The boss of China's privately owned East Star Airlines has been found guilty of tax evasion and sentenced to four years in jail.
The Wuhan Intermediate People's Court found Lan Shili, a board director and the controller of Wuhan-based East Star, guilty of the charge when he ordered his staff to hide more than 500 million yuan (US$73.28 million) of revenue to avoid paying 50 million yuan in taxes.
East Star was set up in December 2005 and owed the tax bureau in Wuhan's Huangpi District, where East Star is headquartered, between May 2006 and February 2009. The tax bureau had urged the company to pay up several times but East Star always rebuffed the bureau, citing a shortage of funds.
The bureau then applied to the district court for a compulsory seizure of 38 million yuan from East Star's accounts but it was unsuccessful in its effort, which led the intermediate court finding Lan guilty of the tax evasion charge last Friday.
Lan was named by Forbes as the 97th richest person on the Chinese mainland with assets worth 2.4 billion yuan in 2006.
The debt-laden East Star flew into bankruptcy in August 2009 and its application for restructuring was rejected by the Wuhan intermediate court on August 27.
East Star was China's fourth private carrier after Okay Airways, United Eagle Airlines and Spring Airlines. It flew more than 20 domestic routes linking key cities with a fleet of nine aircraft and held about 10 percent of the market in Wuhan.
The airline, with a registered capital of 80 million yuan, was jointly owned by a tourist agency, a tourist investment company and a real estate firm, which all belonged to the East Star Group.
On March 13 last year, the airline rejected a government-initiated take-over by the parent group of Air China.
