First Instance Judgment on Criminal Bribery, Forgery, Tampering with and Sales of

Documents, Certificates and Seals of State Authorities by Ni A and Zhongzhu Holdings

(Formerly Known as Zhongzhi Ltd) in Beijing
Criminal Judgment issued by Hejian City Peoples Court of Hebei Province
Criminal Case #240(2014) of the Peoples Procuratorate, the public prosecution authority of
Hejian, Hebei
*
Defendant: Zhongzhi Ltd. (name changed to Zhingzhu Holdings Ltd. since September 29, 2005)
with address at: 46 Sanlihe Road, Xicheng District, Beijing.
Litigation representative: Qian Xianzhong, deputy general manager, Zhongzhu Holdings Ltd.
The accused Ni A, legal representative of former Zhongzhi Ltd., was suspected of committing
bribery and had, since December 20, 2012, been ordered by the Peoples Procuratorate of
Hejian City for detention at a designated residence. He was officially put under criminal
detention since June 19, 2013 and subsequently arrested on July 6, 2013. He is being detained
in Hejian City Detention Centre. His defending lawyer Ding Chengxian is from Yili Law Firm,
Hebei.
Indictment #143(2013) of the Peoples Procuratorate of Hejian City accused Zhongzhi Ltd. of
committing organizational bribery and the accused Ni A of organizational bribery and tampering
with state authority documents. Both were indicted by this Procuratorate on June 5, 2014. This
court has therefore formed a collegiate bench according to the law and commenced public
hearing of the case. The Peoples Procuratorate of Hejian City appointed prosecutor Zhang
Mingkun to testify in court. The accused Zhongzhi Ltd. was represented by its corporate
representative Qian Xianzhong. Defendant Ni A and his defender counsel Ding Chengxian were
also present in court for the trial, during which the Peoples Procuratorate of Hejian once
suggested suspending proceedings although the hearings have now concluded.

The Peoples Procuratorate of Hejian accused Zhongzhi Ltd. of:

(1) organizational bribery during its participation in the restructuring of Heilong Holdings Ltd. of
Heilongjiang (Heilong Holdings) for the purpose of smoothing out the process and to gain profit
therein. The accused Ni has had, in 2005 and Dec 2006, offered a bribe of US$110,000 (859,917
yuan) to former mayor of Qiqihar, Heilongjiang Province, Lin A, who had been dealt with in a
separate case.

(2) Tampering with state authority documents

By approval of the Peoples Government of Sichuan Province on September 1, 2000, Shanghai
Zhongji Energy Engineering Ltd. (legal representative: Ni A) engaged in a leasing contract to
operate Yaan Paper Mill, Sichuan, with an approval document issued and titled by the Sichuan
provincial government as Sichuan Provincial Government Approval of the Operation of Yaan
Paper Mill by way of leasing to Shanghai Zhongji Energy Engineering Ltd. (Sichuan Govt Letter
No. 2000-264). Ni had therefore formed Yaan-Zhongzhu Paper Industry Co Ltd. to enhance
operation of Yaan Paper.

In 2001, Ni A intended to form in Shanghai Zhongchanjing Investment Ltd. through the

investment in kind of 450 million yuan by Yaan-Zhongzhu and with a total registered capital of
500 million yuan. The new company was to be run by Fan A, who was informed that leased
assets could not be used as investment in kind and therefore suggested that Ni A change the
wording leased in the Sichuan provincial government approval document to
acquired/purchased. Then Ni A, Fan A and Chen A reached a consensus in turning the leased
assets of Yaan Paper into proprietary assets of Yaan-Zhongzhu Paper Ltd. with total assets
valued at 450 billion yuan as investment in kind in Yaan-Zhongzhu for which Fan A and Chen A
held executive control.

By the end of 2001, Chen A allowed Qiu A, then financial manager of Yaan-Zhongzhu, to alter
the Sichuan government approval document, changing the document title to Sichuan
Provincial Government Approval for Shanghai Zhongji Energy Engineering to acquire Yaan
Paper Mill and duplicated the official seal on the original approval document. Subsequently,
Fan A took valuers of Shanghai Zhonghua Assets Appraisal Ltd. to Yaan-Zhongzhu Paper Mill for
asset evaluation, which ended up with the total proprietary asset value appraised at 450 million
yuan. On 12 March, 2002, Yaan-Zhongzhu made a 400-million investment in kind, leading to
the successful business registration of Zhongchanjing Investment Ltd.

