According to a report in Zero Hedge, not only does it involve China, but it emerges from a city that has become synonymous for all that is scandalous about China: Wuhan.
The 83 tons of purportedly pure gold stored in creditors' coffers by Kingold as of June, backing the 16 billion yuan of loans, would be equivalent to 22 per cent of China's annual gold production and 4.2 per cent of the state gold reserve as of 2019.
In short, more than 4 per cent of China's official gold reserves may be fake. And this assume that no other Chinese gold producers and jewelry makers are engaging in similar fraud, the report said.
In early June, Minsheng Trust, Dongguan Trust and a smaller creditor Chang'An Trust filed lawsuits against Kingold and demanded that PICC P&C cover their losses.
PICC P&C declined to comment to Caixin on the matter but said the case is in judicial procedure. A source from PICC P&C told Caixin that the claim procedure should be initiated by Kingold as the insured party rather than financial institutions as beneficiaries. Kingold hasn't made a claim, the Caixin source said.
In total, Kingold pledge tens of thousands of kilograms of gold to no less than 14 creditors amounting to just under 20 billion yuan.
The Zero Hedge report said that this exposes just how multi-faceted fraud is in China: capitalizing on pre-existing cronyism and connections with China's powerful army, the founder of Kingold was allowed to basically do anything he wanted, no questions asked, including counterfeiting over 83 tons of gold bars to get billions in funds to participate in China's housing bubble, only for a series of unexpected events to unwind the frauds one after another and expose the type of sordid scandal that is at the heart of most Chinese "enterprises" and business ventures.
As for the gold, ...