Judge's investment in coalmine company holds up in court

10:16, May 24, 2010      

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A judge in Shaanxi Province recently won a court case of his own that enables him to receive a bonus based on his investment into a coalmine company.

The ruling sparked a debate about whether the judge has violated the law because a government regulation stipulates that civil servants and employees of State-owned companies are prohibited from participating in coalmine operations.

Judge Zhang Jifeng, 46, who is serving in a court in Shenmu county, spent 1.8 million yuan ($263,651) in Songjiagou coalmine to buy share in February 2005 with his wife, which is 10 percent of the shares of the coalmine.

In April 2008, Zhang's partner surnamed Chen, transferred some shares of the coalmine to two other investors that carried a value of 50 million yuan ($7.3 million).

Zhang got 6.6 million yuan ($966,721) from Chen, but believes he is entitled to more and sued Chen.

In February, a local court ruled that Chen should pay Zhang 11 million yuan ($1.6 million), the local Chinese Business Views newspaper reported Sunday.

Chen appealed and argued that he gave Zhang 6.6 million yuan after the regulation banning officials from participating in coalmine operations was issued in August 2005. The money was compensation for Zhang and his wife to sell their shares.

According to that regulation, civil servants were required to withdraw their investment from coalmine by September 22 of that year.

Chen said Zhang is a civil servant prohibited from participating in coalmine and he does not deserve the bonus.

But the court said Zhang and his wife were "hidden partners" under Chen's name and were not involved in the direct operations of the coalmine, and thus, they were not in violation of the regulation.

The judgment said the law does not prohibit judges and civil servants from participating in civil activities.

Lou Xiao, an associate law professor in Xian Jiaotong University, told the newspaper that Chen should give Zhang the bonus because he failed to show documents proving Zhang had sold his stocks at the coalmine, but added that Zhang should also be punished based on regulations that officials should not be involved in profit earning activities.

"As hidden partners, the couple deserve their bonus as there is no evidence of their withdrawal," he said. "But according to the regulation, Zhang should be punished."

More than 5,000 civil servants participating in coalmine operations have received punishment in about 100,000 illegal mining cases since 2005, according to information from the Ministry of Land and Resources.

Source: Globaltimes.cn


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