Public procuratorate authorities allowed the accused Ni A and his confederates Fan A, Chen A
and Qiu A in the case to testify in court. Witnesses Lin B and Ni B and etc. testified and
submitted to the court as evidence the business license of the accused Zhongzhi Paper Ltd., the
Sichuan Provincial Government Approval document and the approval document as altered by
the accused, and value appraisal reports on some assets of Yaan-Zhongzhu Paper Mill. The
public prosecution deemed that the accused Zhongzhi Ltd. had bribed state authority officers
859,917 yuan, with Ni A being the companys officer-in-charge and had therefore violated

Article 393 of the Criminal Law of the People's Republic of China and be actionable under the
criminal charge of organizational bribery, whereas defendant Ni A, who instructed Chen A, Fan
A et al to temper with state authority documents, had committed a serious crime as stipulated
in Article 280 (1) of the Criminal Law of the People's Republic of China and be actionable for
criminal liability for altering and forging official state documents. The public prosecution stated
in court that defendant Ni A had proactively explained the crime he had committed and had
turned himself in and might therefore be entitled to leniency. Both defendants Zhongzhi Paper
ltd. and Ni A had also confessed to all criminal facts and details accused in the indictment.

According to the defender for defendant Ni A, Ni had no objection against the public
prosecutions accusations that he had committed organizational bribery and altered official
documents. And in consideration that he had turned himself in and that he had injected more
than 100 million yuan in Heilong Holdings to positively drive the operation of the company, Ni
As counsel suggested lighter or mitigated punishment for him due to the fact that his crime of
altering official state document had not caused consequential damages in a case that was
relatively less serious in criminal nature.

A. Upon investigation and trial, the crime of organizational bribery was established:
On 24 June, 2004, the accused Zhongzhi Paper Ltd. was founded with Ni A as legal
representative. On 29 Sep, 2005, the accused Zhongzhi changed its name to Zhongzhu Holdings
Ltd. In November 2004, the accused Zhongzhi Ltd. took part in the restructuring of Heilong
Holdings Ltd in Heilongjiang. In 2005, the accused Ni A gave then Qiqihar mayor of Heilongjiang
Lin A (in a separate case) US$10,000 (81,917 yuan) to befriend Lin A and in exchange for his
help in the corporate restructuring project. In December 2006, the accused Zhongzhi Paper Ltd.
successfully bid for 40% stake in Heilong Holdings for a lower price. In appreciation of Lin As
support, Ni A instructed his nephew Ni B to transfer through a bank US$100,000 (778,000 yuan)
to Lin B, daughter of Lin A. The above facts have been submitted by the public prosecution and
subsequently verified by the court, hence the following evidence to prove that:

1. The accused Ni As testimony affirmed that he had registered the establishment of Zhongzhi
Paper Ltd. in Beijing in 2004 and participated under which name the corporate restructuring of
Heilong Holdings Ltd in Heilongjiang. In the process, Ni A had, for the sake of befriending the
Qiqihar mayor Lin A for his support in the restructuring, given Lin A US$10,000 in 2005. In 2006
with the support of Lin A, Ni A successfully bid for 40% shares in Heilong Holdings and in
appreciation of Lin As help, Ni A had, through Lins daughter Lin B, given Lin A US$100,000. And
by the time when Ni A withdrew from the restructuring, he had basically withdrawn all his
capital from Heilong Holdings with the co-ordination and support of Lin A.

2. Witness Lin A testified and affirmed that he had come to know Ni A through the introduction
by Zhang C of Heilong Holdings. In 2004 or 2005 when Heilong Holdings of Qiqihar city was
undergoing share right restructuring, he had accepted US$10,000 from managing director of
ZhongChanjing company Ni A. In 2006, Lin A had, through his daughter Lin B, accepted
US$100,000 from Ni A. Heilong Holdings was a state-owned enterprise under the SASAC (Stateowned Assets Supervision and Administration Commission) of Qiqihar and participants in the
restructuring of the company had to be approved by the city government, and the mayor
played an important role in the decision-making process. The money Ni A had given Lin A was
meant to make Ni A a participant, who might be able to get greater care and preferential
treatment during the restructuring process.

