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Chairman facing fraud charges

THE chairman of last year's worst performing company in mainland A-share markets is now facing at least three charges over business fraud and investment scams worth nearly US$500 million.

Long Changsheng of the Shanghai-listed Hongsheng Technology is expected to go on trial at Shanghai No.1 Intermediate People's Court for foreign exchange illegalities, fake capital contributions and withdrawing registered capital.

Long Changsheng, 47, set up an investment company in September 1998 with 50 million yuan (US$7.32 million) he had borrowed from a bank. He went on to count the loan as registered capital of the company, and used it later to act as leverage for his listed company buyout, said prosecutors.

The indictment said he withdrew 15 million yuan immediately after the registration of the "100 million yuan" firm.

Long Changsheng was also involved with fraudulent letters of credit from July 2003.

He had ordered two of Hongsheng's subsidiaries to apply for letters of import credit at four banks and asked a Hong Kong company to offer the four banks 407 fake bills of lading with confirmation from the two subsidiaries.

The four banks later paid US$485 million for the nonexistent deals, but almost a quarter of the letters of credit were non-negotiable and the insurer lost US$114 million.

Hongsheng Technology's 2008 report to the Shanghai stock exchanges suggested its earnings per share were -21.86 yuan, net assets per share were -21.18 yuan while the undistributed profits reached -22.42 yuan per share – the worst performer of any A-shares traded on the Shanghai and Shenzhen stock exchanges.

Described as as a "nice man loyal to his family" among his employees, Long Changsheng has constantly been linked to female celebrities.

He was caught by Shanghai media meeting a Taiwan actress Kelly Lin at a five-star hotel room in July 2004.

Long Changsheng, graduated from University California Los Angeles in 1986, is reportedly the grandson of the late governor and warlord of the Chinese province of Yunnan – Long Yun.


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