High-profile businessman Jiang Jizeng, accused of reaping a 550 million yuan (US$66 million) windfall by manipulating stock prices, went on trial yesterday in Beijing.

Jiang was president of China Trust and Investment Corporation for Economic Development. The company, known as Zhongjingkai, was backed by the Finance Ministry and is suspected of helping Dongfang Electronics (000682), once the best blue chip firm on China's stock market, rig its stock price.

At Beijing No 2 Intermediate People's Court, Jiang, 59, was accused of masterminding a scheme in which the company raised 780 million yuan (US$94 million) to buy and sell stocks in Dongfang Electronics, boosting its stock price by a massive 190 per cent from April to July in 1999. Dongfang share prices rose from 22 yuan (US$2.7) to 60 yuan (US$7.3) per share over that period.

The court was told that, on Jiang's instructions, Sang Huiqing, trading manager of Zhongjingkai's securities department, and other managers raised Dongfang's stock price even higher by trading within the firm without transferring ownership.

As a result, the stock price of Dongfang Electronics jumped to 90 yuan (US$10.8) per share by February 17, 2000, according to the prosecutor from the first branch of Beijing Municipal People's Procuratorate.

Dongfang Electronics was a legend in China's stock market in the late 1990s. Many small investors rushed to buy its shares based on the outstanding achievements listed in its annual reports and its surging stock price.

But the "star" fell to earth in 2001 when the market regulator found it had made up 1.7 billion yuan (US$205.5 million) in sales in its annual report over five years. Jiang was arrested last July.

In court, the prosecutor accused Jiang, as corporate representative of the State-owned company, of manipulating the securities prices by organizing people to engage in illegal trading for material gain.

(China Daily November 12, 2003)