A Shanghai technology company’s human resources manager has been sentenced to over a decade in prison for masterminding a sophisticated payroll fraud scheme that siphoned millions of dollars by creating fictitious employees over nearly eight years. The case, highlighted in a recent White Paper on corporate crime by the Minhang District People’s Procuratorate, underscores vulnerabilities in internal financial oversight.

The scam unraveled in 2022 when finance staff at the unnamed firm noticed irregularities in payroll records. An employee listed as “Xiao Sun” had drawn a salary for six months with perfect attendance—yet no one in the company had ever encountered the individual. An internal probe revealed that Yang, the HR officer responsible for managing hires and payroll since 2014, had exploited lax oversight to invent 22 fake employees, including Xiao Sun and “Xiao Li,” and funnel their salaries into bank accounts he controlled.

Over the years, Yang embezzled approximately 16 million yuan (£1.7 million) through the scheme. His downfall began when suspicious finance staff flagged Xiao Sun’s absence from company records beyond payroll data. Confronted with evidence, Yang admitted to the fraud. Though he repaid 1.1 million yuan (£130,000) personally and his family contributed an additional 1.2 million yuan (£140,000), the recovered sum represented only a fraction of the stolen funds.

In a ruling by the Minhang District Court, Yang was sentenced to 10 years and 2 months in prison, stripped of political rights for one year, and fined for embezzlement. The case has sparked scrutiny of corporate financial controls, particularly in industries with high employee turnover.

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