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June 18, 2011

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'Secret magnate' illegal loan sentence

SHANGHAI property tycoon Yan Liyan was sentenced to three years in prison with probation of five years yesterday for illegally granting loans, after being detained for more than two years.

The verdict handed down by the Shanghai No. 1 Intermediate People's Court rejected previous prosecutors' charges of embezzlement and contract fraud involving about 2.7 billion yuan (US$417 million), which could have resulted in a life sentence if proved.

The court ruled Liu Shunxin, former board chairman of AJ Securities, and Ma Jianping, former general manager of AJ Trust, were the main culprits in illegally granting 937 million yuan in loans. Liu was jailed for 13 years and Ma received a sentence of 12-and-a-half years.

Yan and Chen Hui, former board director of AJ Securities, were judged to be accessories to the crime and received probation. Yan has paid compensation for losses he caused. The verdict didn't reveal the amount.

Yan, known as a "secret magnate," was listed 56th on the Hurun 100 top millionaires list for China's mainland in 2006. He owned several investment companies but little was known about him.

According to the verdict, Liu used money from AJ Securities to invest in the Hong Kong stock market in October 2000 but lost money.

To recover the losses, he conspired with the three others to issue loans in the name of AJ Trust to Yan's companies first and then took the money to buy shares again because capital from the trust company couldn't be used to buy stock in the market directly.

"This means Yan's companies served only as a platform for the capital. He didn't use a penny of the cash," said Yan's lawyer Wang Junmin.




 

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