"Lending money."
At those words, Wang Xiaoliang understood the gist.
Gu Junhao brought in projects and had contractors do the work. When the contractors lacked the money to cover the upfront costs, he naturally lent them his personal funds at high interest.
He was using his position for private gain, while the company bore enormous risks.
"How does it work?" Wang Xiaoliang leaned back in his chair.
Li Yongling still had both hands resting neatly on her knees.
"Contractors generally have to front the costs when they start a job. Workers' living expenses, material costs-at the start, the client basically doesn't pay a cent. They have to cover everything themselves."
Wang Xiaoliang remembered how his youngest maternal uncle had tricked relatives into handing over money under the pretext of covering upfront costs.
Perhaps he hadn't intended to deceive them at first, but the project hadn't progressed as planned.
All the funds had been tied up.
Then he had started playing dirty.
"So when they're short of money, Gu Junhao lends it to them?"
"Yes." Li Yongling nodded. "The contractors who work with us regularly all know Mr. Gu has money. Before the first labor payment comes in, his money goes into the company account. It pays the contractors' various expenses-insurance, living expenses, small tools, protective clothing, and so on. Once the wages come into the company account, his money goes straight back where it came from."
Wang Xiaoliang tapped the desk twice.
"How much interest does he charge? If this money passes through the company accounts, how is the tax reported?"
Li Yongling couldn't help letting out a short laugh.
"Mr. Wang, what tax? On the books, exactly the same amount comes in and goes out. Mr. Gu transfers ten million in, then transfers ten million out a while later.