Li Wei ‘ao, a reporter from Economic Observer Network, used to be the general manager of personal finance department of Henan Branch and the chief auditor of Ningxia Branch of () Co., Ltd. (601988.SH/03988.HK, hereinafter referred to as Bank of China). After the first-instance judgment and the second-instance ruling were sent back for retrial, the first instance of the retrial was pronounced on January 15, 2024. Liu Fuguo received a major change of sentence: one of the crimes he was accused of taking bribes together became a rare crime of illegally operating similar businesses; And Liu Fuguo’s total sentence was changed from 14 years in prison to 7.5 years in prison, which was reduced by nearly half.
In February 2024, several people familiar with the matter told the reporter of Economic Observer Network the above information.
The Commission for Discipline Inspection informed Liu Fuguo that he had resisted organizational censorship.
Liu Fuguo, born in April 1968, was the general manager of personal finance department of Bank of China Henan Branch, the deputy director and director of personal business department of Bank of China Henan Branch, the president of Anyang Branch, the secretary of Luoyang Branch and the chief auditor of Ningxia Branch.
On October 11, 2019, with the approval of the Henan Provincial Supervision Committee, the Xinxiang Municipal Supervision Committee took lien measures on the same day; On suspicion of accepting bribes, he was criminally detained on January 17, 2020 and later transferred to arrest.
On January 19th of the same year, the Discipline Inspection and Supervision Team of the State Supervision Commission of the Central Commission for Discipline Inspection in China Bank and the Supervision Commission of the Henan Provincial Commission for Discipline Inspection released news:
"After investigation, Liu Fuguo violated political discipline and colluded with others to confront organizational review; Violation of organizational discipline and failure to truthfully declare family property information; Violation of integrity discipline, illegal business enterprises, investment in related enterprises in the name of others; Violate the discipline of life and have unfair sexual relations with others many times. Violation of national laws and regulations, repeated overseas gambling. Taking advantage of the convenience and influence of the position, cooperating with others to ask for bribes from financing enterprises, accepting bribes from others alone, and being suspected of accepting bribes. "
The prosecution accused Liu Fuguo and other "borrowing" credit businesses of accepting bribes of nearly 70 million yuan.
After the case, it entered the procuratorate stage.
The People’s Procuratorate of Xinxiang City, Henan Province accused Liu Fuguo, Dong Zhitao, former deputy director of the operation center of Bank of China Henan Branch, Yang Guochun, former general manager of Bank of China International Securities Henan Branch, and Wang Fa, head of Shenzhen Huaxin Guoyuan Investment Development Co., Ltd. (hereinafter referred to as Huaxin Guoyuan Company), of accepting bribes of 67,036,100 yuan and delivery vouchers of 1.8 million yuan.
Specifically, from March 2013 to 2016, Huaxin Guoyuan Company intervened in the credit business of China Bank in eight companies, including Henan Hongli Group Co., Ltd. and Zhengzhou Runjia Real Estate Co., Ltd., and requested the above money and bills of lading from these eight companies in the name of consulting fees.
The so-called quasi-credit business, compared with the traditional credit business, involves many types of financial institutions, such as trusts, brokers and fund subsidiaries. Banks use them as intermediaries to achieve capital lending through complex transaction structures and creditor-debtor relationships. Credit-like business is widely used in some restrictive industries, such as real estate, high pollution and high energy consumption industries, and its interest rate is much higher than that of ordinary credit business.
Xinxiang City People’s Procuratorate also accused Liu Fuguo of taking advantage of his position as the general manager of the personal finance department of China Bank Henan Branch to help Wang Fa’s company with a financing project of 100 million yuan. In 2012, he received five gold bars (700 grams in total, with a total value of 252,900 yuan) from Wang Fa and 100,000 yuan in cash.
At the beginning of 2019, Liu Fuguo returned three gold bars (100g in total) to Wang Fa after learning that the head office of China Bank had investigated the violation of discipline and law in the personal finance department of Henan Branch.
In addition, taking advantage of his position, Liu Fuguo accepted 30,000 yuan from Xie Yong, vice president of Xiayi County Sub-branch of Bank of China, in 2016 to help Xie Yong’s son Xie Tian join China Bank.
Dong Zhitao was also accused of taking bribes alone, specifically:
In 2012, Dong Zhitao took advantage of his position as Senior Manager of Personal Finance Department of Bank of China Henan Branch to help Wang Fa’s company with a 100 million yuan financing project, and received 100,000 yuan in cash and 100 grams of gold (worth 36,100 yuan).
In 2014, Dong Zhitao also took advantage of his position as the vice president of Zhengzhou Garden Sub-branch of Bank of China. After cooperating with Wei Lingcai and others to complete the financing loan project of 200 million yuan of Henan Hongli Group Co., Ltd., he accepted Wei Lingcai’s cash of 1.2 million yuan.
Liu Fuguo was sentenced to 14 years in the first instance and sent back for retrial in the second instance.
