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Executives on trial on fraud charges

    Executives at a debt-stricken firm accused of cheating investors out of 100 million yuan (US$15.3 million) stood trial yesterday at Shanghai No. 1 Intermediate People’s Court.

    Prosecutors said that due to lack of operating capital, Lu Wenxuan, Lu Hanwang and Lu Huaguang of Zhonghengtong (Fujian) Machinery Manufacturing Co, a company based in southeast China's Fujian Province, decided to issue bonds to raise funds.

    All three conspired with an auditor to make a false financial report for the year 2013, in which the firm’s revenues were exaggerated to 513 million yuan and its debts of 20.25 million yuan eliminated.

    As a result, Zhonghengtong was allowed by the Shanghai Stock Exchange to issue private bonds in 2014. Two banks, whose names were not disclosed, and an individual surnamed Che bought bonds worth a total of 100 million yuan, prosecutors told the court.

    In 2016, the bonds reached maturity, but the firm was unable to pay, prosecutors said.

    The court has not issued a verdict.

    Zhonghengtong, founded in 2008, has been undergoing a court-ordered bankruptcy restructuring since September 2016. It is currently under the management of Fujian-based law firm Tenet and Partners, which is seeking new investors from the public.