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, or 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$2.70) to 60 yuan (US$7.30) 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$10.80) 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.

Jiang argued the decision to invest in Dongfang Electronics and the clearing of stocks in 2000 were simply market decisions. He maintains that Zhongjingkai bought the then most promising stocks on the market and sold the shares while the price was still climbing.

As for the insider trading charge, Jiang said he was not the mastermind because the "securities department was responsible of taking care of the exact trading.''

Jiang told the court Sang framed him. "I did not even know what mutual-knock was when market regulators started investigating,'' he said.

But experts said it was hard to believe the head of an investing company who would oversee every major deal was totally unaware of the illegal scheme.

"Even if what he said was true, though very unlikely, he will still hardly be able to escape punishment as he is a legal representative of the company and is supposed to be responsible for the company's actions,'' said Wang Yuanhong, director of the State Information Centre's Finance and Stock Market Department.

The prosecutor also stressed in court that the evidence proved the company had conducted illegal activities, and its president should be held responsible.

The court is yet to reach a verdict on the case.

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