Gu Xiaojuns retrial: the original sentence for misappropriating funds was changed from 10 years to 5 years

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 Gu Xiaojuns retrial: the original sentence for misappropriating funds was changed from 10 years to 5 years


I. Facts about False Reporting of Registered Capital

In 2001, the plaintiff defendant Gu Xiaojun decided to set up Shunde Greencore with Gu Xiaojun and his father Gu Shanhong as shareholders and registered capital of 1.2 billion yuan in order to acquire the shares of Kelong Electrical Appliances. On October 22 of the same year, Greencore of Shunde completed the registration of the establishment of the company and obtained a business license without evaluation and verification of capital by means of a guarantee letter issued by the Peoples Government of Ronggui Town, Shunde City, Guangdong Province (later renamed Ronggui District Office). In April 2002, because the proportion of intangible assets in registered capital of Shunde Greencore reached 75%, far exceeding the legal limit of 20%, the industry and Commerce Department did not grant annual inspection. According to the letter issued by Ronggui District Office, the former Shunde City Industry and Commerce Department approved the annual inspection of Shunde Greencore.

In order to improve the registration procedures for the establishment of Greencore in Shunde and reduce the proportion of intangible assets in registered capital, from May to November 2002, under the arrangement of Gu Xiaojun, the plaintiff defendant, Liu Yizhong, Jiang Baojun and Zhang Xihan, adopted the method of transferring 187 million yuan of Kelong Electrical Appliances between Greencore accounts in Tianjin and Greencore accounts in Shunde to form Tianjin Green. Cole invested 660 million yuan of bank invoices in Greenkel, Shunde, and produced the receipt for the investment of 660 million yuan received by Greenkel, Tianjin, and the supply agreement for the advance payment of 660 million yuan for the refrigerant purchased by Greenkel, Shunde. Accordingly, the Shunde Gongcheng Accounting Firm issued the corresponding capital verification report. According to the capital verification report, Tianjin Greencole Board Resolution and Shunde Greencole Shareholder Resolution, the former Shunde Administration for Industry and Commerce approved the change registration of Shunde Greencole on December 23, 2002. After the registration of the change is completed, Gu Xiaojun will convert the replaced intangible assets of 660 million yuan into the capital accumulation fund of Shunde Greencore.

On October 27, 2005, the Standing Committee of the National Peoples Congress amended the Company Law of the Peoples Republic of China, allowing up to 70% of the registered capital of a limited liability company to be invested in non-monetary property.

On the basis of the facts and evidences confirmed by the re-examination, the Court has made a comprehensive judgement on the defendants Gu Xiaojun, Jiang Baojun, Zhang Xihan and their defendersdefenses and opinions on the crime of false reporting of registered capital, and the procurators appearing in the Supreme Peoples Procuratorate.

1. The defendants in the original trial, Gu Xiaojun, Liu Yizhong, Jiang Baojun and Zhang Xihan, falsely reported their registered capital.

2. The misrepresentation of registered capital by the defendants Gu Xiaojun, Liu Yizhong, Jiang Baojun and Zhang Xihan is not harmful.

(1) During the investigation of this case, the restrictive provisions of the law on the proportion of intangible assets in registered capital have changed significantly. In judging whether the act constitutes the crime of false reporting of registered capital stipulated in Article 158 of the Criminal Law of the Peoples Republic of China, it is necessary to take the company law and other relevant laws and regulations as the basis at the same time. If the relevant laws and regulations are amended after the occurrence of the act, the old and light principle stipulated in Article 12 of the Criminal Law of the Peoples Republic of China shall be applied to re-evaluate the social harmfulness of the act. At the time of the case, the proportion of intangible assets in registered capital should not exceed 20% as stipulated in the Company Law. The intangible assets replaced by false currencies by the defendant Gu Xiaojun and others exceeded the statutory ceiling were 660 million yuan, accounting for 55% of all registered capital. However, in October 2005, the Standing Committee of the National Peoples Congress amended the company law, raising the ceiling of the proportion of non-monetary assets including intangible assets to 70%. Accordingly, the proportion of intangible assets exceeding the statutory ceiling replaced by false currencies in this case has dropped from 55% to 5%. Therefore, in the original trial of this case, the degree of social harm caused by the high proportion of intangible assets should be re-evaluated according to the newly revised law. The illegality and the degree of social harm caused by the misrepresentation of registered capital by Gu Xiaojun and others have been significantly reduced, but this has not been fully taken into account in the original trial when convicting.

(2) The misrepresentation of registered capital by the plaintiff defendant Gu Xiaojun and others is related to the local governments support for the illegal establishment and registration of Greencore in Shunde. In order to successfully acquire Kelong Electrical Appliance Stock and develop local economy, the original Guizhen Peoples Government issued a guarantee letter to the industrial and commercial departments in violation of the regulations, so that Shunde Greencore completed the establishment and registration without submitting a capital verification certificate and 1.2 billion yuan of registered capital was not in place. Subsequently, because the registered capital structure of Shunde Greencole did not meet the legal requirements at that time, the industrial and commercial department did not grant annual inspection. The original office of Ronggui District sent a letter on this issue, and the former industrial and Commercial Department of Shunde City violated the rules and approved the annual inspection of the company. Gu Xiaojun and others, in order to improve the registration procedures and adjust the proportion of intangible assets investment, filed an application for the change registration of Shunde Greencore with the industrial and commercial departments, and implemented the act of replacing intangible assets with false currencies in the process of the change registration. It can be seen that the registration of the change is the continuation of the registration of the original illegal establishment. The improper support of the local government and the industrial and commercial departments in the process of establishing Greencore in Shunde is the important reason for the application for the registration of the change.

