National

Regional

Taiwan, HK, Macao

Special Coverage

Focus

Society

Profiles

Court rejects appeal of tycoon in fund scandal

(Shanghai Daily)
Updated: 2008-06-23 17:11

A higher court in Jilin Province has upheld a 19-year jail term for Zhang Rongkun, a key figure in Shanghai's pension fund scandal, Shanghai Oriental Morning Post reported Monday.

The Higher People's Court of Jilin on Sunday upheld Zhang's sentence while the appeals of five of his subordinates were also rejected, the newspaper said.

Zhang and the others pledged to appeal to the Supreme People's Court, the report added.

Zhang, a Suzhou native, was handed the term and had 1.6 billion yuan (US$229 million) of assets confiscated on April 8 for bribing officials, company executives, manipulating stocks prices, fraudulent bond issuing and the illegal withdrawal of capital contribution, the Songyuan Intermediate People's court ruled.

Zhang's two companies were also fined a combined 300 million yuan.

The court found Zhang and his two investment companies – Fuxi Investment and Feidian Investment – bribed civil servants with 29 million yuan, including 9.3 million yuan paid to Wang Weigong, deputy general manager of state-controlled Shenergy Group.

Wang Weigong introduced Chen Liangyu, former Shanghai Party Secretary to Zhang, previous reports said.

Chen, who was brought down in 2006, was sentenced to 19 years behind bars for abuse of power and taking bribes on April 11 by Tianjin No. 2 Intermediate People's Court.

Wang Weigong is under investigation.

With Chen's help, Zhang acquired a 99.35-percent stake in Shanghai Road and Bridge Development Company Ltd, an arm of the state-owned Shanghai Urban Construction Development Co, by paying 1.015 billion yuan, 300 million yuan less than its lowest estimated market value, according to previous reports.

From 2000 to July 2007, Zhang bribed two senior executives of Shanghai-listed Haixin Group with 1.7 million yuan to manipulate the share price of the company, according to the Jilin court.

Zhang and two Fuxi Investment executives committed fraudulent bond issues during the issuance of the company's short-term bills in 2005, the report said, citing the court's verdict.

The Jilin court also found Zhang borrowed 200 million yuan from Shanghai's pension fund in 2003 and injected the money into Feidian Investment before withdrawing the money.

Zhang and his two accomplices committed the crime of illegal withdrawal of contribution, the court said.

Previous reports said that the manipulation of Haixin's share price helped Zhang earn 1.19 billion yuan as of September 28. The money Fuxi Investment borrowed from two Shanghai-based state-owned companies and the shares of state-owned companies it held also earned Zhang huge profits from the Hong Kong stock market, Caijing said.

Both the 1.19 billion yuan from Haixin shares and about 139 million yuan from the Hong Kong market were frozen by the judicial authority before the trial. A total of 1.6 billion yuan, including a 282 million yuan penalty, were confiscated from Zhang.

Shanghai's biggest ever financial scandal since economic reforms began involved the misappropriation of 3.7 billion yuan of the city's pension funds, including 3.45 billion yuan in principal and 250 million yuan in interest. A total of 25 senior government officials and corporate executives have been or will be tried in courts in Shanghai, Jilin Province and Anhui Province for their involvement in the scandal.

Sixteen of them have already been convicted.

Four of the convicted, including Qin Yu, former secretary of Chen Liangyu, received life-long jail terms while Wang Chengming, former chairman of Shanghai Electric Group Co, was sentenced to death with a two-year suspension, for taking more than 300 million yuan from a land sale in Shanghai in 2003.

The others, including former Shanghai Formula One racing boss, Yu Zhifei, received jail terms ranging from one-and-a-half years to 19 years in trials held in Anhui Province in January.

Under Chinese law, major trials involving senior officials are heard in other jurisdictions to ensure impartiality.