The president of China Resources Power and a Shanxi tycoon, believed to be the biggest beneficiary of a controversial coal investment, have been detained by authorities.
CRP announced last night that Wang Yujun, 49, who is also the company's executive director, was under investigation by prosecutors in Jiangsu province.
The announcement came as sources revealed that Zhang Xinming - once the richest man in Shanxi with estimated assets valued at 4 billion yuan (HK$5 billion) - had been detained earlier this month. Zhang is the founder of Shanxi Jinye Coking Coal, the company at the centre of the controversial deal.
In 2012, CRP paid Zhang's company 7.9 billion yuan to buy three coal mines and related assets. Minority CRP shareholders last year launched a lawsuit against former and current CRP directors, including Song Lin, the disgraced former chairman of CRP's parent company, alleging that the mines were bought at an inflated price. The lawsuit was dropped in January.
Song was sacked in April and is under investigation for corruption.
"Zhang's detention is most definitely tied to the deal he has done with China Resources," said shareholder activist Li Jianjun, who accused Song of being the mastermind behind the controversial deal.
A second source, who is close to Zhang and spoke on condition of anonymity, echoed Li's claim.
"Song set off a chain reaction. Zhang thought he could buy his way out," the source said.
Both Li and the source said that Zhang was detained on August 4 in Taiyuan . They said many other people were also taken away for investigation.
"Another reason why the police detained him was because of his involvement in organised gang crime and money laundering," said Li.
Staff at Shanxi Jinye Coking Coal's human resources department said they were unclear about Zhang's schedule.
CRP said Wang, who was promoted to president in 2010, would be suspended pending the result of the investigation. He will remain as a director.
In May, Zhang told The Beijing News he was not close to Song and denied there was a problem with the coal acquisition. "There are always risks to dealing with cadres. But if you don't [deal with them] you can't get anything done," he said.