(3) The plaintiffs misrepresentation of registered capital by Gu Xiaojun and others did not reduce the total capital of Shunde Greencore. Evidence in the case confirms that after obtaining the registration of the establishment of Greencore in Shunde, the defendant Liu Yizhong submitted to the industry and Commerce Department a report of intangible assets evaluation issued by Kangcheng Accounting Firm in Shunde, which shows that the total value of the assets of the exclusive use rights of two invention patents used by Gu Xiaojun in the statutory period of validity is more than 910 million yuan. After completing the registration of the change, Gu Xiaojun did not withdraw the 600 million yuan of intangible assets replaced by 900 million yuan from the company, but converted them into the companys capital accumulation fund. Therefore, Gu Xiaojuns behavior of replacing intangible assets with untrue currencies has changed the registered capital structure of Greencore in Shunde, but has not actually reduced the total capital of the company.

In summary, the defendants of the original trial, Gu Xiaojun, Jiang Baojun, Zhang Xihan and their defenders, did not falsely report registered capital, nor did they intentionally falsely report registered capital. In the process of company registration change, there was no excuse or defense of falsely reporting registered capital, which was inconsistent with the facts and legal provisions. The court refused to adopt it, but the intangible assets of $660 million were still in good faith. Green Cole has not been withdrawn. The company law revised in 2005 has raised the proportion of intangible assets in registered capital to 70%. It is necessary to reevaluate the establishment of the defense and defense opinions on the social harmfulness of Gu Xiaojuns actions, which should be adopted by our hospital. The Supreme Peoples Procuratorates opinions that Gu Xiaojun and others have misreported registered capital have been adopted by the Supreme Peoples Procuratorate.

2. Facts concerning the disclosure or non-disclosure of important information in violation of regulations

Kelong Electric Appliances was marked as ST by Shenzhen Stock Exchange (Shenzhen Stock Exchange) because of its continuous losses in 2000 and 2001. If it continues to lose in 2002, it will delist. After Shunde Greencore acquired Cologne Electrical Appliance Corporation shares and became the largest shareholder of Cologne Electrical Appliances, in order to exaggerate the performance of Cologne Electrical Appliances, the plaintiff, Gu Xiaojun, arranged for the plaintiff, Jiang Baojun, Yan Yousong, Zhanghong, Yan Guoru, Liu Ke, etc. to seal up the stock products at the end of the year, issue false sales warehouse receipts or invoices, and give them in the second year. Large-scale returns and refunds and other ways to increase profits, and the profits into the Kelon Electrical Appliances financial accounting report to the public.

On June 15, 2006, the China Securities Regulatory Commission (CSRC) decided to impose administrative penalties on Kelong Electric Appliances and Gu Xiaojun on the grounds of failing to disclose information in accordance with relevant regulations, or that the disclosed information has false records, misleading statements or major omissions, and on October 16, the same year, it made an administrative reply to maintain the original decision on administrative penalties. The decision is made. On April 3, 2007, the State Council issued an administrative reconsideration ruling to maintain the above-mentioned administrative penalty decision and administrative reconsideration decision made by the SFC.

During the investigation of this case, the investigative organ has entrusted the accounting firm to appraise the harmful consequences of the above-mentioned acts of Kelong Electric Appliances, which seriously damages the interests of shareholders or others. However, the judicial (accounting) appraisal opinions issued by the investigative organ have some problems, such as that the appraiser does not have the qualification of the judicial appraiser, and that the choice of the appraisal organ does not meet the legal requirements. The investigative organs also collected the testimony of four shareholders, Chen Huanping, Chen Yantao, Zhang Lili and Chen Yongkang. However, the same investigative personnel collected evidence from different witnesses at the same time and place, and questioned continuously for more than 24 hours.

On the basis of the facts and evidences confirmed by re-examination, the Court has made a comprehensive judgement on the defendants, Gu Xiaojun, Jiang Baojun, Zhang Hong, Yan Yousong, Yan Guoru, Liu Ke and their defendersjustifications, defense opinions and the opinions of the prosecutors appearing in court of the Supreme Peoples Procuratorate on the crime of violating rules and disclosing important information.

1. Kelon Electric Appliances implemented the act of increasing profits and putting them into financial and accounting reports to disclose between 2002 and 2004.

2. The facts of the original trial that Kelon Electric Appliances provided false financial and accounting reports seriously damaged the interests of shareholders or other persons are unclear, and the evidence is insufficient.

On June 29, 2006, the Standing Committee of the National Peoples Congress amended Article 161 of the Criminal Law of the Peoples Republic of China through the Amendment to the Criminal Law of the Peoples Republic of China (6). Subsequently, the relevant judicial interpretations amended the provision of the crime of providing false financial and accounting reports to the crime of violating rules and disclosing important information. In the original trial, the provisions of Article 161 of the Criminal Law of the Peoples Republic of China before the Amendment to the Criminal Law of the Peoples Republic of China (6) were applied to convict and punish the accused Gu Xiaojun and others. The accusation of providing false financial and accounting reports should be applied to the original trial, but the accusation of violating rules and disclosing important information should be applied. According to the provisions of the Criminal Law on the crime of providing false financial and accounting reports, it is necessary to have evidence to prove that the act of providing false financial and accounting reports has resulted in the harmful consequences of seriously damaging the interests of shareholders or other persons, in order to investigate the criminal responsibility of the relevant personnel. Referring to the Provisions of the Supreme Peoples Procuratorate and the Ministry of Public Security on the Standards for the Prosecution of Economic Crime Cases in 2001, Serious damage to the interests of shareholders or others refers to situations where the direct economic losses of shareholders or others are more than 500,000 yuan, or where the listing qualification of stocks is cancelled or trading is forced to suspend. However, the evidence in the case is insufficient to prove that the case has met the above criteria.

