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APPENDIX 2: LIAOYANG RIBAO, MARCH 21, 2001243

Front Page

Headline:

City Government News Spokesman responds to journalist's questions regarding Liaoyang Ferroalloy (group) Ltd. Bankruptcy case

Body:

Recently, the paper's reporter interviewed the city spokesman regarding the case of the Liaoyang Ferroalloy bankruptcy

Question: What was the reason for and basis of the Liaoyang Ferroalloy company's bankruptcy?

Answer: The bankruptcy was implemented according to the "Law of the People's Republic of China on Bankruptcy (trial implementation)," the "State Council notice on matters related to the trial implementation of bankruptcies of state-owned enterprises in certain cities (Guo Fa No.59 1994)" and the "State Council supplementary notice matters related to the trial implementation of mergers, bankruptcies and re-employment of workers of state-owned enterprises in certain cities (Guo Fa No.10 1997)." The basic reason for the bankruptcy was that the value of debts far exceeded assets; there was no way the loans could be paid on time. Accumulated losses had surpassed 316 million yuan (U.S.$1 = Rmb 8.3) by the end of June 2001.

The bankruptcy of the Liaoyang Ferroalloy company took place according to legal procedures. On April 28, 2001, the National Leading Small-Group on Mergers, Bankruptcies and Re-employment of Workers of State-Owned Enterprises formerly endorsed the bankruptcy of the company via Document No.9 (2001). On October 19, 2001, the second session of the company's second employee's representatives' meeting passed the bankruptcy plan. After the management notified the Liaoyang City People's Government of the decision, the city authorities, on October 24, 2001, agreed to the bankruptcy according to Document 75 (2001), and requested that the bankruptcy take place in a lawful and stable manner. The Liaoyang Intermediate People's Court accepted a formal application for bankruptcy made by the company on October 26, 2001. On November 5, 2001, the court officially declared the company bankrupt through the ruling of the 2001 Liao Jing Po Zi (Bankruptcy Order, Civil Ruling) Document No.5. The court also immediately declared the setting up of a liquidation committee; the company was taken into receivership and its assets and files were sealed up. By March 15, 2002, the receivers had already completed the relevant work and had entered into the evaluation stage.

Question: What did the government do during the bankruptcy procedure?

Answer: From the beginning and right through to the end, the city's party committee and government maintained that the process should be carried out according to the principle of law, the principle that national assets should not be lost, the principle that employees' interests should be protected and the principle of maintaining stability.

The city government set up a Leading Group on Bankruptcy headed by the main leaders. This group carried out a thorough inquiry at the enterprise, listened to the workers' views and drew up a preparatory plan for the bankruptcy. The vice-mayor was assigned to lead a working group of fifty people to explain and publicize policies and answer questions at the grassroots level. This facilitated the relatively smooth progress of the bankruptcy. By March 15, 2002, 664 people had received lump-sum settlement payments totaling 9.892 million yuan, 622 people had received lump-sum economic compensation payments totaling 2.348 million yuan, and 155 people had received lump-sum disability allowances for workplace injuries totaling 890,000 yuan. Unemployment certificates were prepared and issued to 670 contract workers entitled to unemployment insurance; procedures are currently underway so payments should be made soon. Agreements are currently being drafted for 814 people who are not taking settlement payments and have agreed to make lump-sum retirement insurance payments. Individual payments are being worked out and should be completed by the middle of April. The city Labor Insurance Company has already taken over the cases of 1,438 workers who retired before the bankruptcy, realizing [the goal] of the provision of retirement pensions through social welfare. Work to investigate and confirm [the claims of] 365 people who are less than five years short of retirement age, the 280 people engaged in special categories of work who are eligible for early retirement and 22 people who have work-related disabilities or illnesses of classes one to six has been completed. Once the social security institutions have confirmed the scale for payments, they will be able to undertake procedures for retirement immediately.

Under the circumstances of the assets remaining as they are and in order to protect the interests of the workers, the city government has raised funds to facilitate the issue of back pay owed to employees. So far, 50 percent of the total has been paid already. At the same time, the city government has gathered some of the money and pre-paid the costs of bankruptcy and workers' settlement payments in order to ensure the smooth implementation of the bankruptcy.

During the bankruptcy process, the key leaders of the city government met five times with worker representatives from various levels in order to listen to opinions and answer questions.

Since February 5, 2002, we have entered the evaluation phase. It is forecast that the liquidation committee will draw up a report by the end of March in preparation for the first meeting of the creditors.

Question: Regarding the question of corruption amongst the staff of the former company raised by the masses, how has that been investigated and handled?

Answer: The city party committee and city government take this very seriously. They have indicated clearly that it doesn't matter who is involved, this must be investigated thoroughly. In order to do this, they have specifically set up a task-force made up of personnel from the judicial and discipline enforcement organs. They have carried out extensive investigations and confirmation work based on numerous reports and lines of inquiry provided by the masses. Up till now, six cases have been taken up by the judicial authorities. Of these, one has been sentenced, one has been charged, one is in custody and three are awaiting trial on bail. The discipline enforcement organs have taken up the cases of seven people. Funds recovered so far are 5.26 million yuan and some material goods. Investigations to recover a further 2.9 million yuan are ongoing. The task-force is currently stepping up its work. The city government and party committee would welcome the public to actively make reports and provide new clues for the investigation. We will undertake the investigations earnestly; those who should be treated by law will be treated by law, and those who should be dealt with will be dealt with.

Question: How should we regard some recent unlawful actions that have taken place lately?

Answer: Recently, a tiny minority of people with ulterior motives have used the problems associated with the bankruptcy and reform of the Liaoyang Ferroalloy Company to incite, make links and organize illegal activities that disrupt social order. They have stuck numerous posters in public places, organized links [with other enterprises and organizations] and held illegal marches and rallies without the permission of public security organs. They have caused traffic chaos and prevented government departments from carrying out their normal operations. With regard to the tiny minority of organizers of these illegal activities, the public security organs have given them numerous educational criticisms and admonishments according to law and ordered them to stop unlawful behavior. But they did not listen to the pleas. At the same time, they joined up with overseas media to distort the facts and spread rumors. They severely disrupted our city's normal production, city life and working order. Their actions violated the relevant laws and regulations. Because of this, the public security organs dealt with them according to law.

NOTICE:

In order to help the workers of the laid-off (xia gang) workers of the Liaoyang Ferroalloy Company to regain employment, the city's Labor Bureau will hold a conference in front of the company's office building on March 25, 2002 (Monday). The enthusiastic participation of workers from the Liaoyang Ferroalloy Company is welcomed.

The Liaoyang Labor and Social Security Bureau

March 20, 2002

243 Translation by Human Rights Watch.

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