3. Witness Zhao A (who was then executive vice-mayor of Suihua city, Heilongjiang) testified
and affirmed that in late 2004, the municipal party committees standing committee had
discussed and passed the restructuring plan of Heilong Holdings, allowing Ni As Zhongchanjing
Investment company to take part in the project, during which, then mayor Lin A had made
three relatively important decisions: 1) approved Ni As Zhongchanjing company to take part; 2)
approved a provincial high court to order auctions of state-owned shares in Heilong Holdings
and allowed Ni A to buy the same at a time when Ni A was unable to fulfill contractual
obligations; and 3) when Ni A was withdrawing from the project, Lin A still decided to allot 100
million yuan from the financial fund to compensate the loss Ni A had sustained during his
participation in the restructuring.

4. Witness Zhao B (then chief of Qiqihar Environmental Protection Bureau) testified and
affirmed that, in Nov 2004, the municipal governments standing committee had formulated a
Heilong shares restructuring plan, allowing Ni As Zhongchanjing Investment to join. But then
Heilongs production was suspended again only after three months when Zhongchanjing was
found to have underinvested in Heilong. As a result of forced suspension of Heilong shares
applied by Heilong creditors, a Heilongjiang high court had to organize auction of the shares,
but with Ni As Zhongzhi Paper as the only bidder as decided by the municipal government.

5. Witness Xu (then Qiqihar SASAC director) testified and affirmed participation in meetings on
institutional reform of Heilong group as representative of Qiqihar government to sign a
restructuring agreement with Ni A, according to which, Ni A had bought the corporate shares of
Heilong without seeking prior approval from Qiqihar SASAC but rather, based on the sole
decision of mayor Lin A.

6. Witness Liu (then Qiqihar SASAC deputy director) testified and affirmed that in 2004, Ni As
Shanghai Zhongchanjing Investment was involved in the restructuring of Heilong group, during
which and with the support and help from mayor Lin A, Ni A had taken part in the restructuring
and successful bid for a portion of corporate shares of Heilong Company.

7. Witness Lin B testified and affirmed that in late 2004 or early 2005, she was given a job in Ni
As CGR company in Canada through the introduction of managing director Zhang C of Heilong
Company. In 2006, Ni A said he would set up Sun Wave Property Inc. and gave her US$100,000
as capital. Her father Lin A allowed her to keep the money for the time being before she would
let Ni B to remit the money to Geng Lans account with TD Bank.

8. Witnesses Ni C, Huang, Jin, Lin C, Zhang A and Cheng testified and affirmed that in Dec 2006,
Ni A asked Ni B to remit US$100,000 to Lin B. Meanwhile, Ni B had lent Huang 3.4 million yuan,
which was remitted by Jin, as instructed by Huang, to a bank account of Zhang A, cashier of Ni
Bs company. Ni B then instructed Zhang A to withdraw 78,800 [sic: 788,000] yuan and pass the
amount to Lin C, so that Cheng may change it into US$100,000 and remit it to Geng Lans
account as designated by Lin B. Finally, Cheng used the account of Xia Yulian, his mother, to
remit the US$100,000 to Geng Lan.

9. Bank transaction records (remittances, bank statements, overseas remittances and etc.)
confirmed the fact that, in Dec 2006, US$100,000 had been remitted through cash transfer to
Geng Lans acoount.

10. Business license details confirmed that Zhongzhi Paper Ltd. was founded on 24 Jun, 2004
and changes its name to Zhongzhu Holdings Ltd. on 29 Sep, 2005.

11. Zhongchanjing Investment Ltds records related to the Heilong Holdings project confirmed
details in the participation of the accused Zhongzhi Ltd. in the restructuring of Heilong Holdings
in Nov 2004.

