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D'Long boss on trial in biggest finance case
By Jiao Xiaoyang and Wang Zhuoqiong (China Daily)
Updated: 2006-01-20 06:14
Tang Wanxin, head of the notorious and now bankrupt D'Long Group, went on trial yesterday for illegally accepting deposits, manipulating stock prices and embezzlement.
Tang Wanxin |
The case is the largest-ever financial crime in China, with judicial investigation showing that billions of yuan, more than 2,500 institutions and 32,000 people in about 20 provinces involved.
Six of Tang's executives also went on trial in Wuhan, capital of Hubei Province.
According to the prosecutors, from 2001 to 2004, D'Long Group and its subsidiaries collected more than 45 billion yuan (US$5.6 billion) in deposits from the public, promising high returns.
In China, only banks and authorized financial institutions can accept public deposits, and illegally accepting deposits carries a maximum sentence of 10 years.
In addition, D'Long opened thousands of fake accounts in stock exchange centres, controlling financial institutions and listed companies to tinker with stock prices to its advantage.
According to the prosecution, D'Long bought 67.8 billion yuan (US$8.5 billion) worth of shares from three manipulated companies from 1997, and by April 2004, raked in more than 9.8 billion yuan (US$1.2 billion) in gains.
Manipulating stock prices carries a maximum jail term of 5 years.
The high-profile case is the latest in China's ongoing crackdown on stock market irregularities.
Last month, a Beijing court sentenced Wang Xiaoshi, a former official with the China Securities Regulatory Commission, to 13 years in prison for taking bribes to help companies get listed.
Legislators have recently revised the Company Law and the Securities Law effective January 1 spelling out harsher punishments for market irregularities.
"The laws aim to plug policy loopholes, deter wrongdoers and regulate the market," said Liu Junhai, a researcher on financial law with the Chinese Academy of Social Securities.
The D'Long case is not open to the public.
Tang, founder and president of D'Long, started his career in the Xinjiang Uygur Autonomous Region two decades ago selling products ranging from bicycle locks to agricultural chemicals.
In 1992, he moved to Xi'an, Shaanxi Province, and along with several partners began buying institutional shares in local companies and reselling them to investors. His group expanded to other major cities, speculating on shares of listed companies.
The crisis came to a head in April 2004 when D'Long's capital chain snapped, prices of stocks it controlled nose-dived and customers demanded their deposits back.
Tang fled the country but came back three months later and was arrested.
In August, several senior executives of D'Long involved in accepting deposits were jailed and fined millions of yuan.
(China Daily 01/20/2006 page1)
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