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Airline Corruption Case on Trial

10-30 00:00 Caijing


By staff reporter Long Xueqing and Ji Minhua

The bribery trial of two former executives of Southern Airline and a former Hantang Securities director opened on October 24th at the Guangzhou Intermediary Court.


Chen Mingli, former manager of Southern Airline’s finance department, Peng Anfa, former deputy general manager of Southern Airline and Han Xiaojun, former director of Guangzhou Headquarters of Hantang Securities each face separate charges of bribery, embezzlement and misappropriation of funds.


Chen stands accused of accepting a 53.67 million yuan (US$ 6.71 million) bribe, embezzling 12.34 million yuan (US$ 1.54 million) and misappropriating 1.2 billion yuan (US$ 150 million)   in exchange for entrusting two securities companies, Hantang and Century, with 4.355 billion yuan (US$ 544.38 million) of Southern Airline’s money for investment.  Peng has been charged with misappropriating 300 million yuan (US$ 37.5 million) and Han of bribing Chen with 16.426 million yuan (US$ 2.05 million).


Yan Zhiqing, former general manager of Southern Airlines, authorized the multi-billion yuan transfer after he had already retired.  Chen, Peng and Yan each agreed to keep the deal secret since the funds were being drawn from borrowed money. Southern Airline, a state-owned enterprise worth 72.3 billion yuan, readily obtained loans from state-owned banks, and from 2002 to 2004, borrowed from CITIC, Industrial and Commercial, Everbright and China Merchants banks amounts ranging from 30 to 420 million yuan. 


Chen and Yan are both from Hunan Province, and it is Yan who promoted Chen to his former position.


Chen received payment for “consulting services” from both Hantang and Century. From August 2001 to April 2003, Chen made four transfers to Hantang totaling 1.643 billion yuan (US$ 205.4 million) in exchange for a one percent payoff, or 16.426 million yuan (US$ 2.05 million).  In court, Chen denied transfer any money and claimed that Han acted independently.


Chen also accepted 34.29 million yuan (US$ 4.29 million) from Century Securities in exchange for handing over 2.713 billion yuan (US$ 339.125 million), sometimes signing his own name on the “consultancy” agreements, sometimes neglecting to go through the motions of filling out the paperwork at all.


Court documents showed that Chen gave some of his bribe money to Han to invest, put some into his Hong Kong stock account, and used the rest to pay for property for relatives.


While Southern Airline got back the principal plus interest for five of Chen’s illicit transactions, 300 million yuan (US$ 37.5 million) has yet to be returned.  In November 2003, Chen arranged a loan of 300 million yuan from China Merchant Bank, which Peng approved, to cover the shortfall, and was able to extend repayment for one year beyond the initial deadline through backdoor maneuvering.  Chen then borrowed 300 million yuan from Huaxia Bank in order to pay back China Merchant.


Peng, 58 years old, began his career as a pilot and became deputy general manager of Southern Airline in 2001. Peng claims that when Chen and Han came to his office in March, the loan had already been approved by the bank without his prior approval.  Peng, however, admitted that he did not report the loan to his superiors. “Chen said that the operation had been approved by Yan and that the money was locked in the bank, and so it was quite safe.”


Peng insists he is innocent and his lawyer considers the only evidence of misappropriation – Chen and Han’s testimony – weak.

English version by Zhu Hongbin and Jennifer Brea

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