• Mon
  • Dec 29, 2014
  • Updated: 11:23am

Major player in Shanghai scandal jailed

PUBLISHED : Tuesday, 08 April, 2008, 12:00am
UPDATED : Tuesday, 08 April, 2008, 12:00am

A court yesterday sentenced businessman Zhang Rongkun, a major player in Shanghai's biggest ever corruption case, to 19 years in jail, a mainland magazine reported.

Zhang is among those who illegally borrowed from the city's social security fund in a case that implicated disgraced Shanghai Communist Party secretary Chen Liangyu and more than 25 other government officials and company executives.

The Songyuan Intermediate People's Court in Jilin province sentenced Zhang on five charges involving bribery, stock market manipulation and fraud over a corporate bond issue and misuse of capital from one of his companies, Caijing magazine said on its website.

The court also decided to withhold more than 1.3 billion yuan (HK$1.4 billion) in assets seized from Zhang and fined two of his companies a combined 282 million yuan.

Zhang, 34, plans to appeal against the sentence, the magazine said. Three others from his flagship company, Fuxi Investment Holding Co, were also sentenced yesterday.

Zhang's rise from a small-time entrepreneur running a clothing business in Jiangsu province to China's 16th richest person shows how a network of connections and well-placed bribes can build a business empire on the mainland.

'He was an ambitious man who started from nothing and whose good sense got away from him,' said Russell Flannery, who has interviewed Zhang as compiler of Forbes magazine's 'China Rich List'.

Media reports say Zhang offered more than 29 million yuan in bribes to several government officials. Chief among them was Wang Weigong, former secretary of late vice-premier Huang Ju and deputy general manager of the Shenergy Group, who received 9.3 million yuan in part for helping to arrange introductions to other officials.

After an introduction to Chen, the entrepreneur was able to buy the operating rights for a section of the Shanghai-Hangzhou Expressway at below-market prices. He also secured financing by borrowing money from the social security fund, previously estimated from 1 billion yuan to more than 3 billion yuan.

Chen is awaiting sentencing after a one-day trial last month.

Zhang's stock market manipulation charge stemmed from his purchases of shares in toymaker Shanghai Haixin Group. He bought stock in the company to drive up the price, then sold the shares to a fund manager he knew. Two Haixin officials have already been jailed for their roles in the scheme.

Fuxi Investment also issued 1 billion yuan worth of corporate bonds but falsified the company's financial accounts to investors.

Some analysts believe the prosecution of Chen is politically motivated. He is believed to have encouraged rapid growth and property speculation while the central government was trying to slow the economy.

Share

For unlimited access to:

SCMP.com SCMP Tablet Edition SCMP Mobile Edition 10-year news archive
 
 

 

 
 
 
 
 

Login

SCMP.com Account

or