(1) The evidence in the case is insufficient to prove that there is a case in which the amount of direct economic losses caused by shareholders or others is more than 500,000 yuan. Firstly, although the investigative organs collected the testimony of four shareholders of Chen Huanping to prove that the false financial and accounting reports provided by Kelong Electric Appliances caused them about 3 million yuan in economic losses, the original first instance was not accepted because of the illegal forensic procedures. It is improper to accept the testimony of three shareholders in the original second instance without hearing or giving reasons. Secondly, after the case, Qingdao Haixin Group Co., Ltd. acquired 26.4% of the shares of Cologne Electric Appliances held by Shunde Greenkel at the end of 2006, and renamed Cologne Electrical Appliances Co., Ltd. During the retrial period, the procuratorial organ submitted more than 100 civil mediation letters issued by Guangzhou Intermediate Peoples Court on June 11, 2009 to indirectly prove that the acts of Kelong Electric Appliances providing false financial and accounting reports caused economic losses to shareholders, but it is still not considered to be true and sufficient. After examination, the Court considered that the above civil mediation documents were made after the original judgment came into effect. They only reflected the wishes of Haixin Kelong Electrical Appliances Co., Ltd. and failed to reflect the true wishes of the defendants in the trial, such as Gu Xiaojun, and did not necessarily objectively reflect the actual losses of shareholders, thus insufficient to prove the existence of the case causing direct economic losses to shareholders or others. In the case of over 500,000 yuan.

(2) In this case, there is no such situation as the disqualification of stock listing or the forced suspension of trading. Evidence in the case confirmed that on May 9, 2005, the board of directors of Kelong Electrical Appliances submitted an application to Shenzhen Submission for suspension of trading for one hour in the morning of the next day in order to publish the announcement of the investigation filed by the SFC. With the consent of the Shenzhen Stock Exchange, the shares of Kelon Electric Appliances were suspended for one hour on the morning of the 10th of the same month, and then resumed trading. It can be seen that the suspension is a voluntary application of Kelon Electric Appliances, which does not belong to the situation of forced suspension of trading, nor does it result in the disqualification of shares.

(3) The original trial found that the stock price had fallen for three consecutive days, which resulted in serious damage to the interests of shareholders or others, lacking factual and legal basis. The original trial held that, one hour after the suspension of trading on May 10, 2005, the share price of Cologne Electric Appliances fell for three consecutive days and fell to the lowest level in history since the resumption of trading. Based on this, it was concluded that the provision of false financial and accounting reports by Cologne Electric Appliances seriously damaged the interests of shareholders. After re-examination, it is clear that according to the stock market trading data of Shenzhen Stock Exchange in May 2005, the share price of Cologne Electric Appliances has indeed fallen for three consecutive days since the suspension date, but the decline is not significantly different from that of three days ago, and it has started to rise since the fourth day, and has risen beyond the suspension date by the eighth day.

In summary, the defendants of the original trial, Gu Xiaojun, Jiang Baojun, Zhanghong, Yan Yousong, Yan Guoru, Liu Ke and their defenders, argued that there was no false sale and profit increase of Kelong Electrical Appliances, and that the disclosed financial accounting reports were not false. The defendants opinions did not tally with the facts. However, the original trial found that the acts of providing false financial accounting reports by Kelong Electrical Appliances seriously damaged shareholders or their defenders. The court shall adopt the defense and defense opinions on the insufficiency of evidence for the interests of others. The Supreme Peoples Procuratorates opinions on the fact that Cologne Electrical Appliances provided false financial and accounting reports in the original trial are clear, the evidence is true and sufficient, but the facts of the damage consequences can not be ascertained. The evidence in the case is insufficient to prove that the action caused serious damage to the interests of shareholders or other persons.

III. Facts of misappropriation of funds

(1) 250 million yuan for Kelong Electrical Appliances and 40 million yuan for Kelong Jiangxi

In 2003, the plaintiff, Gu Xiaojun, decided to apply for the establishment of Yangzhou Greencore, whose shareholders are Gu Shanhong and Gu Xiaojuns father and son, with a registered capital of 1 billion yuan, in Yangzhou, Jiangsu Province, in order to acquire the shares of Yangzhou Yaxing Bus. Among them, 800 million yuan was invested in currency and 200 million yuan in intangible assets.

On June 18 of the same year, in order to raise 800 million yuan of registered capital in currency, Gu Xiaojun, the defendant who was then chairman of Kelong Electric Appliances, directed the relevant personnel to transfer 250 million yuan from Kelong Electrical Appliances into the bank account of Kelong, Jiangxi Province, without the consent of Kelong Electrical Appliances and the board of directors of Jiangxi Province, and instructed the former chairman and President of Kelong, Jiangxi Province, to conduct the original trial. Zhang Hong, the defendant, raised 40 million yuan from Kelong, Jiangxi Province. Zhang Hong was specifically responsible for the transfer of the 290 million yuan from the temporary bank accounts of Kelong, Greencore and Tianjin Greencore, and transferred it to Tianjin Greencores 2589768093001 account (hereinafter referred to as 608 account) opened by Yangzhou Branch of Bank of China on the same day. From June 18 to 20 of the same year, Gu Xiaojun instructed Zhang Hong to borrow about 400 million yuan in the name of Greencore in Jiangxi Province, together with more than 100 million yuan transferred from other Greencore companies, to transfer the same operation into Tianjin Greencore 608 account.

