The former director of the Guangdong Department of Science and Technology was dismissed. Qinshang Optoelectronics was accused of bribing 350,000 original shares.

On the morning of the 8th, Li Xinghua, the former director of the Guangdong Provincial Department of Science and Technology, was suspected of accepting bribes and was heard in the Shenzhen Intermediate People's Court. The prosecutor's office alleged that Li Xinghua was suspected of accepting bribes from multiple technology companies to provide "dry shares" worth more than 21.6 million yuan, and was suspected of accepting 19.91 million yuan, 1.1 million Hong Kong dollars and 30,000 US dollars, including many CEOs of listed companies. In return, Li Xinghua approved more than 270 million yuan in scientific and technological support funds for them.

The indictment shows that the value of the "stem shares" bribed to Li Xinghua by these eight companies was at least 21.6 million yuan. In addition to Guangzhou Huahai Pharmaceutical Co., Ltd., seven other companies have received scientific research support funds ranging from millions to tens of millions under the "care" of Li Xinghua.

Many of these bribery companies are listed companies. The procuratorate found that Li Xinghua had accepted 350,000 shares of Qinshang Optoelectronics Co., Ltd. (8.4 million yuan based on the IPO issue price), 33.3% of the dry shares of Guangdong Jingzhan Energy Saving Company (equivalent to 3.5 million yuan) and 700,000 yuan in cash as bribes from Li Xuliang, chairman of Dongguan Qinshang Optoelectronics Co., Ltd. Li Xinghua not only "named and affirmed" Qinshang Optoelectronics Company many times at science and technology system meetings and public occasions, but also reviewed and approved multiple technology support projects applied by the company at the party group meeting, helping the company obtain support funds of 42.45 million yuan.

After this company went public, it gave all original shareholders a 10-for-10 allotment discount. Therefore, Li Xinghua’s actual shares became 700,000 shares, totaling 16.8 million yuan based on the IPO issue price. At the end of 2012, after the original stock trading ban was lifted, Li Xinghua sold the shares and received more than 5 million yuan.

"Enterprises, especially high-tech enterprises in their early stage, all hope to receive financial support, policy support and information guidance from the Department of Science and Technology." Li Xinghua said frankly during the interrogation, "The most common bribery method used by the bosses of such companies is to give dry shares to leaders of the Department of Science and Technology. This can be used to bind interests, obtain long-term support and care, and make the company bigger without having to pay the price immediately."

However, do companies that gain the favor of technology system leaders by giving away gift money and "stem stocks" really achieve innovation with the help of support? Qinshang Optoelectronics has been plagued by negative news since its listing. On May 12 last year, due to issues such as false statements, Li Xuliang, Huang Guanzhi, Zhu Bingzhong and other senior executives were given "warnings" by the China Securities Regulatory Commission, and were also given fines ranging from 50,000 to 200,000 yuan.

In June 2014, four senior executives, including Li Xuliang, chairman of Qinshang Optoelectronics, resigned at the same time, causing a shock in the industry. In December 2014, Qinshang Optoelectronics disclosed in the "Informative Announcement that Stocks Exist in Delisting Risk Warnings and Listing Suspension Risks" that the company was being investigated by the China Securities Regulatory Commission for suspected violations of information disclosure laws and regulations.