Former deputy director general of the Wuhan Urban Management Bureau was tried on Tuesday of deceiving the local government and taxpayers of more than 207 million yuan ($34 million), Chutian Metropolis Daily reported.

Zeng Huaisheng, 65, was responsible for attracting foreign investors to a natural gas project in Wuhan, provincial capital of Hubei province.

According to regulations, majority ownership of a project should be in the hands of Chinese investors.

Zeng reached an agreement in 2001 with a Hong Kong company (considered a foreign investor) for a 50-50 shareholding ratio between Chinese mainland investors and the Hong Kong company.

A year later, Zeng asked the Hong Kong company to give up a 1-percent share of the gas project in May 2002 in exchange for the rights to establish a new business in the Chinese mainland.

Zeng kept his deal with the Hong Kong company secret and claimed that the Chinese investor, Wuhan Natural Gas Group, held a 51-percent share of the gas project.

A joint venture company was then founded in March 2003, with Wuhan Natural Gas Group holding a share of 50 percent, the Hong Kong company 49 percent and the third company 1 percent.

The provincial commerce department of Hubei then repealed the foreign investment certificate of the joint venture company after Zeng’s deal was discovered.

The joint venture company got a tax preference of 204 million yuan and the company founded by the Hong Kong side got a bonus of more than 3.19 million, according to the report. The local tax department has recovered the lost invesment.

A verdict in Zeng’s case has yet to be decided.