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)