Fight false litigation and maintain social integrity

Loan disputes between Shanghai Oubao and Liaoning Trevi

A false dispute between two companies was exposed as the Supreme Court gave a final ruling and punished both parties for impairing other people’s legitimate interests through malicious collusion. The case was a typical one featuring fabricated facts and a cooked-up debtor-creditor relationship. It brought public attention to this kind of suit.

Debtor fully acknowledged debt to creditor

Shanghai Oubao claimed it had loaned a total of 86.5 million yuan to Liaoning Trevi since July 24, 2007 to help it develop a real estate project in Donggang city, Liaoning. Oubao said that Trevi refused to return the money on the grounds of bad sales, and filed the lawsuit.

Trevi accepted the truth of Oubao’s claim, saying it would try to repay the money with interest as soon as possible.

The Liaoning higher people’s court found that Oubao had the right to make the claim, so ruled in its favor.

After the ruling went into effect, Xie Tao, another creditor of Trevi, lodged a complaint, requesting a retrial of the case. Xie claimed that the two companies maliciously colluded to impair his legitimate interests as an investor in the real estate project and he asked the court to find out the truth.

The retrial revealed the following facts: Oubao wired 86.5 million yuan to Trevi in ten remittances. Trevi then moved out 70.5 million yuan shortly after the money reached the account, 64 million of which was transferred to a company held jointly by the two parties. In addition, Oubao sent further funds to Trevi during the first trial. Oubao has eight shareholders, including Qu Yeli holding 73.75 percent, and Zong Huiguang, who was the company’s legal representative. Trevi’s original legal representative was Wang Zuoxin, who was replaced in that capacity by Jiang Wenqi, a shareholder of Oubao, as part of a funding of 18 million yuan from the joint venture. Liu Jingjun became the representative during the change of registration, while he was an employee of Oubao and had represented that company during the first trial. The joint venture received two million yuan from Wang Zuoxin and one million from Qu Yeli. Wang, Qu’s husband, was the legal representative was the venture’s legal representative.

The superior court revoked its first ruling after reviewing all the evidence including that from the first litigation and decided that there was no real legal creditor-debtor relation between the two parties. But, the court didn’t identify false litigation conduct.

Oubao appealed the superior court’s ruling to the Supreme Court, which retrieved bank transaction records and files of all parties involved in the case and investigated into other relevant matters, including the relations and money flow between the two companies.