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Cailianshe News, July 15 (Reporter Gao Yanyun)Recently, the website of the Central Commission for Discipline Inspection and the National Supervisory Commission published an article titled "Three Trials | How to Qualify the Appreciation Gains from Using Power to Purchase Original Shares". On June 14, public official Lan Xianfa was convicted of bribery by the Liangping District People's Court of Chongqing and sentenced to ten years and six months in prison and a fine of 800,000 yuan.

As early as February 1, after research by the Standing Committee of the Liangping District Discipline Inspection Commission of Chongqing, it was decided to expel Lan Xianfa from the party and cancel his retirement benefits in accordance with regulations.

The specific case is that before a listed company went public, it took the initiative to let Lan Xianfa, a public official who was helpful to the company's business, buy 50,000 original shares for 50,000 yuan. The public official subscribed to the original shares in the name of his spouse. After the listing, he made a profit of more than 5.07 million yuan and received a dividend of 21,600 yuan. The rough calculation shows that the profit exceeded 5.1 million yuan. In addition, Lan Xianfa also committed other bribery behaviors.

Screenshot of the website of the Central Commission for Discipline Inspection and the National Supervisory Commission

It is worth noting that the listed company involved in the bribery case is very similar to the GEM company Jifeng Technology. The time of listing, business, and the person in charge of the indirect holding subsidiary are all surnamed Lai. In addition, many information such as the number and time of Gao Moumou's subscription of shares and increase of shares are almost exactly the same. As the listed party, it did not disclose the true background of Gao Moumou's shares. Are there any false statements or major omissions? It is time for Jifeng Technology, which was once Jifeng Agricultural Machinery, and the sponsor Hongyuan Securities (which later merged with Shenyin Wanguo to become a listed brokerage Shenwan Hongyuan) to come out and explain.

Purchase 50,000 yuan of original shares and make a profit of 5.1 million yuan

Lan Xianfa, formerly the director of the Agricultural Mechanization Technology Promotion Station of Liangping County (now Liangping District), Chongqing, and a senior engineer, retired in September 2022.

From 2006 to 2017, Lan Xianfa used his position as director of the Liangping County Agricultural Mechanization Technology Promotion Station to provide assistance and seek benefits for others in agricultural machinery sales and agricultural machinery purchase subsidies, and illegally accepted property totaling more than 5.1 million yuan.

Among them, in 2006, Company B, which was controlled by Company A, was established. Lai, the general manager of Company B, asked Lan Xianfa to use his position to help Company B expand its agricultural machinery product market and obtain subsidies for the purchase of agricultural machinery. In 2007, Company A was preparing to go public. In order to thank Lan Xianfa for his previous official duties and to continue to receive care, Company A opened up the right to subscribe for original shares to Lan Xianfa and promised that the original shares would have a significant appreciation after the company went public, and dividends would be guaranteed even if it was not listed. Lan Xianfa agreed. In February 2008, Lan Xianfa invested 50,000 yuan in the name of his wife Gao to subscribe for 50,000 original shares of Company A.

In October 2009, Company A went public. From 2008 to 2011, Company A increased its shares by converting capital reserves into equity, increasing the number of shares held by Gao to 217,500 shares. From November 2010 to May 2011, after the expiration of the lock-up period for the original shares, Lan Xianfa sold a total of 182,500 shares in two installments, making an illegal profit of more than 5.07 million yuan after deducting the share capital, handling fees, and taxes. During the period when Lan Xianfa was investigated, Gao sold the remaining 35,000 shares, and no profit was made after tax deduction at the time of the judgment. In addition, Lan Xianfa received a total of 21,600 yuan in dividends from Company A for the shares he held.

According to the above public information, a rough estimate shows that Lan Xianfa invested "50,000 yuan" and ultimately made a profit of more than 5.1 million yuan.

In addition, from 2005 to 2010, Lan Xianfa used his position to help Company C in agricultural machinery sales and agricultural machinery purchase subsidies. During the Spring Festival from 2006 to 2010, Lan Xianfa received cash from Company C shareholder Zeng Moumou five times in the name of New Year greetings, 2,000 yuan each time, for a total of 10,000 yuan.

It is very consistent with the listed company Jifeng Technology

Compared with the listed company mentioned in the above article, it is very similar to the GEM-listed company Jifeng Technology.

First, let’s look at the core information revealed by the above official website document:

First, the listed company was listed in October 2009;

Second, the main business of the listed company involves agricultural machinery. In 2006, it established a holding subsidiary in Chongqing, and its general manager is named Lai;

Third, Lan Xianfa's wife Gao Moumou invested 50,000 yuan to subscribe for 50,000 original shares of the company in February 2008;

Fourth, the listed company increased its shares by converting capital reserves into capital stock, which increased the shares held by Gao from 50,000 shares to 217,500 shares from 2008 to 2011.

The points where Gifeng Technology is consistent with the above are as follows:

First, Jifeng Technology used to be referred to as "Jifeng Agricultural Machinery" in securities. The company's predecessor was Sichuan Jifeng Agricultural Machinery Chain Co., Ltd. On October 30, 2009, the company was listed on the Growth Enterprise Market with the stock code "300022". On October 14, 2009, the prospectus announcement issued by "Jifeng Agricultural Machinery" at that time showed that the company's main business included the sales and services of modern agricultural equipment such as traditional agricultural machinery, trucks, agricultural engineering machinery, and general electromechanical products.

