China state media announce confessions in stock market investigations

31 Aug 2015 | Author: | No comments yet »

China Cracks Down on Alleged Stock Market Irregularities.

Chinese state media announced a slew of confessions on Monday following investigations into dramatic stock market fluctuations, including from a reporter who said he had spread false information that had caused “panic and disorder”. In footage broadcast Monday morning on CCTV, China’s state broadcaster, a weary-looking Wang said he obtained information about China’s securities regulator “through private channels” and then added his “own subjective judgment” to the report. “During a sensitive period, I should not have published a report which had such a huge negative impact,” he said.A journalist from one of China’s leading financial magazines has been paraded on state television to make an on-air “confession” for supposedly triggering stock market chaos with his reporting.Beijing: China’s main state broadcaster on Monday paraded a financial journalist “confessing” to causing the stock market “great losses” as authorities seek to rein in a rout on the exchanges. An official from China’s securities regulator, and four senior executives from China’s largest brokerage, CITIC Securities , confessed to insider dealing, the official Xinhua news agency reported.

The high-profile — and deeply problematic — forced apology came amid a broader crackdown as Chinese authorities struggle to cope with the fallout from the Tianjin blasts and the ongoing stock crisis. Wang Xiaolu, a journalist with the respected business magazine Caijing, was held after writing a story in July saying the securities regulator was studying plans for government funds to exit the market.

Their appearance came hours after a midnight announcement that both men and four executives of the brokerage, including managing director Xu Gang, were being formally held. China is trying to restore value to its stock markets, where shares have lost around 40 per cent since mid-June on concerns over the slowing economy and a devaluation of the yuan in mid-August. The authorities appear to have obtained hard evidence alleging the involvement of four securities executives – Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie of Citic Securities – in insider-trading, as well as bribe-taking and forging official seals by the regulatory official, the professor said.

Weeks of stock market turmoil have sent political shockwaves coursing through Beijing, with some now openly questioning the future of the prime minister, Li Keqiang, and others attacking President Xi Jinping’s botched handling of the financial debacle. “I shouldn’t have published the report at such a sensitive time, especially when it could have great adverse impact on the market,” he said. “I shouldn’t have caused our country and shareholders such great losses just for the sake of sensationalism and eye-catchiness. “I’m regretful of what I have done and am willing to confess my crime. Beijing has launched interventions on a grand scale to try — with little success — to shore up plunging share prices after a debt-fuelled bubble burst in June. The six people, plus another four Citic Securities executives and a former staff of the China Securities Regulatory Commission (CSRC), the market watchdog, were “assisting police in their investigation” into a suspected insider trading case last week. Since an epic stock boom went bust this summer, China’s government has struggled to contain the crisis, ordering the press to downplay the story, and periodically singling out scapegoats, from hostile foreign forces, to “malicious” short-sellers, to the U.S.

Among a number of measures, authorities have cracked down on the fabrication of trading information, alleged malicious short selling and other strategies seen as hampering a recovery. Britain’s Financial Times reported at the weekend that China had decided to stop buying shares in favour of intensifying a crackdown on those “destabilising” the market, although there was speculation as recently as last Thursday that government funds were acquiring stock. The commission denied the report the next day, but it was convinced Wang’s report had triggered investor panic, which led to the stock markets’ 23 percent decline that week. In the ministry statement, Wang is reported to have said he wrote the story based on hearsay and his own speculations without having had or verified the facts.

The journalist was suspected of “colluding with others and fabricating and spreading fake information on securities and futures market,” Xinhua reported. Professor Rui said he believes the journalist, whom he said showed poor professional judgment in not fact-checking sensitive information, should be cleared of insider-trading. In a statement last Wednesday, a day after Xinhua said Wang was being held, Caijing said it had not been given a reason for his detention, adding it would support his actions within the normal course of reporting. China has unleashed an unprecedented package of support measures, including using state-backed entities to buy stocks and cracking down on “malicious” short-selling — when investors sell shares they do not own in anticipation of a fall in their price. In an article published on July 20 – soon after the government unleashed hundreds of billions of yuan to rescue the beleaguered market – Wang wrote that the CSRC was preparing an exit plan.

In another confession reported by the ministry, CSRC official Liu Shufan also admitted wrongdoings, apparently saying he had taken advantage of his position to pull strings for publicly traded companies and accepted bribes worth millions of Chinese yuan. Those made to broadcast such statements include Gao Yu, a veteran journalist jailed in April for leaking an internal Communist party document, Charles Xue, a venture capitalist and blogger, and Peter Humphrey, a British private investigator who was released from prison in June after nearly two years behind bars. Speaking earlier this month, Eva Pils, an expert in Chinese law from King’s College London, said so-called televised confessions were being used more and more against government critics including human rights activists, journalists and lawyers. “I have heard previously of people being forced to make statements in front of a camera without that later being shown,” Pils said. “But I think that now clearly … they have also tried to get these filmed confessions and to broadcast them. “The authorities want to use the television confession as a means of censorship,” said Qiao Mu, an outspoken journalist professor from Beijing’s Foreign Studies University. David Bandurski from the University of Hong Kong’s China Media Project told the Financial Times: “This isn’t about the factual nature of his reporting, it’s about the political impact. But no similar confessions have been made public. “Many have long expressed concern over whether China has followed due process in arrest and investigations.

In China high-profile criminal suspects are regularly paraded on television apparently confessing to their actions, in what rights lawyers say is a violation of criminal procedure. If the accused is coerced to make the confession, a fair trial is unlikely to be guaranteed,” said Zhang Qianfan, professor of Peking University Law School. A leaked government propaganda directive from July said: “Do not conduct in-depth analysis, and do not speculate on or assess the direction of the market.

Officials and state-backed media have sternly warned against rumor-mongering, spreading fear that could cause further panic on the country’s shaky stock markets. On Sunday, the brokerage said several senior managers had been asked to assist with a public security investigation and that the company was actively co-operating with the request. The Shanghai market closed down 0.82 percent on Monday, while Citic Securities dropped nearly five percent, in part because of the regulatory crackdown, dealers said. If not, no arrest should be made,” Zhang said, adding, “Even if rumors regarding the blasts in Tianjin were spread, the government shouldn’t have arrested anyone as long as it could find ways to correct them.” In the case of media reports, Xu Huiming, an associate professor of journalism at Guangzhou University, argued that news organizations should oversee the quality of stories reported by journalists and, thus, should be largely held legally liable unless they have fully met their oversight obligations. “While fulfilling reporting duties, no journalists should be held legally responsible alone even if the reporters are found to be lacking in professionalism.

The ministry of public security gave few details of the punishments involved in the campaign against online rumours, beyond saying that 165 social media accounts had been closed in the drive.

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