Judge's lucrative investment in coalmine causes stir in country

08:39, May 26, 2010      

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The discipline authority in Shenmu county of Northwest China's Shaanxi province is investigating a judge who won a lawsuit enabling him to receive 11 million yuan ($1.6 million) from his investment in a coalmine.

Wang Zhixiong, secretary of the Party disciplinary commission of Shenmu, said the county's Party committee held a meeting on Monday night and decided to send a seven-member investigation team to probe the judge's case.

The team also will investigate whether other civil servants are involved in coalmine operations and investment - a practice banned by Party discipline regulations, Wang told China Daily on Tuesday.

"We will punish the judge if his alleged offense is found to be true," Wang said.

Zhang Jifeng, 46, deputy director of the supervising office of Shenmu county court, brought a lawsuit to the local court in April 2008 against a coalmine owner surnamed Chen.

Zhang accused Chen of denying his transferee right in a coalmine in which he held a 10 percent share, and asked for 11 million yuan in bonuses and economic losses.

As Zhang was a judge in the Shenmu court, the court of Hengshan, a neighboring county, was appointed to hear the case. The court found that Zhang and his wife, Wang Hexia, invested 1.8 million yuan to buy 10 percent of the shares of a local coalmine named Songjiagou. Chen held the majority 90 percent share.

In July 2007, the coalmine's shares were expanded to 50 million yuan and two new partners surnamed Yu and Feng were brought in as coalmine shareholders.

Because of the stock expansion, Zhang thought his 10 percent share should be worth at least 5 million yuan and he should get more bonuses from the coalmine. But Chen only paid Zhang 6.6 million yuan and said Zhang had withdrawn from the coalmine.

However, Chen could not offer evidence of Zhang's withdrawal and the court made the judgment on Feb 2 this year that Chen should pay Zhang 11 million yuan.

Chen argued that Zhang is a civil servant and a national regulation issued in 2005 bans civil servants from participating in coalmine operations.

He said the 6.6 million yuan he paid to Zhang and his wife was compensation for their sale of the coalmine shares.

The regulation issued by the central government stipulates that civil servants who were involved in any coalmine operation must withdraw by Sept 22, 2005.

The court ruled that Zhang and his wife were "hidden partners" who were not involved in the direct operation of the coalmine, and Chen should pay the money. Chen refused to accept the judgment and appealed to higher court for a second hearing.

Local media's reports on the case created a stir in the county and drew attention from across the nation.

Zhang Baotong, a social and economic development expert with Shaanxi provincial economic development research institute, said the court's judgment was in accordance with China's Contract Law, but that Zhang violated the Civil Law by participating in the coalmine operation.

"I think there are two legal relationships in this case: Chen should pay the money to Zhang according to the Contract Law, and Zhang should be punished according to the Civil Law," said Yang Qiao, a professor of economic law with Northwest University of Politics and Law.

However, if the investigation finds that Zhang withdrew from the coalmine before Sept 22, 2005, then he did not violate the regulation, Yang said.

"But if he is found not to have withdrawn by that time, he should be punished according to the Civil Law, Judge Law and the regulation banning civil servants from participating in the operation of, or investing in, coalmines," he said.

Source:China Daily


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