More than 6 billion yuan (US$787 million) in public funds was
embezzled in the past four years and the money went into the stock
market, the Shanghai High People's Court said.
Of 317 cases brought before the city's two intermediate courts
and high court between 2003 and 2006, 105 involved embezzlements
totaling 6.32 billion yuan from Shanghai's public funds.
The court said 4.1 billion yuan was from state-owned
enterprises, 1.6 billion yuan from financial institutions, 100
million yuan from the Shanghai social security fund, 260 million
yuan from the housing maintenance fund, 45 million yuan from labor
unions, 16 million yuan from education and 200 million yuan from
public utilities.
Zou Bihua, a presiding judge, said the 100 million yuan from the
Shanghai social security fund was part of the 3.7 billion
misappropriated from the fund last September.
Most of the money from the embezzlements ended up in the stock
market through state bonds. According to regulations, public funds
are only allowed to be invested in safe vehicles like State
bonds.
"They purchased State bonds, then sold them, and put the money
into the stock market," said Qi Qi, a deputy director with Shanghai
High People's Court.
According to the court, "the embezzlement is a result of
improper supervision of public funds. This is becoming a major
threat to the stability of the stock market and to funds".
"There has not been any effective mechanism in the country to
supervise the operation and management of public funds, and as a
matter of fact it is difficult to curb their malpractices," Qi
said.
"The volatility of stock markets can cause huge losses to public
funds."
Qi said the Shanghai High People's Court is conducting a survey
with the Shanghai Stock Exchange on risks currently threatening the
stability of the bourse. It has also appealed to relevant
departments to strengthen supervision.
The Shanghai No 2 Intermediate People's Court recently ordered
the Jiabao Group to compensate 25 investors. The listed group faked
its sales revenue in its year-end performance report.
The Beifang Stock Company and Guotai Junan Securities are being
investigated for illegally pooling public savings. The two pooled
more than 8.3 billion yuan of public savings, and lost 1.5 billion
yuan in investments.
(China Daily June 20, 2007)