Thousands of villagers in a costal county in Jiangsu Province were astonished to find their savings deposits, about 110 million yuan (US$17.6 million), in local financial cooperatives vanished.
Four private-owned but government-supervised financial cooperatives in Guannan County were shut down a week ago after their managers fled, leaving 2,500 depositors helpless.
A local official named Liang Gongzhu said the four cooperatives lent the money illegally to an entrepreneur surnamed Wang to earn high interest on the deposits. But Wang went bankrupt and the lenders could not return money to their customers, China National Radio reported today.
According to the Chinese law, rural financial cooperatives can only lend money to villagers to assist their agricultural activities. Local agricultural and commercial departments are supposed to supervise these private institutions.
But local officials said the law did not specify a government agency to oversee the operation of rural financial cooperatives.
Some suspects have surrendered to police but Wang is still on the run, the report said.
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