Chief's arrest knocks New Huangpu shares

PUBLISHED : Thursday, 07 September, 2006, 12:00am
UPDATED : Thursday, 07 September, 2006, 12:00am

Shares of Shanghai-listed New Huangpu Real Estate, one of the city's largest property developers, fell 2.33 per cent amid reports that the head of its major shareholder was arrested for alleged rule violation in a share sale and involvement in a widening scandal related to the city's pension fund.

The stock shed 12 fen to close at 5.02 yuan yesterday. It fell as much as 4.5 per cent in the morning.

Wu Minglie, president of New Huangpu Group, was arrested by the central government's supervision arm on September 1 for allegedly breaching rules during the sale New Huangpu Real Estate shares, the Caijing Magazine said. New Huangpu is the third-largest shareholder of the listed firm.

The Shanghai Securities News also reported Mr Wu might be involved in illegal use of the city's pension fund that had brought several prominent businessmen and officials under investigation.

New Huangpu Real Estate said it would issue an announcement regarding Mr Wu's arrest but declined to give details. A spokesman for the Shanghai government and Huangpu district government said they were not aware of the arrest.

The Shanghai government's pension fund management arm is suing two companies controlled by Zhang Rongkun, Shanghai Electric Group's former director, to recover about 3.45 billion yuan.

The scandal is widely believed to be connected to corruption investigations of several senior officials and businessmen in Shanghai, including Qin Yu, the head of Baoshan district; Zhu Junyi, head of the city's Labour and Social Security Bureau; and two directors of the listed Shanghai Electric Group.

Mr Wu, 57, former chairman of New Huangpu Real Estate, was also involved in a deal to sell the 102 million state-owned shares or 18.2 per cent of the firm to a Shanghai investment unit of People's Daily.

The share transfer was completed in April this year. Mr Wu quit as chairman in the same month to become vice-president of the People's Daily unit and president of New Huangpu Group.

New Huangpu Group, jointly owned by People's Daily and the Huangpu district government, is in charge of rebuilding many old properties in the city, including the famous Waitanyan project covering 17.06 hectares. The Rockefeller International Group is a partner in the first phase of the US$250 million project.