Zhou Zhengyi, a former property tycoon in Shanghai, is facing five new charges, including bribery, embezzlement, and issuing fake value-added-tax (VAT) invoices，after his three-year imprisonment that expired in May last year.
His defense lawyer, carrying luggage full of materials, entered the Shanghai No.2 Intermediate People's Court on October 23, Caijing magazine reported. The testimony involving a number of officials and businessmen is complex and expected to last for several days.
According to the prosecution, starting in 1999 Zhou fabricated VAT invoices from fraudulent copper cathodes businesses he owned to cajole billions of bank discounts, according to 21st Century Business Herald, a Chinese economic newspaper.
An anonymous bank official told the newspaper it was not difficult for banks to research the credibility of trade conducted among related companies, but cash flowed to Zhou's Shanghai real-estate firm, Nongkai Development Group, and its branch companies despite necessary checks.
Zhou placed his relatives in key positions in his companies, including accountants and managers, to dictate Nongkai. From 1998 to 2003, nearly 80 firms had been merged into Zhou's consortium. Forbes listed Zhou as the 11th richest Chinese mainlander in 2002, with a fortune estimated at US$320 million.
Prosecutors started to conduct their investigation into Zhou's business in 2003. About a year later, he was sentenced to three years in jail for fabricating registered capital and manipulating stock prices.
However, the case turned out to be more complicated after the Shanghai Municipal People's Procuratorate found evidence of bribery and issuing fake value-added-tax (VAT) invoices in Zhou's business, and he was rearrested in January this year.
Also detained were Jin Shanggao (alias), director of capital settlement centers of three stock exchanges in succession; Jiang Fangyuan (alias), deputy director from the credit department of a state-owned bank in Shanghai; Qi Guorong (alias), manager in the international department of a state-owned bank in Shanghai, the 21st Century Business Herald reported. According to the report, Zhou bribed Jin, Jiang, and Qi to help him embezzle funds and borrow loans, with luxury watches, houses and money totaling millions of yuan.
His bribery also reached administrative officials. Huang Jian, a prison warden, helped Zhou send letters to Hong Kong when the man was imprisoned. Huang was sentenced to 11 years in jail on August 10, for receiving bribes totaling 450,000 yuan (US$60,358). Yu Jinbao, Wang Zhengming, and Fu Kehu, members from the investigation group of Zhou's case, were sentenced to terms of 2-11 years in the same month, the newspaper reported.
Zhou and his wife Mao Yuping started their business in the 1980s. Their stewing-food restaurant made them a large sum to speculate in the stock markets. They raked in millions in Hong Kong's rebounded stock market in 1997 and invested it in the real estate market.
Mao was sentenced to 32 months in prison last April by the Hong Kong District Court on charges of conspiracy and defrauding letters of credits worth 49 million HK dollars (US$5.8 million).
Shanghai No.2 Intermediate People's Court also completed the cases of Nongkai's three important figures -- Tang Haigen, Zhai Shiqiang, and Chen Xunming -- on August 10 this year.
Tang Haigen, brother of Zhou's sister-in-law, was former president of Hainiao Enterprise Development Co Ltd as well as a former member of the Shanghai municipal committee of the Chinese People's Political Consultative Conference. He was removed from the political advisory body in January this year and was arrested on charges of embezzlement and bribery, according to Xinhua's report.
(China.org.cn by Wu Jin November 2, 2007)