image image

Law

Law

Tycoon Gu Chujun’s case review provides latest test of China’s treatment of private sector

As crackdowns on tycoons continue, Gu tries to clear name after 10-year sentence in 2005 on charges he said were trumped up by corrupt officials

PUBLISHED : Wednesday, 13 June, 2018, 3:18pm
UPDATED : Wednesday, 13 June, 2018, 9:48pm

Gu Chujun, a former appliance tycoon who was jailed on what he calls falsified charges, is having his case reviewed in southern China on Wednesday, in a quest for exoneration that marks another test of the legal treatment of private entrepreneurs in the communist nation.

The case of the 59-year-old engineer-turned-entrepreneur, who made his fortune by making white goods as well as a series of aggressive mergers and acquisitions, is the second high-profile appeal case involving a private businessman that the Supreme People’s Court vowed to revisit in December, as the Communist Party strives to allay private sector concerns over its increasingly heavy hand.

Last month, Zhang Wenzhong, the former chairman of one of China’s biggest retail chains, Wumart Stores, was exonerated of charges of bribery and fraud that had landed him in jail.

Verdict turns jailed tycoon into private capital’s touchstone in quest for role in Communist China

Gu, the former chairman of Guangdong Kelon Electrical Holding – then one of China’s biggest makers of white goods and appliances – was once riding high in the private sector, held up by Chinese media as a role model for entrepreneurs, and a turnaround specialist.

That all came to a halt when the financier was sentenced to 10 years in jail in 2005 on charges of falsifying financial reports, violating disclosure rules and illegal diversion of funds.

The investigation of Gu started after he was accused by the well-known finance analyst Lang Hsien Ping of embezzlement of state assets when taking over the loss-making state-owned fridge maker Kelon.

But Gu said the charges against him were trumped up by corrupt officials who were wary of his fortune.

Gu’s case comes after a number of private tycoons have been rounded up as part of a broader crackdown on corruption, which has sent a chill through the business community.

Detention of Anbang boss a milestone in financial industry crackdown, analysts say

Wu Xiaohui, the former chairman of troubled Chinese insurance giant Anbang, was sentenced last month to 18 years’ jail for fraud and embezzlement to the tune of around US$12 billion.

Xiao Jianhua, who has vanished from public view after being escorted in a wheelchair from a Hong Kong hotel and across the border to assist a corruption investigation on the mainland, is still awaiting trial, as the Tomorrow Group he founded struggles to dispose of assets.

Disappearing Chinese billionaire Xiao Jianhua awaits day in court as flagship’s assets sale stalls

Gu has been on a one-man crusade since his early release in 2012 to correct the record, seek a judicial review of his case and ask for 48.9 billion yuan (US$7.6 billion) in financial compensation.

“It will become crystal-clear that the investigation into my company was based entirely on illegal procedures initiated by officials with the evil intention to snatch my assets,” he told the South China Morning Post in January.

At the start of Wednesday’s hearing in Shenzhen, the court scrutinised old evidence that led to Gu’s conviction and examined new evidence presented to dispute the charges.

First the ‘guns’, then the ‘knives’ ... now Xi goes after the ‘money bags’ in China’s financial industry

The case is being heard at the Supreme People’s Court’s First Circuit Court, located inside a seven-story building in downtown Shenzhen.

Only six media organisations were allowed to cover the trial, including state broadcaster CCTV, Xinhua News Agency, and a newspaper run by the Communist Party’s legal and political bureau. Uniformed guards barred other journalists from entering the courthouse compound and banned photography.

The court posted updates of the proceedings via its official Weibo account.

The hearing was still under way on Wednesday evening and the court had not indicated how long the proceedings could take.