Prosecutors withdrew the testimony of a witness Thursday in the ongoing trial of Li Xuli, the fund manager appealing his conviction for trading illegally on inside information.
Shanghai Higher People's Court decided that it would not consider the testimony of Li's wife, Yuan Xuemei, due to a dispute about how it was obtained.
The testimony helped convict Li in his original trial on November 23 in Shanghai No.1 Intermediate People's Court, where the 40-year-old financier was sentenced to four years in prison and a fine of 18 million yuan ($2.93 million).
Prior to his legal troubles, Li had been the investment director at Bank of Communications Schroder Fund Management. He was charged with using information he had gleaned through his position to make investments for his own personal benefit - a practice known as "rat trading."
During his first trial, prosecutors accused him of asking the manager of a securities company in Shenzhen, Guangdong Province, to buy shares of China Construction Bank and Industrial and Commercial Bank of China on his behalf. The investments ended up earning Li 10 million yuan.
During Thursday's trial, Li's attorney, Zhou Ze, a partner at the Beijing Wentian Law Firm, said that police coerced his client into confessing to the crime and engineering his wife's testimony.
Li gave notes to his wife so she could testify against him in court because investigators persuaded him that doing so would earn him a lenient sentence and prevent his wife from being charged, Zhou said. Li was afraid that there would be no one to take care of his child if his wife was prosecuted.
At Thursday's trial, Li admitted to giving false statements, which his lawyer said was done at the behest of investigators. "The reason why the records of his accounts were so contradictory was because investigators coerced him into pleading guilty," Zhou said in court.
However, police officers said in court that they abided by the rules during the investigation. Although the court supported the prosecution's decision to drop Yuan's testimony, the judge pointed out that there was no evidence showing that Li had been coerced.
Li also testified Thursday that he did not know Li Zhijun, the manager of the Shenzhen securities firm. "My wife kept in touch with him, but I never talked to him in person," Li said when answering the prosecutor's questions.
Without Yuan's testimony, Li's attorney argued that there was no direct evidence to show that Li spoke to Li Zhijin about purchasing the shares.
The court did not come to a verdict Thursday as the trial was ongoing.
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