The coal chemical project built by a subsidiary of China Coal Energy Co., Ltd. (hereinafter referred to as "China Coal Energy"), China's second largest listed coal enterprise, in Yulin City, Shaanxi Province, involved major land violations and was investigated and dealt with by the local land department and the Ministry of Land and Resources. China Coal Energy kept it secret.

Under the banner of key projects, "rushing forward" to occupy land

It is reported that the "Methanol Acetic Acid Series Deep Processing and Comprehensive Utilization" project located in Mazaliang Village, Baijie Township, Hengshan County, with a total investment of 19.3 billion yuan, is a coal chemical project. The main investor is China Coal Shaanxi Yulin Energy Chemical Co., Ltd. (hereinafter referred to as "China Coal Yulin Company"), a wholly-owned subsidiary of China Coal Energy. 30% of the funds are injected by China Coal Energy in the form of capital, and the rest are financed through bank loans and other means. After the project is put into production, it can produce 600,000 tons of engineering plastics annually. The project is listed as a key project of Shaanxi's "12th Five-Year Plan" and is also one of the major backbone demonstration projects of the province's energy and chemical industry.

The Economic Information Daily reporter saw at the scene that in the project area of several square kilometers, tower furnaces are towering, tanks are standing in rows, and pipelines are densely distributed. It is understood that the main process equipment of the first phase of the project has been completed and is being tested on a single machine. It is expected to be put into trial production in July this year.

According to the cooperation agreement signed between the Shaanxi Provincial Government and China Coal Energy, China Coal Energy must first carry out large-scale coal chemical projects before it can intervene in the development of Yulin coal, and then the Shaanxi Provincial Government will simultaneously provide two large coal mines. The two coal mines approved by China Coal Energy are Dahaize Coal Mine and Hecaogou Coal Mine. The former is expected to produce 25 million tons per year, and the latter 3 million tons per year.

"It is precisely for the high-quality resources of the two large coal mines in Yulin that China Coal Energy launched the coal chemical project and illegally occupied land on a large scale under the banner of key projects." said an industry insider in Yulin.

A cadre from the Baijie Township Government of Hengshan County told the Economic Information Daily reporter that the land of the coal chemical project is a sloping sand dune land with rich groundwater resources. Water can be seen when digging a well more than 7 meters deep and the water level is stable. It has great prospects for the development of sightseeing agriculture and facility agriculture. Before it was occupied, a large area of tamarisk and sea buckthorn were planted, which is an important source of income for local farmers.

"They said that it was a key project and no one could stop the occupation." Many villagers in Mazaliang Village told reporters that the project rushed to occupy land without showing any land use procedures, and large areas of tamarisk and sea buckthorn vegetation were eradicated, which was collectively resisted by the villagers. In fact, the person in charge of China Coal Group once publicly stated that the project was being promoted, "Extraordinary promotion, as fast as possible."

The reporter learned from the Hengshan County CPPCC that in June 2012, the county CPPCC inspected the construction of projects in the county. The inspection report stated that due to land disputes, villagers blocked the construction of the coal chemical project of China Coal Yulin Company, and the construction progress was slow for a time.

The county land bureau was fined more than 5 million yuan but could not shake the "central enterprise background"

Data shows that the contradiction between supply and demand of construction land in Yulin City is prominent. As of the end of 2012, the total amount of carryover and legacy land in the city was about 60,000 mu, which was urgently awaiting approval. With the launch of the China Coal Yulin coal chemical project, various regulations restricting land acquisition and land use have been broken.

Zhou Xiye is the chairman of the labor union of the Hengshan County Land Bureau and is responsible for the land approval work for the coal chemical project of China Coal Yulin Company. He told the Economic Information Daily reporter that the province only gives Hengshan more than 1,000 mu of industrial land quota each year, while the coal chemical project occupies a huge area. China Coal Yulin Company has two lines at once, and the county cannot meet its land requirements at all.

