A spectacular business roller-coaster ride has finally come to an end for Tang Wanxin, By staff reporters Ling Huawei

and Cao Haili and intern Zhou Fan

A spectacular business roller-coaster ride has finally come to an end for Tang Wanxin, head of the notorious and now bankrupt Delong group. Sources say he will stand trial this month in Wuhan for illegally accepting deposits and manipulating stock prices. The trial will mark the final chapter in the Delong saga, in which the group masterminded schemes that sent several subsidiary companies stocks skyrocketing before crashing to the ground. Nearly 20 billion yuan (US2.47 billion) in market value evaporated within 10 days.

Tang was indicted on December 13 in Wuhan. His brother Tang Wanli, who had been chairman of the Delong International Strategic Investment arm of the group, resigned five days before as vice-president of the All-China Federation of Industry and Commerce.

Tang managed to escape charges related to several financial crimes, including illegal fundraising, loan fraud and wire fraud, which together could have carried penalties of life imprisonment. Instead, Tang faces a maximum of fifteen years illegally collecting bank deposits carries a maximum of 10 years, and manipulating stock prices no more than five years. Sources say prosecutors have considered charging Tang with illegal business operation, which would carry an additional five-year maximum sentence, but the charge does not appear on indictment documents. Analysts told Caijing that the chance that Tang will spend more than 10 years in prison is slim.

Tang began building his business empire 20 years ago as a money-minded college student dabbling in various sales schemes, most of which lost money. His transformation into chairman of a company that controlled major financial institutions and listed companies throughout China was nothing short of a commercial miracle, which brought him wealth, fame, and now billions in debt and years in prison.

Tang began his career in Xinjiang selling cheap clothes, packaged noodles, bicycle locks, agricultural chemicals, and computers. A jack-of-all-trades, he dabbled in printing, chemicals, software development, consultancy, and even organized an aviation club. But he had nothing to show for those ventures.

In 1992, he borrowed 5,000 yuan and moved to Xian, Shaanxi Province, where he found several commercial partners and began buying institutional shares in local companies and reselling them to investors in Xinjiang and Shenzhen. Within a year, the group had reaped a handsome profit of 50-70 million yuan (US6.2 8.6 million.) The group expanded to other major cities, speculating on the shares of listed companies.

The group, by then known as Delong, reinvested their profits from speculation into a dramatic expansion throughout several industries, including real estate, agriculture, and nightclubs. In 1993, Tang joined with state-owned Xinjiang Hongyuan Trust and Investment Co. to invest in the construction of the Hongyuan building. According to the agreement reached, each party would invest 80 million yuan (US 9.9 million) and would share property rights equally. But with the help of Hongyuan general manager Han Xinlin, Delong managed to evade much of its financial responsibility for the project, leaving Hongyuan to front most of the funds. Han later resigned after China Construction Bank, Hongyuans major shareholder, began to investigate the scandal. Tang gave Han five million yuan (US617,000) for him to use to speculate in the Beijing stock market. Han later joined Delong in 1997 as one of its major leaders.

Tang led Delong into the financial marked in 1994, when Delong leased the trading seat of the Xinjiang Financial Leasing Co., Ltd. at the Wuhan Securities Exchange Center, and soon pooled 300 million yuan (US37 million) over the next several years in the companys name, for Delongs use. Delong engaged in stock transactions via the companys position on the Wuhan stock exchange. But the arrangement didnt last long. Tang and his colleagues expanded rapidly through the stock and bond market, but their performance was poor; the company recorded some 100 million yuan (US12.3 million) in losses in the treasury bond futures market the following year.

By late 1996, Delong had wreaked havoc on its balance sheet, with debts totalling 420 million yuan (US 50.6 million) and assets only slightly more than 300 million yuan (US37 million.) To fill the gap, Tang began purchasing financial institutions and industrial companies, which he then bled to save the larger group. That year, he purchased 30 percent of the shares of Jinsin Trust through Xinjian Tunhe Investment Company. Delong took over a number of listed companies through a series of similar acquisitions, including Tunhe, Torch Automobile, and Hejin Investment, which became Delongs primary stock market puppets.

Delong depended on a consistent stream of new capital from companies it acquired to purchase its own shares and prop up their value, making up for gaps as a result of its corporate expansion and stock speculation. In the nine months before it formally took over Jinsin, for instance, Delong siphoned 500700 million yuan (US61.7- 86.4 million) from the institution. Rapid expansion was costing Delong about 100 million yuan (US12.3 million) a year; without new capital injections, it would quickly have gone bankrupt.

In 1997, pooling public funds through Jinsin and manipulating stock prices had become Delongs last possible strategy to resolve the crisis. It opened thousands of fake accounts in stock exchange centers, controlling financial institutions and listed companies to tinker with stock prices to its advantage. Meanwhile, Delong was wildly expanding its trust-based fundraising business to prop up stock prices of its holdings. Its trust subsidiaries, mainly Jinsin, promised high returns to attract blind investors. Jinsins financial reports show that its liabilities have risen continuously since 1997 from 900 million yuan (US 111.1 million) to 2.3 billion yuan (US284 million) at the end of 2000. In 2002, Jinsin was ordered to pool 5 billion yuan (US617.3 million) for Delong, most of which disappeared in stock market speculation.

Stock market regulators began closing in on Delong in 2001, and by the end of that year Jinsin had defaulted on 4.1 billion yuan (US506.2 million). The crisis came to a head in April 2004 when Delongs capital chain snapped, prices of stocks it controlled nose-dived and trust fund clients demanded immediate repayment on their investments. Tang Wanxin fled the country.

When he returned three months later and was arrested, he seemed unrepentant. Things would have been different, he protested, if only I had owned a bank.

English version by Xin Zhiming and Lauren Keane