On June 20 of the same year, 608 account had a total capital of 803 million yuan. Gu Xiaojun, the defendant in the trial, instructed Zhang Hong and others to transfer 800 million yuan, two of which were each 400 million yuan, to Greencore Capital Verification Account in Yangzhou. After experiential capital, Greencore was founded in Yangzhou, in which Gu Xiaojun contributed 700 million yuan in currency and 200 million yuan in intangible assets, accounting for 90% of the equity; Gu Shanhong contributed 100 million yuan, accounting for 10% of the equity. On June 23 and 24 of the same year, Gu Xiaojun instructed Zhang Hong and others to return 250 million yuan of misappropriated Kelong Electrical Appliances and 40 million yuan of Jiangxi Kelong Electrical Appliances.

According to the facts and evidence of re-examination, the original trial found that the defendants of the original trial, Gu Xiaojun and Zhang Hong, took advantage of their positions and misappropriated huge amounts of funds from their units for personal use. The facts of profit-making activities were clear and the evidence was true and sufficient. The main reasons are as follows:

1. Gu Xiaojun, the plaintiff accused, instructed Zhang Hong, the plaintiff, to misappropriate 250 million yuan of Kelong Electrical Appliances and 40 million yuan of Kelong, Jiangxi Province, in line with the situation stipulated in the Criminal Law of utilizing the convenience of his position and misappropriating the funds of his own unit

In the case of the application for funds, loan contracts and other documentary evidence, witnesses Shi Zhun, Liu Congmengs testimony and the statements of the defendants Jiang Baojun, Zhanghong and others confirmed that the 250 million yuan of Kelong Electric Appliances was ordered by the defendant Gu Xiaojun to apply for funds from Kelong Electrical Appliances, which was transferred from Kelong Refrigerator Account in Guangdong Province to Kelong in Jiangxi Province before being used. When repayment was made, Kelong in Jiangxi Province also transferred 250 million yuan. Yuan is directly returned to Kelong Electrical Appliances; 40 million yuan in Jiangxi Kelong is a loan from Zhang Hong to the bank in the name of Jiangxi Kelong. Gu Xiaojun, as chairman of Kelong Electrical Appliances, directed his subordinates to misappropriate the huge funds of Kelong Electrical Appliances and Jiangxi Kelong. Zhang Hong, as chairman and President of Jiangxi Kelong Electrical Appliances, was instructed by Gu Xiaojun to transfer 290 million yuan involved from Kelong, Jiangxi Province to Greenkel Electrical Appliances Company in violation of regulations. Both of them took advantage of their positions and carried out the act of misappropriating the funds of their own units.

290 million yuan was used by the defendant, Gu Xiaojun, to register and set up Greencore in Yangzhou, which belongs to the misappropriation of funds from the unit for personal use stipulated in the Criminal Law.

Documents such as bank bills, receipt vouchers and capital verification reports confirm that after the transfer of 290 million yuan from Kelong Refrigerator in Guangdong Province and Kelong in Jiangxi Province, the provisional bank accounts of Kelong in Jiangxi Province, Greencore in Jiangxi Province and Greencore in Tianjin, which were specially opened by the defendant Gu Xiaojun and Zhang Hong, were transferred continuously. The flow of funds was clear, and other current funds were not mixed in, and eventually transferred into them. As Gu Xiaojuns personal capital, the verification account of Yangzhou Greencore was used to register and establish Yangzhou Greencore. The actual user of the funds involved is Gu Xiaojun himself, which conforms to the provisions of the Criminal Law on misappropriating the funds of his own unit for personal use.

In 2003, Gu Xiaojun decided to set up Yangzhou Greencore in order to acquire the shares of Yangzhou Yaxing Bus, and misappropriated 290 million yuan involved as Gu Xiaojuns personal capital to register and establish Yangzhou Greencore. Gu Xiaojun instructed Zhang Hong to misappropriate 290 million yuan of funds for company registration, which is to prepare for production and business activities. It belongs to the misappropriation of funds for profit-making activities. It conforms to the provisions of the Criminal Law on misappropriation of funds although not more than three months, the amount is large, and the amount of misappropriation is huge.

On the basis of the facts and evidences confirmed by re-examination, and in response to the defendants Gu Xiaojun, Zhang Hong and their defendersjustifications, defenses and opinions of the procurators appearing in the Supreme Peoples Procuratorate on the facts of embezzlement of funds, the Court made a comprehensive judgement as follows:

1. According to the Kelon Electric AppliancesAnnouncement on the Investigation Results of KPMG Huazhen Accounting Firm, it is impossible to draw a conclusion that Kelon Group still owes a large amount of funds to Greencore Company.

During the retrial of the case, the defendant Gu Xiaojun and his defender submitted to the court the Koron Electric Appliances Announcement on the Investigation Results of KPMG Huazhen Accounting Firm, believing that according to the contents contained in the announcement, Koron Group still owed 293 million yuan to Greencore Company, and Gu Xiaojun used the Koron Group to return 290 million yuan of loans to Greencore Company to establish Greencore, Yangzhou. Its behavior does not constitute the crime of misappropriating funds. The procurator of the Supreme Peoples Procuratorate in court believed that the announcement of Cologne Electric Appliances on the investigation results of KPMG Huazhen Accounting Firm could not fully reflect the flow of funds between Cologne Group and Greencore Company, and could not draw the conclusion that Cologne Group owed Greencore Company a large amount of funds.