B. The fact of altering state authority documents:

On 1 Sep, 2000, Sichuan Provincial Government approval document titled Sichuan Provincial
Government Approval the Operation of Yaan Paper Mill by way of leasing to Shangha Zhongji
Energy Engineeringi (Sichuan Govt Letter No. 2000-264) approved Shanghai Zhongji Energy
Engineering, with Ni A as legal representative, to lease and operate Yaan Paper for a period of
20 years. Through capital operation means such as setting up new companies and share
acquisition and swapping, the operation and management of Yaan Paper had eventually be
transferred to Yaan Zhongzhu Paper Ltd. (est: 27 Mar, 2000; registered capital 120 million
yuan; Ni A as legal representative). In 2001, Ni A intended to set up in Shanghai Zhongchanjing
Investment with the assets of Yaan Paper as investment in kind and assigned then assistant
general manager of Shanghai Zhongji Energy Engineering Fan A (now sentenced) to take
responsibility for establishment of the new company. Since leased assets could not be used as
capital in kind, Ni A, Fan A and then financial manager Chen A (sentenced) of Shanghai Zhongji
deliberated to alter the original provincial leasing approval (Sichuan Govt Letter No. 2000-264)
by changing leasing to purchase, thereby using Yaan Papers assets as Yaan Zhongzhis
investment in kind. In late 2001, Chen A instructed then financial manager of Yaan Zhongzhu
Qiu A (sentenced) to alter the provincial approval document to a forged document approving
Shanghai Zhongjis buying of Yaan Paper Mill. Based on which, Shanghai Zhonghua Assets
Appraisal Ltd. issued, on 5 Nov, 2001, its appraisal report No. (2001)328 and appraised the
machinery of leased Yaan Paper Mill as assets owned by Yaan Zhongzhi Ltd. at a net value
of450 million yuan. On 12 Jan, 2002, Zhongchanjing Investment Ltd. was successfully registered
in Shanghai, with registered capital of 500 million yuan and Ni A as legal representative.

The abovementioned facts were submitted by procuratorate authorities and had been
verified to be true by the court to prove that:
1. Accused Ni A testified and affirmed that Yaan Paper was a leased operation and managed by
Yaan Zhongzhu Ltd. In about 2003, he decided to set up Zhongchanjin Investment Ltd. with 500
million yuan as registered capital and with 450 million yuan worth of investment in kind being
the production plants and machineries of Yaan Zhongzhu Ltd. Although consultation revealed
that leased assets could not be used for investment, Ni A discussed the matter with Fan A and
Chen A, and subsequently resorted to solve the problem by altering the Sichuan provincial
government approval document, changing the wording of leased to purchase so as to gain
the trust of commercial and industrial registration authorities for business registration. Upon
alteration by Fan A and Chen A, the approval document allowed Yaan Papers assets be
appraised and valued for the successful registration of Zhongchanjin Investment.

2. Accomplice Fan A testified and affirmed that he was assistant of general manager and
financial manager of Shanghai Zhongji Energy Engineering in 1998. Yaan Paper was leased to Ni
A in the name of Shanghai Zhongji Energy Engineering and operated and managed by Yaan
Zhongzhu. In 2001 Ni A planned to use the equipment of Yaan Paper as 450 million yuans
worth of investment in kind to establish Zhongchanjing Investment. Since Yaan Paper was a
leased business that could not be used as investment in kind, Ni A, Fan A and Chen A
collaborated to solve the ownership problem by assigning Chen A to alter the wording leased
in the approval document to purchase and submitted the altered document to the appraisal
company. Based on the forged document, the appraisal firm valuated the assets of Yaan Paper
at more than 500 million yuan for the eventual and successful registration of Zhongchanjing
Investment.

3. Accomplice Chen A testified and affirmed that, in the second half of 2001, Shanghai Zhongji
Energy Engineering had rented Yaan Paper for operation and later founded Yaan Zhongzhu to
run and manage it. In early 2002, Ni A planned to set up Zhongchanjing Investment and
intended to boost the appraisal value of Yaan Papers assets to 450 million yuan or more as
investment in kind to be injected into Zhongchanjing. Ni A and Fan A knew Yaan Paper was a
rented asset and could not be used for investment in kind and therefore assigned Qiu A to alter
the document and pass the same to Fan A for submission to an assets appraisal company.

4. Accomplice Qiu A testified and affirmed that in 2002, he was responsible for the finance of
Yaan Zhongzhu. He was instructed by Chen A and Fan A to alter wordings, from lease to
purchase, in the provincial approval document on the leasing of Yaan Paper, for [third party]
appraisal and audit. He then passed the altered approval document to Chen A.

5. Witness Tang, Feng A and Ji testified and affirmed that, in 2001, Shanghai Zhonghua Assets
Appraisal had conducted an appraisal of Yaan Paper, mainly by Ni Senkang. The appraisal was
based on the asset rights as stated in the Sichuan provincial government approval document of
Shanghai Zhongji Energy Engineerings purchase of Yaan Paper.

