A former pension fund official in southern Chinese city of
Guangzhou went on trial on Tuesday for allegedly misusing millions
of social security fund, a local court said.
Prosecutors said Liu Yuhong had allowed about 750 million yuan
of money from the fund to be used in risky businesses including
real estate and loans without approval from upper-level
management.
Liu committed the malpractice from 1993 to 1996, when he served
as manager of the Guangzhou Social Labor and Insurance Co., a firm
affiliated to the city's labor administration, according to
prosecutors.
About 520 million yuan of the investment has not yet been
recovered, prosecutors said.
Liu, who was arrested by police in December 2006, is the latest
suspect on trial over a pension fund scandal in the city.
Cui Renquan, currently chief of Guangzhou labor and social
security, said in April that 18 criminal cases related to the
scandal have been filed.
He said Cai Yaokun, former deputy director of Guangzhou City
administration for social insurance, has been sentenced to 10 years
in jail for taking bribes. But he didn't reveal the total number of
people on trial or convicted.
Liu argued in court that he made the investment decisions based
on national and local policies, and the actual loss was 100 million
yuan.
The national policy Liu referred to was a document issued in
1993 by the then Ministry of Labor, which encouraged local
officials to increase the value of their pension funds by
transferring a portion into state banks, trusts and investment
companies.
But ensuing rampant malpractice prompted the ministry to remove
permission the next year, banning pension fund investment in the
open market and demanding recovery of the investments in disallowed
commercial operations, including real estate.
By march this year, about 360 million yuan of such investment
had been recovered in Guangzhou, and there are hopes for another
105 million yuan, but about 600 million yuan had "vanished" in
dead-end properties and bad debts.
City mayor Zhang Guangning has promised that if the funds cannot
be recovered, the local government will make up the shortfall.
The Yuexiu District People's Court, where the case was heard, is
yet to announce the verdict.
Pension fund abuse has been a public focus since it brought down
Chen Liangyu, former Party chief of Shanghai. Chen had allegedly
siphoned off 3.2 billion-yuan (US$427 million) pension fund into
speculative real estate and road investment projects.
Chen was sacked and also expelled from the Communist Party of
China (CPC). He is now under criminal investigation and awaiting
trial.
(Xinhua News Agency October 31, 2007)