Wei Jianmin, director of the Party and Mass Work Department of China Coal Yulin Company, told the Economic Information Daily reporter that the project land procedures are complete and there is no problem. Zhou Dongzhou, secretary of the board of directors of China Coal Energy, said in an interview with reporters that the project has been approved for 2,600 mu of land, and another 1,040 mu is being approved.

Contrary to what China Coal Energy said, Zhou Xiye told reporters: "The first phase of the project covers an area of more than 6,000 mu, of which more than 2,600 mu have been divided into seven or eight batches and have completed the approval of agricultural land conversion; the application for the conversion of more than 3,400 mu of agricultural land has been reported to the province in three batches and is awaiting approval." Zhou Xiye emphasized that the land supply for the coal chemical project of China Coal Yulin Company has not yet started, the bidding and auction procedures have not been started, and the state-owned land use rights of one mu of land have not been obtained so far, which is a case of construction without approval.

The reporter obtained an administrative penalty decision made by the Hengshan County Land and Resources Bureau in May 2012, and the penalized unit was China Coal Yulin Company. A staff member of the bureau said: "The county land bureau issued the punished unit many times the "Notice of Order to Stop Land Violation" and the "Notice of Order to Correct Illegal Behavior", but it did not comply with the requirements; it then issued the "Administrative Penalty Notice" and the "Administrative Penalty Hearing Notice", but they still ignored it." The above-mentioned administrative penalty decision stated: "The company applied for 6,640 mu of land, but actually used 5,312 mu of land, which is illegal land use while reporting". Based on this, the county land bureau imposed a fine of 5.14 million yuan on China Coal Yulin Company, and the penalty has been paid.

A person in charge of the Yulin Municipal Land and Resources Supervision Brigade told the Economic Information Daily reporter that the municipal land department had repeatedly warned and stopped the illegal occupation of land by the coal chemical project, "They relied on their background in state-owned enterprises and simply ignored it, and the illegal occupation of land has been expanding again and again."

As early as July 25, 2011, the Yulin Municipal Land and Resources Bureau required at the city's key construction project land approval promotion meeting that "illegal land use for project construction should be curbed, and don't be lucky when the state conducts land satellite image law enforcement inspections. Especially for key projects, land cannot be used before approval, which will lead to accountability by superiors."

Illegal occupation of land has not stopped despite investigation by the Ministry of Land and Resources

Relevant personnel from the Yulin Municipal Land and Resources Bureau told the Economic Information Daily reporter that during the 2011 land satellite image law enforcement inspection organized by the Ministry of Land and Resources, a prominent suspected illegal land spot was found in Hengshan County. After verification and determination, as of the end of 2011, the coal chemical project of China Coal Yulin Company occupied more than 6,000 mu of land without approval.

"The huge fine did not force China Coal Yulin Company to "stop", and the illegal occupation of land has never stopped." Bu Fudong, the captain of the Law Enforcement and Supervision Brigade of the Hengshan County Land and Resources Bureau, told reporters frankly.

A person in charge of the Shaanxi Provincial Land and Resources Law Enforcement and Supervision Bureau told the Economic Information Daily reporter that the provincial, municipal and county land departments were unable to stop the illegal occupation of land by the coal chemical project and had to report it to the Ministry of Land and Resources.

Zhou Xiye told the Economic Information Daily reporter that in 2013, the case of the coal chemical project occupying land without approval was filed by the Ministry of Land and Resources and listed as a direct investigation case. It was required to immediately stop the illegal occupation of land, complete the land use procedures as soon as possible, and investigate the responsibilities of relevant personnel.

Zhou Xiye said that the Ministry of Land and Resources directly investigated and handled the case this time, and the county government's responsible leader, a member of the county land and resources bureau team and the relevant person in charge of China Coal Yulin Company were punished for party and political discipline respectively. However, who was punished and what kind of punishment was not made public.