After further review, on December 1, 2005, Cologne Electrical Appliances commissioned KPMG Huazhen Accounting Firm to investigate the abnormal and significant cash flow of Cologne Electrical Appliances and its major subsidiary companies during the period from October 1, 2001 to July 31, 2005. On January 23, 2006, Cologne Electrical Appliances issued a bulletin on the investigation results of KPMG Huazhen Accounting Firm. According to the KPMG report, the abnormal cash flow of Cologne Group and Greenkel Company during the investigation period was RMB 2.169 billion and RMB 2.462 billion, respectively. The abnormal cash flow of companies suspected of being related to Greenkel Company was RMB 1.902 billion and cash flow was RMB 2.462 billion. The inflow amount is RMB 1.017 billion yuan. The results of KPMG Huazhens investigation are as follows: The abnormal net cash outflow between KPMG and Greencore or suspected Greencore-related companies during the period of investigation is about 592 million yuan, and the net cash outflow amount may represent the minimum loss caused to KPMG.

It can be seen that the defendant Gu Xiaojun and his defenders believe that Cologne Group still owes 293 million yuan to Greencore Company, which is based on the content of the first half of the announcement, that is, the abnormal cash flow of Cologne Group and Greencore Company during the investigation period involves 2.169 billion yuan of cash outflow and 2.462 billion yuan of cash inflow. But in fact, the announcement also clearly pointed out that during the investigation period, the abnormal cash flow of Cologne Group with Greencore Company or suspected Greencore Company related company involved 4.071 billion yuan (2.169 billion + 1.902 billion) of cash outflows, 3.479 billion yuan (2.462 billion + 1.017 billion) of cash inflows and 592 million yuan (4.092 billion + 1.17 billion) of net abnormal cash outflows of Cologne Group. 71-3.479 billion yuan, and the 592 million yuan may represent the smallest loss to Kelong Group. Therefore, according to the results of the investigation stated in the bulletin, we can not draw the conclusion that Cologne Group owes Greencore Company a huge amount of funds. On the contrary, Cologne Group has suffered a huge loss of at least 592 million yuan. Gu Xiaojun and his advocates said that the Kelon Group owed 293 million yuan to Greencore Company, which lacked factual basis, and our hospital refused to adopt. The Supreme Peoples Procuratorate shall adopt the opinions put forward by the procurators appearing in court.

From now on, 290 million yuan has been misappropriated for personal use, which does not belong to the normal capital exchanges between Cologne Group and Greencore Company.

During the retrial of this case, the defendants Gu Xiaojun, Zhang Hong and their defenders proposed that the $290 million involved in the case was the normal loan of funds between Greencore Company and Cologne Group. There were hundreds of fund exchanges between the two sides. Without a comprehensive investigation of the overall situation of fund exchanges between the companies, one could not simply be identified as the crime of misappropriation of funds. The procurator of the Supreme Peoples Procuratorate in court believed that the $290 million involved in the case was diverted to personal use by Gu Xiaojun, which was essentially different from the fund exchanges between the company.

After re-examination, it is clear that since the acquisition of Kelon Electrical Equity by Shunde Greencore in 2002, there are a large number of abnormal capital exchanges between Kelon Group and Greencore Company without the consent of the board of directors, without any trade background or business contacts, and the abnormal transfer vouchers are not included in the accounts. Although Gu Xiaojun, the defendant in the trial, is the actual controller of Greencore Company and the controlling shareholder of Shunde Greencore Electric Appliances, the company has independent legal personality and property rights. The control and use of company funds should be strictly in accordance with company law and company financial management system. The managers of a company, even the legal representatives and the chairman of the board of directors, can not arbitrarily transfer funds between related companies without the consent of the board of directors, without any trade background or business contacts, let alone transfer the funds of the company to personal use. In this case, the $290 million involved was transferred to a special temporary account by Gu Xiaojun and Zhanghong, and then the real source of funds was concealed through continuous accounts withdrawal. At last, the $290 million was transferred to Greencores verification account in Yangzhou as Gu Xiaojuns personal investment. The essence of this case is that the funds were misappropriated for personal use, which is quite different from the normal capital exchanges between companies. Two kinds of behavior. No matter how much money is exchanged between companies, managers are not allowed to transfer the companys funds to personal use. Gu Xiaojun has no right to transfer the funds of Cologne Group and Greencore Company without authorization, let alone confuse the companys property with personal property. Therefore, Gu Xiaojun, Zhang Hong and their advocates can not establish the above-mentioned defense and defense opinions, and the Court will not accept them. The Supreme Peoples Procuratorate shall adopt the opinions put forward by the procurators appearing in court.

In the process of lending 398 million yuan to Bank of China Yangzhou Branch, 400 million yuan pledged was also remitted to Yangzhou Greencore Capital Verification Account.

During the retrial of the case, the defendant Gu Xiaojun and his defender proposed that the defendant Zhang Honghong pledged 398 million yuan to the Bank of China Yangzhou Branch with 400 million yuan including 290 million yuan involved in the case. As the pledged 400 million yuan has been frozen by the bank, it is impossible for two 400 million yuan to be remitted to the Greencore verification account in Yangzhou. According to the Supreme Peoples Procuratorate, on June 20, 2003, 400 million yuan of deposit, including 290 million yuan involved in the case, was transferred to Tianjin Greencore 608 account and then to Yangzhou Greencore verification account from 608 account, according to documents such as Bank of China Yangzhou branch account and related bills.

On June 19, 2003, according to the instructions of the defendant Gu Xiaojun, the plaintiff, Zhang Hong, pledged a loan of 398 million yuan to the Yangzhou Branch of the Bank of China with a deposit of 400 million yuan including 290 million yuan involved in the case, and transferred the loan to Tianjin Greencore 608 account. The next day, the Bank of China Yangzhou Branch returned the above 400 million yuan deposit to Tianjin Greencore 608 Account. Up to now, a total of 803 million yuan was invested in the 608 Account, and two 400 million yuan were transferred from the Account to the Greencore Verification Account in Yangzhou. To sum up, the $290 million involved in the case was actually used by Gu Xiaojun as an individual capital contribution to the registered company. Gu Xiaojun and his advocates put forward the above-mentioned defense and defense opinions which are not in conformity with the facts and will not be accepted by the Court. The opinions put forward by the procurators appearing in court of the Supreme Peoples Procuratorate are based on facts and shall be adopted by the Court.

