The USD 589 M fundraising scandal behind China’s straddling bus revealed
The founder of China’s once known high tech transportation solution — the straddling bus dubbed as Batie — was arrested on Sunday for illegal fundraising.
The straddling bus or the Transit Elevated Bus (TEB) was once a popular concept. Huaying Kailai, the company which invested in the bus, said that it was a significant original China invention. TIME praised it as “The 50 Best Inventions of 2010”.
The so-called revolutionary transportation invention was aimed at solving city traffic problems. In May 2010, Batie came into public view at the 13th Beijing International High Tech Expo. It claimed that each vehicle could carry 1,200 passengers to reduce 25 to 30 percent of the main road congestion. It also claimed that the time taken for construction of the bus was about one-third the period of a subway construction, and would only cost one-tenth of subway construction costs. Thereafter, it garnered the attention of several international media outlets including BBC, CNN, CNBC which reported on it. The world had seen the project as a potential solution to solve mega city traffic jams.
According to public reports, Huaying Kailai sold a series of financial products in order to raise funds for Batie. The lowest price of its financial product was sold at RMB 1 million (USD 147,267) with an annual return rate of 12 percent. Huaying Kailai raised more than RMB 4 billion in total.
The public raised questions of Batie being a financial fraud shortly after a quick test run in Qinhuangdao located north of Beijing last August. Soon, the bus’ fake patents were exposed. Last November, state media China Central Television (CCTV) pointed out that Huaying Kailai was suspected of illegal fundraising.
Bai Zhiming, known as the “father” or founder of the straddling bus, was reported to be under police investigation. According to CCTV, the fundraising fraud sucked more than USD 589 million from 40,000 individual investors.
In end June, the Qinhuangdao government requested for the removal of the straddling bus test line so that the road will return to its normal condition.