THE trial of former Shanghai Party secretary Chen Liangyu has begun, his lawyer said Wednesday, in one of the mainland's most high-profile corruption cases.

"Chen Liangyu's case went to trial Tuesday, but there was no verdict. I don't know when there will be a judgment," his lawyer, Gao Zicheng , said.

Authorities removed Chen from his position as Shanghai Party chief in September 2006 and expelled him from the Party in July last year for his alleged role in embezzling social security funds.

Gao said Chen was in good spirits, following rumors Chen was suffering from psychological problems. "Chen's mental state is very good," he said, but declined to give further details about the trial.

Tianjin No. 2 Intermediate People's Court, where the trial is being held, declined to comment.

There is speculation the Supreme People's Court chose the venue for its proximity to Beijing, where Chen is being held, and to avoid Shanghai, where he might still have political influence.

More than 20.1 billion of the nearly 33 billion yuan ($4.68 billion) misappropriated from Shanghai's social security fund was invested in the property sector, the 21st Century Business Herald Wednesday quoted the National Audit Office as saying.

A report released by the office concluded an 18-month investigation into the scandal, for which Shanghai's former Party chief Chen Liangyu has been arrested.

The embezzlement was first uncovered in June 2006. At first, it was thought the misused funds totaled 3.4 billion yuan, but Wednesday's report by the Herald said the amount was 32.9 billion yuan.

The money was loaned to various companies, including Shanghai-based Bailian Group and Feidian Investment, which invested it mainly in property and highways.

The investments took place despite central government policy issuances from 2003 aimed at controlling soaring property prices.

As of June 2006, 44 real estate companies had received 20.1 billion yuan from the misused fund, the report said.

Most of the misused money was loaned to property developers from 2002, when the boom in the Shanghai property market began.

Some of it was invested in lavish villas, shopping malls and office complexes in Capital Square at Shanghai's People Square, and Shanghai Tomorrow Square on East Nanjing Road, the report said.

In July 2006, about a month after the scandal was uncovered, 25.5 billion yuan had not been paid back. As of April last year, 8.77 billion yuan was still outstanding, it said.

The scandal has since led to the arrest of more than 20 senior officials and State-owned company heads in the Shanghai.

(SD-Agencies)