Zhongshan mayor's arrest linked to insider trading

PUBLISHED : Wednesday, 02 June, 2010, 12:00am
UPDATED : Wednesday, 02 June, 2010, 12:00am

The mayor of Zhongshan, the first top official to be the subject of a graft investigation since it became a city in 1984, is allegedly involved in both insider trading of a listed state-owned enterprise, and property speculation, mainland media reported yesterday.

The outspoken Caixin Online (www.caing.com) reported yesterday that Mayor Li Qihong , who was taken away by the Communist Party's anti-graft investigator, was allegedly involved in insider trading of the Zhongshan Public Utilities Group, the trading of which was suspended on Monday a few hours after the announcement that she was under investigation.

The website quoted unnamed sources as saying that more than 10 others were detained besides Li, including the mayor's husband, her younger brother, younger sister and younger sister-in-law.

'Li was formally informed by a party vice-secretary from the Guangdong Commission for Discipline Inspection on Sunday that central party disciplinary authorities had arrived in Guangdong, and she was soon taken away by those who flew from Beijing,' the report said.

The city government mouthpiece, the Zhongshan Daily, did not report on Li's detention on Monday, according to China News Service.

On Sunday, the newspaper reported on an industrial inspection in the city in which she accompanied Guangdong vice-governor Zhu Xiaodan .

Guangdong party disciplinary authorities confirmed Li's detention on its website late on Sunday.

It said Li 'had been put under investigation for allegedly breaking economic discipline severely'.

A few hours later, the utilities group announced it was suspending its trading from Monday.

It said: 'The company received a notice from controlling-shareholder Zhongshan Zhonghui Investment Group on Sunday night, saying that the company has an important issue to be verified ... and would not resume share trading until the relevant issue was clear.'

The listed company, with assets of more than 5 billion yuan (HK$5.7 billion), covers public services in Zhongshan, including water and natural gas supply, sewage, wet markets, real estate development and investment. Zhongshan Zhonghui Investment Group is also a state-owned company, founded by the Zhongshan municipal party committee and city government in 2007.

Mainland media also reported that Li and her family were also allegedly involved in property market speculation.

On May 19, the Supreme People's Procuratorate and the Ministry of Public Security issued new rules to clarify prosecution standards for insider trading and the leaking of inside information.

Under the new rules, insiders who trade securities worth more than 500,000 yuan or benefit from insider trading worth more than 150,000 yuan will be prosecuted.