Secondly, Liangping Jifeng is an indirect holding subsidiary of the listed company Jifeng Technology. It was established on December 28, 2006. Its main business is agricultural machinery and automobile sales and services. The general manager is Lai Han, and the registered address is "No. 170 Daheba Street, Liangshan Town, Liangping County".

Liangping Jifeng is an indirect holding subsidiary of the listed company Jifeng Technology

Third, on February 24, 2008, Jifeng Agricultural Machinery held the first extraordinary shareholders' meeting in 2008. The meeting resolved to increase the capital of the joint-stock company by 12.973 million shares, of which 11 original shareholders subscribed for 2.4663 million shares; 50 new shareholders subscribed for 10.5067 million shares, with a subscription price of RMB 1 per share.

The company said that this capital increase mainly opens the right to subscribe for the company's new shares to store managers and above in Sichuan and Chongqing, and at the same time the company will acquire the equity of the subsidiaries in the region held by the above-mentioned personnel. Among the 50 new shareholders, "Gao Chuanrong" is one of them, and the subscribed shares are exactly 50,000 shares.

Gao Chuanrong subscribed 50,000 shares

On December 22, 2008, the company held the fifth extraordinary general meeting of shareholders in 2008 and agreed to the proposal to increase the company's capital reserve by 5 shares for every 10 shares.

As a result, Gao Chuanrong's holdings increased from 50,000 shares to 75,000 shares.

After the company went public, on June 10, 2010, the company implemented the 2009 dividend and capital reserve conversion plan, with a dividend of RMB 2 for every 10 shares. At the same time, the capital reserve fund was converted into 10 shares for every 10 shares held by shareholders.

At this time, Gao Chuanrong's holdings increased from 75,000 shares to 150,000 shares.

The restricted period is 12 months after listing, and the restricted period ends on October 30, 2010. After this period, Gao Chuanrong can sell the shares freely.

On May 25, 2011, the company implemented the 2010 dividend and capital reserve conversion plan, with a cash dividend of RMB 1 for every 10 shares and a capital reserve conversion of 10 shares for every 10 shares held by shareholders.

If Gao Chuanrong had not sold any of the 50,000 shares she originally held, her holdings would have increased to 300,000 shares. However, the above-mentioned official website document revealed that "50,000 shares increased to 217,500 shares", which means that Gao Chuanrong sold 41,300 shares before the record date of the 2010 dividend conversion, and her holdings at the time of the 2010 dividend distribution were approximately 108,800 shares.

In the case of Lan Xianfa using his power to buy original shares at a low price and accepting bribes, do Jifeng Agricultural Machinery and the relevant responsible persons have social responsibilities? The company's prospectus did not disclose the true background of Gao Chuanrong's shares. How should the responsibilities of the listed company and the sponsor be handled? This requires an explanation.

The sponsor of Jifeng Agricultural Machinery's IPO is Hongyuan Securities. In January 2015, Shenwan Hongyuan, after the merger of Shenyin Wanguo and Hongyuan Securities, was officially listed on the Shenzhen Stock Exchange.

Bribery of the "Empty-Empty-Piece" Type

Qiu Xueling, director of the Sixth Investigation Office of the Chongqing Liangping District Commission for Discipline Inspection and Supervision, said that Lan Xianfa and his wife Gao were not shareholders of the subsidiary controlled by Company A, and Lan Xianfa or Gao were not qualified to purchase the original shares of Company A. Company A opened the original share subscription rights to Lan Xianfa based on Lan Xianfa's status as a public official and his previous care for Company B, and Lan Xianfa was aware of this and agreed.

Yu Haihua, director of the First Procuratorial Department of the Liangping District People's Procuratorate of Chongqing, pointed out that the subscription opportunity obtained by Lan Xianfa was directly related to his power. Lan Xianfa's subscription of 50,000 original shares of Company A was not a normal market investment behavior. Company A and Lan Xianfa had a clear understanding of the expected benefits of the original shares. Both parties used the appreciation gains of the original shares after listing as the subject of power-for-money transactions.

During the trial, the defense counsel put forward the defense opinion that "Lan Xianfa was qualified to subscribe for the original shares and actually paid the consideration, so he should not be convicted of bribery." The court believed that there was a fundamental contradiction with the evidence in the case and therefore refused to accept the defense opinion.

Zhu Fei, deputy chief judge of the criminal court of Liangping District People's Court of Chongqing, said that the court did not support the defense counsel's argument that "the amount of Lan Xianfa's bribes should be determined by multiplying the number of shares held by Lan Xianfa when Company A went public in 2009 by the issue price, which totaled more than 1.6 million yuan." Upon investigation, Lan Xianfa obtained a profit of more than 5.07 million yuan from the sale of the original shares, plus a dividend of 21,600 yuan, for a total illegal profit of more than 5.09 million yuan. This illegal profit is not only the realization of the expected benefits of the briber and the bribee, but also the improper consideration paid by Company A to buy Lan Xianfa's official behavior, and should be included in the amount of bribes according to law.