China arrests five Fuxing private fund executives in fraud case

[SHANGHAI] Chinese authorities arrested five senior executives of Shanghai Fuxing Group, an embattled conglomerate that has missed billions of dollars in payments in one of the nation's most high-profile financial investigations.

The executives were charged with alleged fraud or illicitly taking public deposits, according to a statement posted on the official WeChat account of Shanghai's prosecutor. Meanwhile, police investigating the firm uncovered a funding "black hole" of more than 20 billion yuan (S$4 billion), Caixin reported.

A previously used general line to the company's office was disconnected and its website is no longer accessible.

Fuxing Group's chairman Zhu Yidong fled the country last year as investors protested their losses. He was arrested overseas soon after and escorted back to China on charges of manipulating stocks and other economic crimes.

Officials at Fuxing Group and Li Weiwei, the controlling shareholder of a separate Beijing-based asset management company, used more than 400 individual and institutional accounts to manipulate the price of Dalian Insulator Group, the China Securities Regulatory Commission said in July. The Shanghai prosecutor said in September that it arrested eight Fuxing Group executives including Zhu.

Fuxing Group, which called itself a conglomerate on its website, said it operates in multiple industries including commercial real-estate, asset management, finance and rare metals.

BLOOMBERG