Jul 20, 2016

    Chinese courts turn to shaming debtors


    ABOVE throngs of commuters at a Shanghai railway station, four billboards were lit up with the name of the head of a mid-sized industrial products maker.

    But he was not promoting his company or its goods.

    The Shanghai Railway Transportation Court put his name in lights earlier this month because his company failed to pay a 2.9 million yuan (S$585,000) debt.

    As growth slows, borrowers are finding it harder to repay loans, pushing China banks' official soured debt above US$299 billion (S$404 billion) at end-May.

    To fight this rising tide, Chinese courts have ramped up the use of shaming tactics.

    For 10 days ending last Friday, the names, ID numbers, addresses, case numbers and amounts owed by 20 people, either individual debtors or the heads of companies, were flashed across screens at the two main Shanghai railway stations at 10-minute intervals.

    In some cases, there were also photos of the miscreants.

    Some of the people featured have changed their phone numbers, addresses and disappeared, said the release, adding that the public can call in with clues to help the authorities track down the debtors.

    Normal methods of enforcement in China include the freezing and forced sale of assets, among other measures.

    A decree issued by the State Administration for Industry and Commerce at the end of last year set out the circumstances under which a company can be publicly shamed.

    The decree expands upon 2013 Chinese Supreme Court rules that say dishonest debtors' details can be published in newspapers, on the radio, television and the Internet.