6. Witness Zhang B testified and affirmed that, in the second half of 2001, he and several
people of Zhonghua Appraisal company had inspected Yaan Paper on-site. He had provided an
asset inspection report based on the appraisal report and related bank transaction receipts.

7. Witness Ni Senkang testified and affirmed that, in 2001, he and Feng A, Feng B, Ji and Zhang
B of an accounting firm and others appraised the assets of Yaan Paper. He had issued an official
report for use by the client based on the government approval document, business license and
letter of commitment provided by Zhongzhu.

8. Sichuan provincial approval document (2000)264 and the altered version proved that the
original approval for Zhongji Energy Engineering to rent Yaan Paper had been altered to
Zhongji Energy Engineering to purchase Yaan Paper.

9. Sichuan Government office archive material confirmed that Sichuan provincial government
approved the leasing of Yaan Paper to Zhongji Energy Engineering.

10. Zhongchanjing Investments business files confirmed that Zhongchanjing Investment Ltd.
was registered on 12 Mar, 2002, with Hubei Zhongneng Economic Development Co. Ltd and
Zhejiang Zhongyuan Enterprise Investment Ltd. each contributing 50 million yuan in capital and
Yaan Zhongzhu investing 400 million yuan as investment in kind.

11. Appraisal report on part of the assets of Yaan Zhongzhu confirmed that, on 5 Nov, 2001,
Zhonghua Assets Appraisal firm had, based on the altered Sichuan government approval
document, provided a report that appraised the net value of part of Yaan Zhongzhis at about
450 million yuan.

12. Hejian City Peoples Court (2013) Criminal Judgment No. 249 confirmed that accomplices
Fan A, Chen A and Qiu A had already been sentenced correspondingly due to the crime of
altering state authority document.

Comprehensive evidence shows:

1. Hejian City Peoples procuratorate proceedings confirmed that the accused Ni A had
proactively confessed untold facts about his committing of the crime of bribing Lin A
US$110,000 and the crime of altering state authority document.

2. Personal identity registration confirmed that Ni A was born on 19 August, 1962.

This court deemed that the accused Zhongzhi Paper Ltd. had, for the sake of making illegitimate
benefits for the company, given then Qiqihar mayor of Heilongjiang Lin A US$110,000 (859,917
yuan). The behaviour of Ni A, as the companys direct official-in-charge, constituted the crime
of organizational bribery. Ni A had instructed Chen A, Fan A et al to alter an approval document
of the Sichuan Provincial Government to enable Zhongchanjing Investment Ltds entry to the
market and its subsequent and serious disruption of the order of social administration by
allowing the company to falsely claim its registered capital at 500 million yuan. The nature of
the case constituted the crime of altering state authority document. This court supported the
public prosecutions view that the accused were found guilty. Upon coercive measures, the
accused Ni A had confessed in truth crimes that were then unknown to judicial authorities. In
view of his confession, the court would effect mitigation and leniency. The court accepted the
defenses suggestion of light punishment for defendant Ni A and based on Ni As crime, its facts,
details, nature and the harm it did to the society, the court ruled, pursuant to Articles 393,
280(1), 25(1), 30, 31, 63(1), 67(2) and 69(1) of the Criminal Law of the PRC and, Article 2 of the
Supreme People's Courts legal explanation on the substantial application of handling
surrendered and merit cases, it was ruled that:

1. The accused entity Zhongzhi Paper Ltd. will be fine 800,000 yuan for organizational bribery
(the fine should be paid within 10 days after this judgment)

2. The accused Ni A has been found guilty for organizational bribery and sentenced to six
months in jail, and one year and ten months for the crime of altering state authority. The actual
jail term is 2 years.
(Jail terms will be calculated from the actual date of execution with the actual number of
detention days deducted and every two days of house detention counted and deducted as one
day in jail. Hence, a total of 90 jail days will be deducted from jail term starting 19 Jun, 2013 to
18 Mar, 2015.)

Objection against this judgment or appeal should be submitted either through this court or
directly to the Cangzhou Middle Peoples Court, Hebei, within 10 days after this Judgment.
Written appeals should be submitted in duplicate, with one original and one copy.

Chief Judge: Wei Hongfang

Judge: Ma Hui

Acting Judge: Sun Ning

Jan 20, 2015

Clerk: Liu Linwei