"Before the investigation by the Ministry of Land and Resources, the project occupied an area of more than 6,000 mu. Now the actual area has exceeded 8,000 mu, an increase of more than 2,000 mu. The more it is investigated, the more illegal the land occupation is. The investigation by the Ministry of Land and Resources has not been able to stop it." A deputy head of Baijie Township Government of Hengshan County who is familiar with the land acquisition of the project told the Economic Information Daily reporter.

In April 2014, some villagers of Mazaliang Village commissioned a qualified engineering surveying and mapping company in Yulin City to conduct on-site surveying of the land area of the first phase of the coal chemical project of China Coal Yulin Company, and determined that its land area is 8,478 mu.

Lei Yuhong, deputy director of the Propaganda Department of Hengshan County Party Committee, refused to disclose the specific results of the investigation to the Economic Information Daily reporter, and the reporter's request to interview relevant leaders of the county party committee and county government was also declined. Lei Yuhong said that he would explain the details to the reporter later, but there was no news as of press time.

Wei Jianmin, director of the Party and Mass Work Department of China Coal Yulin Company, and Feng Zhanjun, manager of the Planning and Development Department, also remained silent about the specific results of the investigation by the Ministry of Land and Resources. Zhou Dongzhou, secretary of the board of directors of China Coal Energy, avoided talking about the details to the reporter of Economic Information Daily, but only said that he "actively cooperated with the investigation and handling by the Ministry of Land and Resources."

Illegal occupation of land was kept secret and suspected of information disclosure violations

An expert from the Institute of Industrial Economics of the Land and Resources Economics Research Institute said in an interview with the reporter of Economic Information Daily that the project was built before approval and the illegal occupation of land was so large, which is unique among Chinese listed companies.

Jiang Changyun, a researcher at the Institute of Industrial Economics and Technological Economics of the National Development and Reform Commission, told this reporter that the coal chemical project of China Coal Yulin Company is of great demonstration significance for exploring the development model of the modern coal chemical industry. Its large-scale illegal occupation of land and the expansion of land occupation while being investigated set a bad precedent.

Article 30 of the ¡°Administrative Measures for Information Disclosure of Listed Companies¡± stipulates that when a major event occurs that may have a significant impact on the trading price of the securities and derivatives of a listed company and investors have not yet learned of it, the listed company shall immediately disclose the event, explain the cause of the event, the current status and the possible impact, and at the same time stipulate that major events include the company being investigated by the relevant authorities for suspected violations of laws and regulations, or being subject to major administrative penalties.

According to the classification standards of the ¡°Major Land and Resources Case Reporting System¡±, the illegal occupation of land by the coal chemical project of China Coal Yulin Company is a major land violation case, which is a major event that can affect the company's stock price. However, the reporter checked all the announcements of China Coal Energy since 2012 and found that neither the regular reports nor the temporary announcements made any reminders or explanations about the penalties for illegal occupation of land, and did not mention the investigation and handling by relevant state departments. The 2013 annual report stated that the project "has obtained various approval procedures."

Gao Zhan, a lawyer at Beijing Zhongdiao Law Firm, told the Economic Information Daily that China Coal Energy should have disclosed the facts when its subsidiary was subject to administrative penalties and was investigated by the land department, but the company deliberately concealed major matters and was suspected of false statements. Gao Zhan said that once the facts are confirmed, the China Securities Regulatory Commission will impose administrative penalties; China Coal Energy is also listed in Hong Kong. If there is a violation of Hong Kong's regulatory laws, Hong Kong regulatory authorities and stock market participants, including investors, may file a lawsuit against the company and management in Hong Kong.

Zhou Dongzhou, secretary of the board of directors of China Coal Energy, told the Economic Information Daily that according to relevant regulations, the matters of punishment and investigation for land occupation by China Coal Yulin Company can be exempted from announcement. Zhou Dongzhou did not explain the legal basis for "not announcing".

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