On August 17, 2021, Xinxiang Intermediate People’s Court ruled in the first instance:
Liu Fuguo was convicted of accepting bribes, sentenced to 14 years in prison and fined RMB 1.2 million; Dong Zhitao was convicted of accepting bribes, sentenced to 10 years in prison and fined 500,000 yuan; Yang Guochun was convicted of accepting bribes, sentenced to 12 years in prison and fined RMB 1 million. Wang Fa was convicted of accepting bribes, sentenced to 14 years in prison and fined 1.2 million yuan.
Xinxiang Intermediate People’s Court also ruled that the illegal income of Liu Fuguo, Dong Zhitao, Yang Guochun, Wang Fa, Wei Lingcai and Liu Songhe, who were frozen and detained in the case, was 4,974,400 yuan, 5,428,300 yuan, 880,000 yuan, 17,505,400 yuan, 5,298,000 yuan and 500,000 yuan respectively. The remaining insufficient part of 34.2499 million yuan continued to be recovered from these four defendants. Dong Zhitao’s illegal income from personal bribery was 1,336,100 yuan, which was recovered according to law.
After the verdict was pronounced, Liu Fuguo, Yang Guochun and Wang Fa refused to accept it and appealed separately.
In March 2022, the Higher People’s Court of Henan Province, which was in charge of the second trial of this case, held that "some facts identified in the original judgment were unclear and the procedure was illegal" in the first trial. Therefore, it is ruled that the judgment of first instance shall be revoked and sent back to Xinxiang Intermediate People’s Court for retrial.
Xinxiang Intermediate People’s Court retried and sentenced Liu Fuguo to two crimes.
From November 13th to December 1st, 2023, Xinxiang Intermediate People’s Court held a public hearing to hear the case.
Liu Fuguo argued in court that he was not guilty. The defenders’ opinions include: "China Bank and Huaxin Guoyuan Company are both intermediaries providing intermediary services in the credit business, and they all participate in civil activities as equal market participants, and China Bank does not have any authority to control other market participants", "To take a step back, if the facts alleged in the indictment are completely true, then this case is closer to the crime of illegally operating similar businesses, and it is impossible to constitute a joint bribery crime" and so on.
According to Article 165 of the Criminal Law, the so-called crime of illegally operating similar businesses means that "directors, supervisors and senior managers of state-owned companies and enterprises, taking advantage of their positions, operate their own businesses or operate businesses similar to those of the companies and enterprises where they work for others to obtain illegal benefits, and if the amount is huge, they shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also or shall only be fined; If the amount is especially huge, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and fined. "
In judicial practice, this crime is quite rare. The reporter searched the Supreme People’s Court’s "China Judgment Document Network" and found no case involving "the crime of illegally operating similar businesses".
Xinxiang Intermediate People’s Court held that Liu Fuguo and Dong Zhitao, as managers of China Bank, together with Yang Guochun and Wang Fa, "established Huaxin Guoyuan Company by relying on the information platform and intermediary income business of Henan Branch of Bank of China, and took advantage of their positions in the intermediary business of China Bank to intervene in the intermediary business of China Bank. In the process of financing for enterprises, Huaxin Guoyuan Company illegally operates the same business as the company where it works by signing financing service agreements with financing enterprises, and obtains consulting service fees from the financing costs of financing enterprises. The behavior of Liu Fuguo and others is essentially a profit-making behavior, which seriously violates the obligation of non-competition, increases the capital cost of capital-using enterprises in disguise, endangers the company’s management order and destroys the normal market order, and its behavior conforms to the constituent elements of the crime of illegally operating similar businesses. "
The court held that Liu Fuguo and others "have constituted the crime of illegally operating similar businesses. The public prosecutor accused the four defendants of improper charges of accepting bribes, and the court corrected them. Therefore, it was decided that:
Liu Fuguo was convicted of illegally operating similar businesses, sentenced to five years and six months in prison and fined RMB 1 million. He was convicted of accepting bribes, sentenced to three years in prison and fined 200,000 yuan. He decided to execute a fixed-term imprisonment of seven years and six months and fined 1.2 million yuan.
Dong Zhitao was convicted of illegally operating similar businesses, sentenced to five years and six months in prison and fined RMB 1 million; He was convicted of accepting bribes, sentenced to four years in prison and fined 300,000 yuan. He decided to execute a fixed-term imprisonment of eight years and six months and fined 1.3 million yuan.
Yang Guochun was convicted of illegally operating similar businesses, sentenced to five years and three months in prison and fined 800,000 yuan.
Wang Fa committed the crime of illegally operating similar businesses, was sentenced to five years and six months in prison and fined RMB 1.2 million.
Compared with the earliest judgment of the first instance, after the retrial of the first instance, the sentences of the four defendants have been greatly reduced. However, the insider told the reporter of Economic Observer that Wang Fa and other defendants still refused to accept and filed an appeal.
As of February 19, 2024, the second trial of the case has not yet reached a result.