Golf Construction

Following the onset of the Asian Financial Crisis, a number of Chinese claimants emerged. There was a large cross-section of companies that had no purchase orders or contracts, but remitted invoices that were accepted by Chinese accounting staff. It was well known that the Shanghai Links Golf company had more than $US15million in the bank at the time Bouygues and Pomerleau obtained their injunction. It was also known that golf course money and heavy equipment was used to complete the Housing Project. Knowledge of the cash generating capacity of the golf course caused many sub-contractors to submit claims against the golf company, Shanghai Huaxia International Country Club. The most interesting of these claims was from the Anhui Aggregate Supply Company, a group owned by the Anhui Communist Party. They claimed they had supplied enough sand to cover both the golf course and the housing lands with 1.5meters of sand, all of which had been supplied long after the reclamation remediation work had been undertaken.

The fraud which was perpetrated by the Anhui Aggregate Group is almost impossible to believe. The Anhui Aggregate Group were contracted to source and supply speciality sands specified by Jack Nicklaus to provide a 6 inch sand cap on fairways, and a 12 inch sand cap on greens, and 12 inches of white coral sands in bunkers. The sand volumes were to be weighed at a weigh scale at the entrance of the Golf Project, and then escorted by security guards to the location that this particular truck load of sand is to be dumped. The truck is then further escorted to a guarded exit, where the truck is weighed a second time. Anhiu Aggregate Group was to be paid the difference between the entry weight and the exit weight. Invoices were to be sent in at the end of each month. Nothing untoward came up in any monthly billings until October 1998, when the Anhui Aggregate Group remitted an invoice for an amount that was many times what was actually delivered. Anyone who has not done business in China will think this is very straight forward, but it was not to be. Every single Chinese person on payroll for the Golf Company colluded to permit full trucks to exit and then the same truck would enter again, and be weighed as though it had been emptied and a new load of sand was being delivered. It was estimated that only every 30th load was actually dumped.

The matter went to the Shanghai Intermediate Court. The Golf Company had paid the amount of sand that was taken by quantity surveyors from the Golf Architect drawings. A request for discovery was made to the Court, namely that the Anhui Aggregate Group, who had to barge all aggregate down the Yangtze River, which was known to be under the control of the State Water Bureau, and therefore had to produce manifests for each load of sand, be ordered to produce copies of these shipping manifests. Alternatively, the State Water Bureau be ordered to produce these shipping manifests. The application was refused. The Judge ultimately ruled that we were “fools” for trusting people who worked for us, but how could he know if we were not also “dumb” foreigners who had “pushed the sand in to the East China Sea”.

The Asian Financial Crisis had ended the vigorous trade in Golf Memberships on the Tokyo Membership Exchange. This meant that the sales volumes of memberships declined dramatically, and that judgment monies owed for the millions of cubic meters of sand that we had “pushed in to the East China Sea” had to be paid by other means. Looking back, it is probable the State Water Bureau were involved in this very serious fraud.

This fact is important insofar as the Director of the Bureau of Law and Politics for Pudong (the person with domain over all Courts, Judges, and Police for the Shanghai Pudong New Area), Mr. Hu Shen Xiong, would later “order” that the Housing Company take a loan to pay this Communist Party controlled sand supply company, and a Pudong Communist Party owned tree supply company that had supplied several hundred dead trees.