Sun was found guilty by Xushui People's Court of raising 13.08 million yuan (HK$12.28 million) from 611 local depositors from January 2000 to May this year without approval from the People's Bank of China.

Under mainland laws, only financial institutions with the approval of the central bank can run deposit-taking businesses. Sun was fined 100,000 yuan and his company 300,000 yuan.

The court ruled that Sun, known for his critical views of the government's agricultural policies, was guilty because his act had seriously disturbed financial order.

The high-profile case yesterday attracted dozens of reporters to the little-known town of Xushui, where Sun built his chemical fertiliser and feedstuff empire.

Defence lawyer Xu Zhiyong argued that Sun had not caused harm to the public. He said that unlike many state banks that failed to invest money properly, Sun only used the money he raised to expand his business, which made a significant contribution to the local economy.

Another defence lawyer, Zhang Xingshui, said the laws governing financial institutions were outdated and failed to meet the financial needs of private companies like the Dawu Group.

During the four-hour hearing, Sun and his niece, Liu Ping, broke down in tears when making their closing remarks. Ms Liu, 29, the acting general manager, represented the Dawu Group yesterday.

Sun said he had consulted lawyers when he started the deposit business and had never thought it would cause so many problems.

Speaking after the trial, Mr Xu said the sentence was acceptable and an appeal was not planned.

'No matter what, they will not allow other localities to follow his example. If all private companies do what he did, then there would be chaos,' one mainland reporter said.

Sources close to Sun's case yesterday said President Hu Jintao had instructed local officials to handle the case with care and Vice-Premier Hui Liangyu, who oversees the country's agriculture policies, also issued similar instructions.

Lawyers and academics had called for his release, saying he was forced to raise deposits from local villagers as private businessmen were discriminated against by state banks.

Local villagers also came to his defence, saying that Sun, who provided jobs for 1,500 people, was only helping the local economy and hadn't cheated his depositors.