China corruption trial to build congress momentum

BEIJING, Sep 7 (Reuters) China will soon try officials and executives tied to a corruption scandal that felled the former Communist Party boss of Shanghai, turning their downfall into potent political theatre before a major congress, sources said.

The officials and businessmen are accused of sustaining a web of bribes and illicit loans centred on Chen Liangyu, the former Party secretary of Shanghai, who was sacked in September 2006 and now faces criminal investigation and likely conviction.

With his grip on China's financial centre, Chen had resisted the authority of President Hu Jintao, who is set to gain another five years as national Party chief and consolidate his authority at a congress opening in mid-October.

Three sources familiar with official communications on the case told Reuters that up to a dozen or more people accused of corruption linked to Chen were likely to be tried this month -- serving as a vivid warning that Hu wants wayward officials and potential rivals to fall into line before the Party conclave.

"Holding the trials will be a big reminder that Hu calls the shots now," said a lawyer following developments. "The ordinary people hate corruption, and this will also be a good warm-up for the Party congress." He and the other sources asked that their names not be used, fearing official recrimination.

The first trials expected later this month may be held in the northeastern province of Jilin, where the anti-corruption investigators who pursued many of the charges were plucked from, said one of the sources.

An official answering the phone at the Jilin Provincial People's Procuratorate told Reuters today that his office was in charge of prosecuting some of those involved in the case, but he had no details of any timetable.

The defendants are likely to include Shanghai and Beijing business executives accused of paying off Chen's staff and family members in return for easy or illegal loans from Shanghai's coffers, the sources said.

Chen himself would probably not be tried until after the congress, when the lesser trials would have cleared the way for his conviction, said two of the sources.

A Hong Kong newspaper under Beijing control, Wen Wei Po, reported last month that Chen had diverted 3.5 billion yuan (4 million) from city pension funds to lend to a crony's business.

Chen released another 1 billion yuan to another firm that in return gave his son, Chen Weili, well-paid top positions that needed no work. Chen kept two long-time mistresses, the paper said.

Central officials had laid the groundwork for obtaining a persuasive conviction against Chen by pushing through an expanded interpretation of what counts as corruption, one of the sources said.

The interpretation issued by the country's highest court and prosecution office in July says buying homes and cars at artificially low prices can count as bribe-taking. So can payments and other benefits to family or mistresses.

REUTERS ARB HS1034