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Former Onlly exec in court on graft charges

THE former president of Shanghai Jiaoda Onlly Co, a publicly traded health care firm, told a local court yesterday he was innocent of corporate corruption charges exceeding 150 million yuan (US$22 million), in a case that has drawn wide public interest.

The charges, heard by the Shanghai No. 2 Intermediate People's Court, also involve two alleged co-conspirators in a wide-ranging scheme to exploit their positions for personal enrichment, according to testimony. The hearing was scheduled to last two days but was suspended at the end of the first day. The reason was not given.

Former Onlly President Lan Xiande, 52, was charged with embezzling 90 million yuan in public funds, taking 47.53 million yuan in state-owned assets and accepting 15.71 million yuan in bribes.

Two former Onlly vice presidents, Fan Xiaobing and Ye Wenliang, also went on trial yesterday. Fan was prosecuted for allegedly accepting 15.71 million yuan in bribes and embezzling 55 million yuan in public funds with Lan. And Ye was charged with taking 47.53 million yuan in state-owned assets and embezzling 35 million yuan with Lan.

Hundreds of people showed up for yesterday's hearing.

Lan is a former biology teacher at Shanghai's Jiao Tong University who became general manager of Onlly in December 1997 because the university was a big shareholder in the firm.

The alleged misdeeds began when Onlly decided to extend its business scope into real estate in 2002 and bought the Shanghai Rongbei Real Estate Development Co, which belonged to the Zhongshan Sub-district of Songjiang District, for 6.5 million yuan. Onlly originally held 80 percent of the shares and the remainder went to 11 senior managers of the firm.

When Rongbei sought to increase its investment capital in January 2003, Lan and Ye decided to shut the university out of the deal, prosecutors said. The 11 individual shareholders then invested 8 million yuan to buy the increased shares, cutting the university's stake to 48 percent, prosecutors said.

Lan and Ye then allegedly misappropriated 47.53 million in public assets by giving Onlly a fraudulent appraisal of Rongbei's worth.

Lan, however, said he made his decisions based on a memo signed by Onlly and the sub-district, which said Rongbei should be a privately owned company and that shares held by individuals should exceed 50 percent. He also questioned the Rongbei asset appraisal provided by prosecutors.

The indictment also charged that Zhu Min, general manager of Shanghai Jiejie Real Estate Co Ltd, suggested a plan to develop land in Baoshan District with Onlly in 2003 and promised to transfer 50 percent of Jiejie's shares to Lan and Fan as a reward. But Lan and Fan allegedly paid only 4.4 million yuan, which equaled 20 percent of Jiejie's shares. The two then illegally accepted a 15.71 million yuan dividend distributed by Jiejie based on their inflated ownership stake, prosecutors said.

The charge of embezzlement involved two alleged illegal loans totaling 90 million yuan.

Prosecutors said Lan ordered Onlly subsidiaries to make those loans to companies in which the three held personal financial stakes.


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