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Shares hit after reports of link to Huang probe

CHINESE property group Hopson Development Holding Ltd dropped 27.39 percent in Hong Kong trading on Friday after reports that its chairman, Zhu Mengyi, 50, had been told not to leave China's mainland by police investigating the alleged economic crimes of former Gome Chairman Huang Guangyu.

Shares tumbled as much as 50 percent during trading but closed at HK$3.50 (45 US cents) on Friday, down 27.39 percent, after a stock exchange statement that day saying that the reports in Hong Kong-based Apple Daily lacked evidence. Turnover reached US$600 million.

In the statement, the company did not reveal any other details or say whether Zhu was still in charge.

Financial crimes

Radio France Internationale reported that Zhu was told not to leave the country during Chinese New Year and was under investigation in Dongguan, Guangdong Province.

According to its report, the police discovered clues pointing to Zhu's involvement when they were investigating Zheng Shaodong, assistant to the minister of public security and director of the ministry's economic criminal investigation bureau.

Zheng was detained for allegedly accepting bribes while probing financial crimes and was linked to an investigation, which involved Huang, into money laundering through gambling.

Huang, named the second-richest man on China's mainland by Forbes magazine last year, faces charges of manipulating the prices of shares in two firms, Shanghai-listed Sanlian Commercial Co and Shenzhen-listed Beijing Centergate Technologies Co, China's securities watchdog said in November.

Hopson Development executives told the Beijing Times on Friday that day-to-day business at its Beijing headquarters had not been affected by the latest reports but refused to say when they last saw Zhu.

The Times also cited an unnamed source as saying a Hopson Development employee said Zhu had not shown up after the Spring Festival.

Zhu and Huang are both from Guangdong Province.

Guanghuang Tiancheng Investment Co, whose chairman is Zhu's elder brother Zhu Layi, attained 9.02 percent shares of Sanlian Commercial Co in 2008.

The Beijing Times reported analysts as saying Gome was striving for control of Sanlian before Zhu Layi bought the shares in what was probably a bid to help Gome take control.

Electronics retailer Gome is the largest shareholder of Sanlian and Huang was then chairman, but he was stripped of executive duties last December and resigned from the board.

The Zhu brothers were ranked 10th richest on the Chinese mainland by Hurun, China's rich list compilers, in 2008 with assets estimated at 20 billion yuan (US$2.92 billion).




 

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