Former CSRC official's relative investigated

PUBLISHED : Tuesday, 09 June, 2009, 12:00am
UPDATED : Tuesday, 09 June, 2009, 12:00am

Xiao Yinan, the brother-in-law of Fan Fuchun, a former vice-chairman of the China Securities Regulatory Commission, is being investigated by mainland authorities for alleged embezzlement, sources said.

Mr Xiao, who was chairman of Shanghai Broadband Technology, is the second person related to the former securities regulator to be held by for investigation. Last week, the authorities began a probe of Fan Xiaowei, the son of Mr Fan, for violating stock market rules.

But sources said it was still unknown how severe the violations were and whether the senior Fan was involved in the scandal.

One source close to the CSRC said higher-level officials might be involved as the probe deepened.

Fan Xiaowei was executive director of Guotai Junan (Hong Kong).

The probe appears to be part of an intensified crackdown by Beijing on market irregularities, a move the government hopes will bring greater fairness and transparency.

Early this year, the government arrested Wang Yi, a vice-governor of China Development Bank and a CSRC vice-chairman in the 1990s, on bribery charges.

Last month, the authorities began investigating Xiao Shiqing, a former chief executive of China Galaxy Securities, and Lei Bo, Sinolink Securities chairman, after they were found to have played a role in the Wang scandal.

Market sources said Mr Wang and other securities officials took advantage of their positions, giving unqualified companies tickets to stock market listings in exchange for bribes.

In 2007, there were rumours that Mr Fan, then vice-chairman of the CSRC, was being investigated for taking bribes.

Mr Fan stepped down from the CSRC post earlier this year after he reached mandatory retirement age.

As thousands of companies scrambled to secure a listing, many executives lobbied the CSRC for early initial public offering approval, investment bank sources said.

'It all came down to whether you have a relationship with CSRC officials. You will get fast tickets to the stock market if there's somebody high up who can help you there,' an executive with a Beijing-based investment bank said.

Since the mainland launched the Shanghai Stock Exchange in 1990, the stock market has been rife with scandals, ranging from price manipulation and falsified earnings to embezzlement.