4. The short time of embezzlement of funds does not cause significant economic losses to the unit and does not affect the establishment of the crime of embezzlement of funds.

After examination, the Court held that, according to the provisions of Article 272 of the Criminal Law of the Peoples Republic of China, the crime of misappropriating funds refers to the fact that the staff members of a company, enterprise or other unit, taking advantage of their position, misappropriate the funds of the unit for personal use or loan to others. The amount of the misappropriation is large, has not been repaid for more than three months, or has not exceeded three months, but the amount is large and carried out. Profit-making activities or illegal activities. Accordingly, embezzlement of funds for personal use, a large amount of profit-making activities, that is, constitute the crime of embezzlement of funds, there is no limit on the length of embezzlement, nor does it take causing unit economic losses as the premise. Gu Xiaojun, the plaintiff accused, instructed Zhang Hong, the plaintiff accused, to misappropriate 290 million yuan of funds for personal use to register and establish Greencore in Yangzhou, which conforms to the constitution of the crime of misappropriating funds and should be punished according to law. Gu Xiaojun and his advocates put forward the above-mentioned defense and defense opinions can not be established, and the Court will not accept them. The opinions put forward by the procurators appearing in the Supreme Peoples Procuratorate are established and adopted by the Court.

(2) 63 million yuan involved in Yangzhou Yaxing Bus

From March to April 2005, Yangzhou Yaxing Bus signed a share transfer contract with Yangzhou Mechatronics, and agreed that Yangzhou Yaxing Bus would transfer its share of Yangzhou Diesel Engine Co., Ltd. (Yangchai Company for short) to Yangzhou Mechatronics. Yangzhou Mechatronics needs to pay a total of 64.04 million yuan in share transfer and some investment dividends to Yangzhou Yaxing Bus. Meanwhile, the defendant appointed by the plaintiff Gu Xiaojun, the plaintiff Jiang Baojun borrowed money from Yangzhou Mechatronics in the name of Yangzhou Greencore, but was refused by Wang Daqing, the legal representative of Yangzhou Mechatronics. In late April 2005, Jiang Baojun, then the director of Yangzhou Yaxing Bus, drafted a payment notice in the name of Yangzhou Yaxing Bus and handed it to Wang Daqing without discussion by the board of Yangzhou Yaxing Bus. He asked Yangzhou Mechatronics to transfer 63 million yuan of the equity transfer and part of the investment dividend that should have been paid to Yangzhou Yaxing Bus to Greenkol, Yangzhou by April 26, 2005. Bank account. On April 25, the same year, according to the payment notice, Yangzhou Mechatronics paid 63 million yuan to Greencore, Yangzhou. After payment, Yangzhou Mechatronics received a settlement receipt of RMB 63 million for Yangzhou Yaxing Bus. On April 26 and 27 of the same year, the 63 million yuan was transferred from the Greencore account in Yangzhou to the Greencore account in Jiangsu and the Greencore account in Jiangxi respectively for repayment of bank loans and company loans.

On the basis of the facts and evidences confirmed by re-examination, and in response to the defendants Gu Xiaojun, Jiang Baojun and their defendersjustification, defense opinions on the facts of embezzlement of funds and the opinions of the prosecutors appearing in the Supreme Peoples Procuratorate, the Court made a comprehensive judgement as follows:

1. It is a mistake to apply the 1998 judicial interpretation to the original trial, but not to apply the 2002 legislative interpretation.

According to the original trial, the defendant Gu Xiaojun, a private company whose private ownership and control are entirely controlled by the defendant in the trial, refers to the provisions of Article 1, paragraph 2 of the Interpretation of the Supreme Peoples Court on Several Questions Concerning the Application of Law in the Trial of Cases of Misappropriation of Public Funds, which came into effect on May 9, 1998, Misappropriation of Public Funds to Privately Owned Companies and Privately Owned Enterprises belongs to the Personal Envoy of MIS The act of Gu Xiaojun and Jiang Baojun embezzling 63 million yuan of Yangzhou Yaxing Bus to be used by Greencore belongs to the case of embezzlement of funds for personal use, which constitutes the crime of embezzlement of funds. However, on April 28, 2002, the Standing Committee of the National Peoples Congress promulgated the Interpretation of Article 384, paragraph 1, of the Criminal Law of the Peoples Republic of China, which gave a new explanation to the misappropriation of public funds for personal use. Only in accordance with one of the following three circumstances, can the misappropriation of public funds be attributed to personal use, namely: (1) to provide public funds to oneself, relatives or friends or to them. He uses public funds by natural persons; (2) he uses public funds for other units in his own name; (3) he decides to use public funds for other units in his own name for personal benefit. The original trial found that Gu Xiaojun and Jiang Baojun had misappropriated funds for personal use without referring to the application of new legislative interpretations, which was indeed inappropriate.

2. The evidence in the case is insufficient to prove that the act of Jiang Baojun, the plaintiff defendant, issuing a notice of payment was carried out after consulting the plaintiff defendant Gu Xiaojun for his consent.

