The court hearing the case against Zhou Yiming, a 32-year-old businessman ranked last year by Forbes magazine as China's youngest magnate, has wrapped up the trial's first stage and will soon announce a verdict, said a court official.

The first stage of the trial at Suining Intermediate People's Court in Southwest China's Sichuan Province, which ran from October 31 until November 3, involved statements and arguments, said Tan Shengbin, director of the court's general office.

Police had charged Zhou, chairman of the Shenzhen Minglun Group Ltd, an electronics and food processing company, with business fraud after he acquired 550 million yuan (US$69 million) through his stake in Sichuan Mingxing Electric, a major supplier of water, electricity and gas to 3.8 million residents in Suining.

The case began in August 2002, when Sichuan Mingxing Electric, a listed company, decided to sell a 28-per-cent stake, worth 380 million yuan (US$48 million), on the stock market.

At that time Mingxing Electric had 100 million yuan (US$13 million) worth of capital and no debt, making it an attractive target for investors, including Zhou.

Police said that in 2003, Zhou paid 110,000 yuan (US$13,924) to the Shenzhen Zhongxi Accounting Firm to help him forge an audit of his personal finances. The fake reports inflated Shenzhen Minglun Group's net assets in 2002 to 1.2 billion yuan (US$152 million), though the company had actually been 280 million yuan (US$35 million) in debt at that time.

Police said Zhou used the fake reports to borrow 380 million yuan (US$48 million) from three banks, which he then used to acquire the entire 28-per-cent stake in Sichuan Mingxing Electricity.

"After he gained control of Sichuan Mingxing Electric, Zhou started to siphon capital out of the enterprise, causing it to suffer huge financial losses," Tan said.

Tan told China Daily that Zhou had accepted the basic facts contained in the charges against him in court.

Zhou faces a maximum penalty of life imprisonment. China's criminal law lays out sentences ranging from 10 years to life imprisonment for serious acts of business fraud, Tan said.

Forbes last year ranked Zhou as No 207 among the 400 richest Chinese people. His personal fortune was estimated to be US$121 million.

Source: China Daily