By staff reporter Lu Yanzheng

Early this month, the much-anticipated preliminary hearing for a bribery case involving the general manager of Southern Metropolis Daily was held in the Dongshan district court in Guangzhou. Southern Metropolis Daily is a tabloid subsidiary of Nanfang Daily, which is owned by Guangdong provincial government.

The defendant, Yu Huafeng, Southern Metropolis Daily’s general manager, was charged with “taking 100,000 yuan (US＄12,091) in bribes” and “giving 970,000 yuan (US＄117,291) in bribes” to Li Minying. Li was a member of the management board of the Nanfang Daily Newspaper Group and was in charge of supervising Southern Metropolis Daily’s business operation.

Around 8am on March 4, the 35-year-old Yu Huafeng, wearing a yellow prisoner vest and a black hood completely covering his head, was brought to courtroom No. 206, a small room with 30 seats. Yu’s wife broke into tears at the sight of her husband.

The hearing lasted for the entire day. Two thirds of the time focused on evidence concerning the bribes.

Prosecutors stated that from March 2000 to January 2001, Yu Huafeng, at that time the deputy editor and advertising director of Southern Metropolis Daily, asked two of his employees to fetch 1.6 million yuan (US＄ 193,530) from Nanfang Daily’s accounting department. The money, he told them, would be awarded to five employees in the advertising department. Of this amount, however, 580,000 yuan (US＄70,156) was divided between Yu Huafeng and other eight members on Southern Metropolis Daily’s editorial board. Yu received 100,000 yuan (US＄12,096), which was regarded by the court as embezzlement of company funds.

Yu’s defense council, however, stated that Nanfang Daily Newspaper Group set aside 1.6 million yuan (US＄193,530) to award employees in the business departments at Southern Metropolis Daily. Yu merely followed editorial board decisions to persuade employees in the business departments to share this amount with employees in Southern Metropolis Daily’s other departments. The purpose of this action was to narrow the income discrepancies among employees in the news department, administrative staff, and the business departments.

Yu’s lawyer said that Southern Metropolis Daily signed an “annual accounting schedule” with Nanfang Daily Newspaper Group. According to this schedule, Nanfang Daily Newspaper Group’s accounting department handles all accounts for Southern Metropolis Daily. When Southern Metropolis Daily achieves its business goals, its employees are entitled to a certain amount of bonus from the Group’s accounting department. Employees in the advertising department may receive additional personal awards when they exceed certain sales levels. Two of Southern Metropolis Daily’s internal documents outline this practice.

Following the “annual accounting schedule” in 2000, Southern Metropolis Daily took approximately 4.5 million yuan (US＄544,310) from Nanfang Daily Newspaper Group to award year-end bonuses to its employees. When this amount is added to the 1.6 million yuan (US＄193,530) in bonuses for the sales department, the amount of money given as bonuses totaled more than 6 million (US＄725,750) for the year 2000.

Yu’s lawyer further argued that Nanfang Daily Newspaper Group gave the 6 million yuan (US＄725,750) bonus to Southern Metropolis Daily. Once this amount had been transferred, it was no longer “company money.” In this sense, the 580,000 yuan (US＄70,156) which was distributed among Yu and other members of the editorial board of Southern Metropolis Daily, should not be treated as “company money.”

Yu Huafeng’s second alleged crime was giving bribes. According to the prosecutor, from early 2000 to March 2003, Yu gave Li Minying a total of 970,000 yuan (US＄117,330), all in the name of personal bonuses. Li was a member of the management board of the Nanfang Daily Newspaper Group and was in charge of supervising Southern Metropolis Daily’s business operations. The prosecutor alleged that Li helped Southern Metropolis Daily’s advertising business in order to “get inappropriate personal gains.”

Yu’s lawyer said that the 970,000 yuan (US＄117,330) was bonus money Southern Metropolis Daily gave to Li Minying. The lawyer said Li had helped secure many advertising sales for Southern Metropolis Daily. He had negotiated with many potential clients. Unfortunately for Li though, as an employee at Nanfang Daily Newspaper Group, he could not receive bonuses from Southern Metropolis Daily. This would be against the regulations of Nanfang Daily Newspaper Group. It was in order to circumvent this regulation that Yu took the money first and then gave it to Li. It was a token of gratitude from Southern Metropolis Daily, not from Yu himself.

During the final portion of the trial, the two sides debated over whether or not an inappropriate financial relationship existed between Li and Yu.

Prosecutors claimed that Yu had bribed Li in order to include accounts receivable for the following year in the current year’s revenue, resulting in a higher personal bonus.

Yu’s lawyer argued that Southern Metropolis Daily keeps its books on a “cash basis,” under which the general manager’s performances are measured by the cash received regardless of when the sales occurred. Yu would have nothing to gain by including accounts receivable for the following year in the current year.

The lawyer did a simple calculation. According to the accounting records, by calculating the accounts receivable into the revenue, Yu would have received a bonus of 370,000 yuan (US＄44,755), less than half the amount of money he allegedly gave to Li as a bribe. For this reason, it would make little sense for him to bribe. Furthermore, those accounts receivable would then no longer be counted as revenue in the following year, resulting in a lesser bonus to Yu in total.

On March 5, in the same courtroom, Li Minying was tried for allegedly receiving 970,000 yuan (US＄117,330) in bribes from Yu.

To the court, Li acknowledged that he did violate certain regulations by taking this amount of money, which he has since returned. But he added, “The regulation does not reward the competent and violates the distribution principle of a socialist society.” He said that the regulation does not suit the business nature of Southern Metropolis Daily and other media.

Li’s hearing lasted for half a day.

After Caijing went to the press, we learned that Yu was sentenced to 12 year in prison and Li to 11 years. Both men indicated they would appeal to a higher court.

It’s said that the prosecutors spent seven months preparing for this case. Yu Huafeng was initially detained on January 14 and Li on January 15. On February 16, the prosecutors brought charges against the two men in court.

Southern Metropolis Daily is one of the most successful newspapers in China. Its profit topped 160 million yuan (US＄ 19 million) in year 2003.