The original trial found that the plaintiff defendant Jiang Baojun issued payment notice to Yangzhou Electrical Machinery and Electricity Company, which was implemented after consulting the plaintiff defendant Gu Xiaojun for his consent, and accordingly determined that Gu Xiaojun had the intention and behavior of instructing Jiang Baojun to embezzle funds. After re-examination, it was found that Jiang Baojun only admitted once during the supplementary investigation that the payment notice issued by him was implemented after consulting Gu Xiaojun for his consent, and then kept confessing that the payment notice issued by him was a personal act and Gu Xiaojun was not aware of it. Gu Xiaojun always defended that he only let Jiang Baojun borrow money from Yangzhou electromechanical company. He did not know that Jiang Baojun issued payment notice to Yangzhou electromechanical company without authorization, and there was no other evidence to prove that Jiang Baojun issued payment notice after consulting Gu Xiaojun for his consent. Therefore, the original trial found that Gu Xiaojun ordered Jiang Baojun to embezzle the funds involved insufficient evidence.

3. The funds involved in the case are always circulated among the units, and there is no evidence to prove that there is a case of misappropriation of funds for personal use in the process of fund transfer.

Evidence in the case confirmed that 63 million yuan in the case was transferred from Yangzhou Mechatronics to Yangzhou Greencore Account, and the settlement receipt was issued by Yangzhou Yaxing Bus. After that, they were transferred to Jiangsu Greencore 12 million yuan and Jiangxi Greencore 51 million yuan respectively for repayment of bank loans and company loans. According to the fact that the court re-examined and clarified, Yangzhou Greencore is an independent company legal person. The 63 million yuan involved in the case was transferred to Yangzhou Greencore in the name of Yangzhou Yaxing Bus, not to transfer funds from unit to individual use, nor to transfer funds to other units in the name of individual use, which is not in line with the first two situations stipulated in the legislative interpretation of 2002. Although the 63 million yuan involved in the case was transferred to other units in the name of the unit, the funds were always circulated among the units. There was no evidence to prove that the defendant Jiang Baojun had obtained personal interests in the process of the transfer of funds, so it was not in line with the third situation stipulated in the legislative interpretation in 2002.

The Court believes that the socialist market economy is an economy governed by law. As an important subject of market economy, companies and their operators must strengthen their awareness of rules and integrity, and carry out business activities within the scope prescribed by law. Registered capital is not only the basis of company operation, but also the basic guarantee of taking risks and repaying debts. False registered capital not only impairs the management order of company registration, but also brings risks to the business environment of the market. Relevant responsible persons shall bear corresponding legal responsibilities according to law. However, with the development of economy and society, the requirements for the type and structure of registered capital of a company are constantly changing. Relevant laws and regulations will be revised and adjusted accordingly, and the evaluation criteria for the social harmfulness of false registered capital will also be changed. In the case of false reporting of registered capital, which has been amended in relevant laws and regulations at the time of trial and has significantly reduced the degree of illegality and social harm, it is not considered a crime according to the old principle of light weight and the principle of modesty in criminal law. In this case, the original trial found that the defendants, Gu Xiaojun, Liu Yizhong, Jiang Baojun and Zhang Xihan, used false certificate documents to replace intangible assets with 660 million yuan of false currency in the process of applying for the change of registration in Greencore, Shunde. However, the misrepresentation of registered capital by Gu Xiaojun and others was the continuation of the local governments support for the illegal establishment of registration in Greencore, Shunde. The total capital of the company has not been impaired. Moreover, during the investigation period of this case, the company law has amended the upper limit of the proportion of non-monetary property including intangible assets, which has been raised from 20% to 70%, so that the proportion of intangible assets exceeding the legal upper limit replaced by false currencies in this case has been reduced from 55% to 5%. Therefore, Gu Xiaojun and others have falsely registered. If the circumstances of capitals actions are significant and slight, they are not considered to be crimes. The original trial found that the acts of Gu Xiaojun, Liu Yizhong, Jiang Baojun and Zhang Xihan constituted the crime of false reporting of registered capital, which was a mistake of applicable law and should be corrected according to law. Gu Xiaojun, Jiang Baojun, Zhang Xihan and their advocates argue that Gu Xiaojuns acts do not constitute the crime of false reporting of registered capital, and that the cases of Gu Xiaojun, Liu Yizhong, Jiang Baojun and Zhang Xihans false reporting of registered capital by the procurators appearing in court of the Supreme Peoples Procuratorate are obviously minor and harmless. According to Article 13 of the Criminal Law of the Peoples Republic of China, The court shall adopt the opinion that no criminal responsibility shall be investigated.

Securities system is an important part of socialist market economy. The information disclosure system with authenticity, accuracy and integrity as the core requirements is the basis for the healthy and stable development of the securities market, and also a powerful means to protect the legitimate rights and interests of investors. The provision of false financial and accounting reports is not as good as the actual disclosure of important information, which violates the fundamental requirements of the information disclosure system, disrupts the order of the securities market and damages the interests of shareholders and the public. Of course, it is forbidden by law. However, according to the criminal law at the time of the case, the criminal liability of the perpetrator can only be investigated if the act causes harmful consequences of serious damage to the interests of shareholders or other persons. In this case, the original trial found that there was a fact that Kelon Electric Appliances listed false profits in financial accounting reports between 2002 and 2004 to disclose, but the existing evidence is not enough to prove that the harmful consequences caused by the acts of providing false financial accounting reports by Kelon Electric Appliances have reached the degree of serious damage to the interests of shareholders or others. This part of the facts is unclear, the evidence is insufficient, and judged on the basis of evidence. Principle: According to the law, the criminal responsibility of the defendant, Gu Xiaojun and others, should not be investigated. Therefore, the original trial found that the acts of Gu Xiaojun, Jiang Baojun, Zhanghong, Yan Yousong, Yan Guoru and Liu Ke constituted the crime of violating the rules and disclosing important information, which belonged to the mistake of identifying facts and applying laws, and should be corrected according to law. Gu Xiaojun, Jiang Baojun, Zhanghong, Yan Yousong, Yan Guoru, Liu Ke and their advocates have insufficient evidence to prove that the acts of providing false financial and accounting reports by Kelong Electric Appliances seriously damage the interests of shareholders or other persons. The acts of Gu Xiaojun and others do not constitute the defense and defense opinions of the crime of violating rules and disclosing important information, as well as the prosecutors appearing in court of the Supreme Peoples Procuratorate. The existing evidence is insufficient to prove that Gu Xiaojuns behavior caused serious damage to shareholders or other peoples interests. The opinion that Gu Xiaojun and others should be treated as innocent is established and accepted by our hospital.

