of a personal debit card. This case was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
From February to May 2008, Wanrong (Liaocheng) Gardening Engineering Co., Ltd. in Shandong province handled the settlement of USD63.32 million-worth of foreign exchange from foreign investors in payment for a construction project. Of the Renminbi resulting therefrom, the said company transferred RMB147.89 million to the account of its wholly-owned property subsidiary through different channels, used RMB15 million to purchase real estate outside of Shandong province, and lent RMB279.5 million to other domestic enterprises. Such behavior was deemed to be in violation of the relevant regulations on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
From September to December, 2009, Qian An VV Lan Shan Building Materials Company in Tangshan city, Hebei province, settled EUR614,400-worth of foreign investment capital based on invalid documents, and then transferred the RMB6 million resulting therefrom to the Renminbi account of Qian An Lanshan Cement Co., Ltd., a shareholder in the Chinese party thereof. Such behavior was deemed to be in violation of the relevant provisions on administration of the settlement of foreign exchange capital, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
From November to December 2008, a person surnamed Huang, a local citizen of Jinhua city, Zhejiang province, based on 18 cargo declarations for export, for which the verification and writing-off of the export proceeds in foreign exchange had been completed, handled a settlement of USD1.7485 million through a personal foreign exchange account thereof. Such behavior was deemed to be in violation of the Regulations. According to the Regulations, the SAFE rendered a decision to impose a fine on Huang as an administrative penalty.
In December 2006, after having had USD7.5 million worth of capital settled through two transactions, Guangdong Credit Orienwise Guarantee Ltd. used RMB58.6365 million resulting therefrom to purchase funds. Such behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
In June, 2010, Tianming (Shenyang) Alcohol Co., Ltd. in Liaoning province owed overseas institution(s) SGD37.6 million resulting from the performance of an external guarantee under the item of a domestic loan, but failed to register the foreign debt with the foreign exchange authorities within the prescribed time limit. Such behavior was deemed to be violation of the relevant provisions on the administration of foreign debts, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
From February to June 2007, Yestock Technology (Shenzhen) Co., Ltd., based on a fake purchase and sales contract for GPS terminals signed with Shenzhen Chuangtou Electronic Information Technology Co., Ltd., settled HKD10.6495 million through three transactions and injected RMB9.9 million resulting therefrom into the stock market. The companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
On August 13, 2007, Qingmao Paper Industry Co., Ltd. in Shaxian county, Fujian province, settled HKD14.075 million based on a purchase and sales contract for machinery and equipment signed with Fujian Changfa Trading Co., Ltd. Thereafter, the said company required Fujian Changfa Trading Co., Ltd. to remit RMB13.6 million resulting therefrom to Fuzhou Huicheng Real Estate Co., Ltd. under the pretext that it was unable to start up the project immediately. The said companys behavior was deemed to be in violation of the relevant provisions on the administration of settlement of foreign exchange, and the SAFE thereby rendered a decision to impose a fine as an administrative penalty upon said company pursuant to the Regulations.
When conducting economic activities, all market entities shall foster an awareness of their social responsibilities and develop their business in a sound and scientific manner in strict compliance with all policies concerning the administration of foreign exchange. The penalized enterprises and individuals shall regard this as a warning and shall firmly establish an awareness of law-abiding operations. All other enterprises and individuals shall also draw lessons from the above-mentioned cases to strengthen their self-discipline, and to operate their businesses in strict accordance with the law. The SAFE shall step up efforts to facilitate the process of trade and investment and to enhance a service-oriented awareness so as to meet the legitimate demands of enterprises and individuals for foreign exchange; meanwhile, it shall strengthen supervision and inspection of the compliance of the foreign exchange business conducted by market entities and continue to crack down on hot moneywith intensified efforts, thereby effectively maintaining the safety of China's foreign-related economy and finance.
December 10, 2010
