Having been jailed for 31/2 years for manipulating the price of shares in Hong Kong-listed Shanghai Land Holdings and for perverting the course of justice, Mo, 43, was last month sentenced to a further six months in jail for fraudulently obtaining nearly $50 million credit from five local banks.

Last year, Mr Chau, 45, was put on the Independent Commission Against Corruption's 'most-wanted' list. The graft watchdog alleges he conspired between October 2001 and May 2003 to dupe shareholders into accepting a reduced purchase price for the takeover of an unnamed listed company.

The Shanghai scandal highlighted the lack of transparency and potential for corruption in state land sales, and prompted the central government to press the city to crack down on property speculation.

Shanghai has sought to play down the impact of the scandal. 'We have no comment ... on this,' a city government spokesman said.

Shanghai residents claimed Mr Chau had colluded with officials to obtain land in the city centre free of charge and without compensating those living there. They subsequently lost a lawsuit against district authorities. No government officials have been punished over the affair.

Activists said they believed Mr Chau's sentence had been too light.

'This isn't a country ruled by law,' said one.

Zheng Enchong , a lawyer who advised the residents, was sentenced to three years in jail for leaking state secrets after informing an overseas human rights group about property disputes in Shanghai.

Zheng had accused city and central government officials of involvement with the developer. He is due for release in 10 days, according to New-York based Human Rights in China.

Mr Chau's whereabouts were not known last night. Previously, he has expressed a wish to resume his business dealings after leaving jail.