By staff reporter Wang Heyan

Three oil investors in the northern Shaanxi province have been sentenced to prison for gathering a mob and disturbing the peace after resisting government efforts to expropriate the oil fields they had purchased.

One investor, Feng Bingxian, was sentenced to a three-year prison term, while two other representatives, Feng Xiaoyuan and Wang Shijun, were sentenced to two years and two years’ probation. The sentences were meted out on December 26th at a hearing in Shaanxi’s Jingbian county court.

The dispute began when Jingbian county officials took over ownership, management, and shareholders’ rights of hundreds of small, privately owned oil fields in northern Shaanxi province. The three convicted investors represent a group of more than 60,000 who had bought the fields from county governments as long as a decade before, when Shaanxi was seeking private investors in its oil fields to support provincial development. The area was then known to contain oil reserves, but was expected to be relatively unprofitable and difficult to exploit.

On April 13, 1994, state-owned oil giant Sinopec signed an agreement with the Shaanxi provincial government rezoning 1080 square kilometers of oil fields to be sold to private investors. Local officials then adopted a series of incentives to attract those investors from outside Shaanxi, some as far away as Guangdong Province. Within two years, Shaanxi’s oil production had soared from 400,000 tons to 6 million tons annually, and investors’ profits surged as oil prices also rose.

But that development was not without its problems. Outdated drilling techniques, inefficient resource use and unchecked environmental pollution eventually raised government officials’ concern, and in December 1999, the central government issued a regulation known as “Document 1239” to regulate the province’s small oil fields. In 2003, when 15 county-level governments in the cities of Yan’an and Yulin began to expropriate those private oil fields, over 60,000 private investors joined in the struggle to oppose the takeover.

In early 2004, some of the investors turned to the courts to safeguard their rights, preparing to sue the provincial, municipal and county governments for illegal government behavior. But when the investors were nearly ready to bring their suit a year later, several government officials tried to settle with them out of court. On April 12th, a representative for the investors met with Yulin city mayor Wang Dengji and other officials, who reportedly admitted that nationalizing the oil wells had been a “well-intentioned mistake,” and promised to send a task force to the counties to solve the problem.

But the government never made good on its promise, and took no action. Over 200 investors gathered at the Shaanxi provincial Communist Party Committee office on May 11th, wanting to speak with the officials involved in the case. More than 30 government officials and nine representatives from the group of investors held a four-hour meeting.

But the tide turned without warning two weeks later on May 26th, when Yulin police arrested the investors’ lawyer, Zhu Jiuhu, for disturbing the peace and illegal assembly. Feng Bingxian and more than a dozen other representatives for the investors were arrested in the several months that followed. By the trial date, all except Feng had since been released on parole.

On October 20th, Jingbian county prosecutors charged four defendants – Feng Bingxian, Feng Xiaoyuan, Wang Shijun, and Kong Yuming – with disturbing the peace and illegal assembly. The other representatives and the lawyer were not charged. Charges against Kong were later dropped because he suffers from advanced kidney disease.

During the December 26th trial, the prosecution argued that on April 12th and May 11th, Feng Bingxian had organized, and his counterparts had participated in, a conspiracy to block the entrances to Shaanxi’s municipal government Communist Party Committee offices. The prosecution argued that the investors’ actions had disrupted normal government operations and were a negative influence on society. Defending lawyer Mo Shaoping argued that the evidence was insufficient to confirm guilt, but the court disagreed.

Jingbian government officials refused to speak with the media after the trial. Feng Bingxian will appeal the verdict; his two counterparts will not.

English version by Zhu Hongbin and Lauren Keane