Property right system is the cornerstone of socialist market economy. The state equally protects the property rights and legitimate rights and interests of all kinds of market subjects, punishes the crimes of embezzlement, partition and misappropriation of property of state-owned, collective and non-public enterprises according to law, establishes market order of equal competition, honesty and trustworthiness, and creates a fair, fair, transparent and stable legal environment. Business activities of companies and enterprises must abide by the rules and regulations, improve their competitiveness in accordance with the laws and regulations, and the operators of companies and enterprises should adhere to the rules, take the right path, and start their own businesses in good faith and abide by the law. In this case, the defendant Gu Xiaojun, without the decision of the board of directors of the company, arbitrarily misappropriated the huge funds of the listed companys Kelon Electrical Appliances for personal use, registered and established a company wholly controlled by individuals to acquire other listed companies, such as Yangzhou Yaxing Bus, which not only infringed the corporate property rights of Kelon Electrical Appliances, damaged the vital interests of the majority of shareholders, but also seriously disrupted the capital. The order of the market has had a significant negative impact on the fair and orderly business environment. Gu Xiaojun, Zhanghong, the defendants of the original trial, embezzled 250 million yuan of Kelong Electrical Appliances and 40 million yuan of Kelong, Jiangxi Province, for personal use and profit-making activities. Their acts have constituted the crime of embezzlement of funds, which is of great social harm and should be punished according to law. The original trial found that Gu Xiaojun and Zhang Hongs misappropriation of 290 million yuan of funds for personal use constituted the right crime of misappropriation of funds. Gu Xiaojun, Zhang Hong and their defenders have proposed that their actions do not constitute an excuse for the crime of misappropriating funds, and that their defense opinions cannot be established, and the court will not accept them. The Supreme Peoples Procuratorates opinions on the criminal responsibility of Gu Xiaojun and Zhang Hong, who were convicted of misappropriating funds in the original trial by the procurator in court, are clear, and the evidence is solid and sufficient. They should be investigated in accordance with the law and accepted by the Court.

In the joint crime of embezzlement of 290 million yuan of funds, the defendant of the plaintiffs trial, Gu Xiaojun, initiated the intention of committing a crime, instructing others to embezzle the huge amount of funds of his unit for personal use, playing a major role and being the principal offender, should be punished in accordance with all the crimes he participated in. In view of the short time of embezzlement of funds in this case and the fact that it has not caused significant economic losses to the unit, it may be given a lighter punishment as appropriate. The plaintiff defendant Zhang Hong, ordered by Gu Xiaojun to help misappropriate funds and play a supporting role, is an accomplice and should be given a lighter, lighter or exempted from punishment. Considering Zhang Hongs attitude towards confession and other circumstances, the original trial has mitigated his punishment and sentenced him to suspended sentence. The punishment for the crime is equivalent and should be maintained in accordance with the law.

According to Article 256, paragraph 1, of the Criminal Procedure Law of the Peoples Republic of China, Article 389 of the Interpretation of the Supreme Peoples Court on Application and Article 272, paragraph 1, 12, 13, Article 25, paragraph 1, Article 26, paragraph 1 and 4, Article 27 and Article 61 of the Criminal Law of the Peoples Republic of China. It is stipulated that, after discussion and decision of the plenary session of the Judicial Committee, the Court shall render the following judgment:

1. To revoke the criminal ruling No. 101 of the Guangdong Higher Peoples Court (2008) and the criminal judgment No. 65 of the Foshan Intermediate Peoples Court (2006) on the crime of false reporting of registered capital by the defendant Gu Xiaojun, the conviction and sentencing part of the crime of violating regulations and disclosing important information, and the sentencing part of the crime of misappropriating funds; 2. The conviction and sentencing part of the plaintiff defendant Jiang Baojun; the third part of the conviction and sentencing part of the plaintiff defendant Zhang Hongs crime of violating rules and disclosing important information; the fourth to the eighth part of the conviction and sentencing part of the plaintiff defendant Liu Yizhong, Yan Yousong, Zhang Xihan, Yan Guoru and Liu Ke.

2. Maintaining the first conviction part of the criminal judgment No. 65 of Foshan Intermediate Peoples Court of Guangdong Province (2006) on the crime of misappropriating funds for the defendant Gu Xiaojun; and the third conviction part of the crime of misappropriating funds for the defendant Zhang Hong, who was tried by the plaintiff, is sentenced to two yearsimprisonment and two years probation.

3. The defendant in the plaintiffs trial, Gu Xiaojun, was convicted of misappropriating funds and sentenced to five yearsimprisonment.

4. The defendant Jiang Baojun was not guilty.

5. The defendant Liu Yizhong was not guilty.

6. The defendant Zhang Xihan was not guilty.

7. Yan Yousong, the accused in the original trial, is not guilty.

8. The defendant Yan Guoru was not guilty.

9. The defendant Liu Ke was not guilty.

This judgment is final.

Source: Responsible Editor of Supreme Law Website: Liu Yuxin_NBJS7825