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Former Communist Party chief in Shanghai sentenced for corruption
The graft charges are part of a massive pension fund scandal that toppled
dozens of officials and business people.
By Don Lee
Los Angeles Times Staff Writer

April 12, 2008

SHANGHAI =C2=97 The Communist Party's former chief in Shanghai was sentence=
d
Friday to 18 years in prison for graft in a massive pension fund scandal
that toppled dozens of officials and businesspeople and exposed some of the
corruption behind the development of China's richest and most glamorous
city.

The official New China News Agency said Chen Liangyu, 61, was convicted of
extorting or accepting bribes of more than $340,000 and abusing his
position. The court in Tianjin, where a secretive trial was held last month=
,
also confiscated about $43,000 of Chen's personal assets, the news agency
said.

The sentencing was the culmination of an investigation that began in
mid-2006 into Shanghai's multibillion-dollar social security fund, which
Chen and others misused for personal gain. Government prosecutors also
accused Chen of using his power to benefit his family, friends and
underlings, who took bribes from developers and other businesspeople in the
form of salaries for phantom jobs, apartments and trips overseas.

Once a national Politburo member and one of China's most powerful men, Chen
was ousted as Shanghai's party boss in September 2006 -- the highest-rankin=
g
official to be purged in more than a decade. It wasn't the bribes per se
that got Chen in trouble, analysts said; in fact, the amount he was forced
to give up was insignificant. Rather, they said, his downfall was due to hi=
s
open defiance of central government orders to curb speculative real estate
development that was fueling an overheating economy.

Chen's lawyer, Gao Zicheng, declined to comment. "I could only say that
the
procedure is legal," Gao said in a telephone interview. "Whether there
is an
appeal or not depends on Chen's personal will."

Rumors had swirled in recent days that Chen could receive a more severe
punishment, possibly even death. But some analysts had expected him to get =
a
lighter penalty, something closer to 10 years, partly because of the risk o=
f
fostering a brutal climate for the Communist Party's political elite.

"I was shocked this guy got 18 years," said Minxin Pei, director of the
China program at the Carnegie Endowment for International Peace in
Washington. "That sends out a very strong message. It's not just about
corruption. It's about asserting central government authority. It says to
local officials, 'No matter how strong you are, don't mess with us.'
"

Corruption has been a long-standing problem in China, exacerbated by market
reforms that have given local governments greater power and avenues to
wealth, largely by exercising control over real estate. Beijing has
conducted numerous anti-corruption campaigns over the years, but it has
struggled to corral party officials in a system in which patronage and loca=
l
political machines are hard to break.

In the last five years, nearly 15,000 officials, including 35 at the
provincial or ministerial level, were investigated for embezzlement, briber=
y
and misappropriation of public funds, China's top prosecutor said in a
report last month.

Chen had built a strong political base in Shanghai over 10 years as a
district head, mayor and then the party's secretary here from 2002 to 2006.
Trained as an architect, he was said to have been protected by Jiang Zemin,
China's former leader whose power base was Shanghai.

Hu Jintao replaced Jiang as president in 2003, and the removal of Chen was
seen by some as Hu's way of eliminating a political enemy and consolidating
his power.

Chen's fall from grace elicited comparisons to Chen Xitong, the onetime
party chief of Beijing and a member of the Politburo who, under Jiang's
maneuverings, was ousted in 1995 for corruption. Three years later, Chen
Xitong was given a 16-year jail term but was released in 2006 for medical
reasons.

Chen Liangyu has been held in Qincheng Prison in Beijing's northern suburbs=
.
During his incarceration, some real estate projects in Shanghai were
reported to have been put on ice, and some developers were said to have gon=
e
into hiding.

Chen's sentencing came after a closed trial in Tianjin No. 2 People's
Intermediate Court, the second-lowest court in the Chinese legal system. No
journalists or family members were allowed inside for the proceedings March
25, according to Caijing magazine, a respected publication in Beijing.

In addition to four charges of taking more than $340,000 in bribes, Chen
faced two counts of abuse of power and a charge of dereliction of duty, the
magazine said.

New China News Agency said Chen had helped some businesses obtain fiscal
subsidies or compensation for building demolition, as well as in dealing
with unused real estate. The news agency said Chen had urged his family
members to return all the illicit money after the case against him was
launched.

Charges that Chen abused his power were tied directly to his role in the
funneling of Shanghai's pension money to developers and other companies for
hotels and other projects. Dozens of Shanghai officials and businesspeople
have been implicated in the scandal, and a number of them have been jailed.
On Monday, Zhang Rongkun, once one of the richest men in China, was
sentenced to 19 years in prison for securing loans from Shanghai's pension
plan for use in his company's private investments in a toll road.

With Chen's sentencing, observers said, the Shanghai pension fund case is
essentially closed. As a result of the scandal and the ensuing probe,
officials scrutinized other such funds in China. Analysts said it wasn't
clear how much of Shanghai's social security money that was put at risk was
lost or recovered.

don.lee at latimes.com=20


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