Houston Community News >> Shanghai Tycoon Falls From Grace

11/30/2007 Beijing - He once was one of China's richest and most politically connected businessmen, a real estate tycoon who had started out selling noodles. But on Friday, Zhou Zhengyi was sentenced to 16 years in prison, the latest powerful Shanghai figure to fall from grace.

Zhou, 45, stood inside Shanghai Municipal No. 2 Intermediate People's Court as a judge pronounced him guilty on five charges, including misappropriation of funds, bribery and forging tax receipts, state news media reported. His company also was fined 3.35 million yuan, or about $450,000.

Zhou's career arc spoke to the nexus of money and political power in China, especially in Shanghai, the financial capital. He was closely connected to Shanghai's former Communist Party boss, Chen Liangyu, who was removed from his post last year in a sweeping corruption investigation ordered by President Hu Jintao.

The investigation struck directly at the Shanghai political machine, which was linked to the former Chinese leader Jiang Zemin, and had resisted many of the policies put forward by Hu and Prime Minister Wen Jiabao. Chen, the party boss who was removed last year, was a protégé of Jiang, himself a former Shanghai party leader.

Zhou, the property magnate, owed his rise to the Shanghai clique. During the 1990s he became one of the city's biggest real estate developers as the city was in the midst of a stunning run of growth. By 2002, Forbes magazine estimated his wealth at $320 million.

But Zhou became an early target as the central government began investigating malfeasance in Shanghai. He was detained in June 2003, a few months after Hu became China's president and Communist Party chief.

He was convicted on financial charges and sentenced to three years in prison. By the time Zhou was released in May 2006, Hu had opened a new corruption investigation that was ultimately aimed at Chen. Five months later, Zhou was detained again.

Investigators from Beijing concluded that Shanghai officials had diverted 3.7 billion yuan, or about $500 million, from the city's social security fund to investment corporations controlled by well-connected businessmen. Another tycoon, Zhang Rongkun, once ranked No. 16 on the Forbes list of China's richest people, has already been arrested on charges linked to the social security scandal, the state news media reported.

The state news media did not specify if Zhou's latest conviction was specifically linked to the social security scandal. But the 16-year prison term suggests that Zhou has run out of political patrons.

During his previous, shorter stint in prison, Zhou enjoyed many privileges. Four of his jailers have been convicted of accepting bribes in exchange for special treatment, including access to a telephone and extra visits from friends.

Chen, who has been expelled from the Communist Party, has yet to go on trial for the charges against him.

(Contributed by IOL)