Chinese officials jailed for leaking economic data

[October 24, 2011]  BEIJING (AP) -- Two Chinese officials have been jailed for leaking key economic data that can move global financial markets, in a breach that triggered a government crackdown to tighten secrecy, officials said Monday.

The leaks were an embarrassment for Beijing, which treats an unusually wide array of economic data as secret and is struggling to prevent official misuse of it amid intense interest in the world's second-largest economy. Businesspeople and others have been jailed under state secrets laws for obtaining or disclosing commercial information that is considered public or only trade secrets elsewhere.

The two officials from the central bank and China's statistics agency were convicted of giving stock brokerage employees details of nine indicators including inflation, economic growth and retail sales before their official release over an 18-month period ending in January 2011, said a prosecutor, Li Zhongcheng.

Such data on China's booming economy are watched closely by global investors and can cause swings in stock and bond prices when they are announced, allowing people with advance knowledge to profit.

"They have caused huge losses to the interests of the economy, the nation and the people," said Li at a news conference.

Other governments also tightly control inflation and other economic data ahead of their release. But China extends its highest security to a wider range of information that most other governments -- from sales by steel mills to possible changes in gold prices to geological data. That has made enforcement more difficult as the number of agencies and companies that handle information grows.

Last year, a Chinese-born American geologist, Xue Feng, was sentenced to eight years in prison on charges of obtaining state secrets after he bought a database with information about oil and gas wells that belong to China's two biggest state-owned energy companies.

Xue, who worked for consulting firm IHS Inc., and his lawyer argued such information is commercially available in other countries. They said the database was advertised for sale before he purchased it and was declared classified only after he was detained.

In the latest case, the leaks prompted China's Cabinet to order an investigation of security at 21 government agencies that handle secrets, said Du Yongsheng, deputy director of the National Administration for the Protection of State Secrets.

Several agencies were ordered to tighten security and some administrators were punished after investigators found gaps in their secrecy measures, said Du. Li said the government will conduct education campaigns for government employees to make sure they understand their duties under the secrecy law.

The firing of the two officials was reported in June by Chinese state media but Monday's announcement was the first time the names and details of the cases were released.

In July, the National Statistics Bureau said it would start releasing monthly economic figures as soon as they were compiled, to prevent leaks.

The two jailed officials profited by trading stocks based on the leaked information and also received payoffs in the form of fees for delivering lectures at brokerage events, Du said. He gave no details of how much money they made.

Sun Zhen, former deputy director of the secretary's office at the National Bureau of Statistics, was sentenced to five years for disclosing 27 items of data from June 2009 to January 2011, according to Li. He said that included 14 items deemed "classified," one of the highest secrecy levels.

Wu Chaoming, former deputy director of the financial history research office at China's central bank, was sentenced to six years for leaking a total of 25 items of data on 224 occasions between January and June 2010, Li said. He said they were "confidential," a lower level of classification.

The leaks damaged government credibility and China's economy by disrupting fair market competition, Du said, without giving details.

"The economic performance of our country is affected," he said. "After the economic data are released, usually we can see abnormal fluctuations in the stock markets. Behind that there is something unfair going on."

Four other suspects who work in the securities industry are under investigation, according to Li. Du did not respond to a reporter's request for the names of the brokerages but said he expected prosecutors to investigate their possible legal responsibility.

Du defended the prosecution of Xue, saying authorities in charge of state secrets verified before the trial that the data were deemed classified, though he did not respond to a question about the date that status took effect.

"I believe their verification was objective and accurate," Du said.

The official also cautioned foreign reporters at the briefing that they too were bound by Chinese secrecy laws.

"If accidentally you have access to such information, my advice for you is don't touch it and promptly report it to the relevant authorities," he said.

[Associated Press; By JOE McDONALD]

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