The Christian community in Luoyang, in central China, is a house divided. The fight centers around Zhang, who, his critics charge, used his position to allegedly embezzle church funds and dabble in questionable real-estate deals. Most of the 30,000 Christians in Luoyang want Zhang out of his church. But Zhang, the former head of the city’s officially sanctioned church organization, is still preaching. Officials continue to protect him, even though the church organization was sued four times during his tenure.

The tale of Luoyang’s church highlights Beijing’s delicate handling of religious freedom. The government is cracking down on spiritual movements that might rival the Communist Party’s authority; just last week police detained scores of followers of the Falun Gong spiritual movement who showed up at Tiananmen Square to commemorate the anniversary of a sit-in. At the same time, Beijing has permitted the official Christian church to blossom. The party, through the Three Self Patriotic Movement, still indirectly controls all registered churches. Any churches that don’t register are illegal–part of an underground Christian movement that rejects official controls. Three Self officials are entrusted by the government to manage church affairs. Autocratic church leadership often leads to property disputes and–in the worst cases–corruption. Church leaders “are working hand in glove with the authorities,” says Mark Jacobs of Washington, D.C.-based International Christian Concern, which questions the legitimacy of the official church. “With this type of relationship, [church] leaders are easily compromised. Some less-ingenuous pastors can become just like the authorities they work with–very corrupt.”

Property disputes have erupted in many churches all across China. Last May, for example, when Christians in downtown Xian discovered that church leaders had sold their church out from under them to build a bigger one in the suburbs, hundreds occupied the building to prevent its destruction. They failed. Some disputes are simple misunderstandings between congregations and well-intentioned ministers who make bad property investments and end up losing church lands and buildings. “Sometimes the ministers don’t know the law,” says Kim-kwong Chan, a religious scholar in Hong Kong. “They’re just naive.” Other property disputes involve crooked church officials. In some cases, parishioners become so frustrated that they abandon the sanctioned Church entirely and join illegal churches.

Zhang’s motives seemed pure when he helped reopen Luoyang’s first church in the early 1980s and became an ordained minister shortly thereafter. But things changed in 1992, after Zhang, a factory worker’s son, was promoted to chairman of the city’s official church organization. As chairman, he had authority to cut property deals on behalf of all the churches in Luoyang. Court records show Zhang signed off on multiple deals for the association to build and sell residential apartment buildings and took out a $225,000 church loan by putting up church property as collateral. The deals went sour, and the church association was sued four times for not paying back the money.

Shocked and angry, Luoyang’s Christians fought back. They lobbied church and government leaders to get rid of Zhang. They dug up old records and found that Zhang had served time for embezzlement in 1964. Asked about his police record, Zhang refused to comment. In 1998, after the church had lost its first court case, Zhang stepped down as the city’s church leader. Following the second property case, more than a square kilometer of the church’s land was repossessed and its bank account was frozen. Hundreds of enraged churchgoers protested the loss by blocking the doors to the Communist Party headquarters. The pressure finally paid off: Last May the Luoyang Three Self church sent a document to provincial authorities demanding that they defrock Zhang and “purify the church of Luoyang.” In July, the government revoked Zhang’s status as minister, but he refuses to stop preaching. He says the order is bogus. “If [any of these allegations] were true, would I still be here? Those people are slandering me,” Zhang told NEWSWEEK. “They’re violating my human rights. I could sue them, but God has told me not to.”

Zhang seems to live a simple life; his apartment has no luxurious furnishings. But critics say he procured a state car and liked to wine and dine religious officials. Though Zhang spearheaded a citywide fund-raising campaign, they say he hogged all the money for his own church. His church flourished; others limped along with no funds for even simple repairs. Ma Jingyong, head of the Religious Affairs Bureau, the government agency that oversees the Three-Self church, defends Zhang. “Zhang was only involved in a real-estate dispute, not corruption,” he says. The parishioners of Zhang’s church support their minister, too. “Don’t believe what others tell you,” says Yao Suyun, a fifth-generation Christian. “He’s not corrupt at all. His house is bare as a bone. Why, the only thing he ate on Chinese New Year was salty pickles.”

In some ways, the struggle against Zhang is a credit to China’s nascent civil society. The scandal–which is about alleged crooked deals, not religious repression–epitomizes China’s halting moves toward rule of law and accountability. Citizens–such as the Christians of the Luoyang church–are becoming more vocal about their rights, and the government is starting to listen. The Luoyang fight, meanwhile, goes on: Zhang is still preaching. There is little hope that the land the church lost will be returned. Churchgoers eye each other with distrust and bicker about what to do next. They have won the freedom to worship, but they are still struggling to put their own house in order. Reuniting their divided church may turn out to be the hardest struggle of all.