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The fugitive former chairman of listed stationery company Climax International has been arrested in the United States for embezzlement in Hong Kong and faces deportation.

Kenneth Fung Kin-yuen is alleged to have embezzled millions of dollars from Climax four years ago.

Fung, also known as Kenneth Fung Chi-keung, was traced by American authorities to his apartment in Cambridge, Massachusetts, on Friday.

A spokesman at the US Attorney's office, Samantha Martin, said he was arrested on the grounds of Harvard University and ordered detained by a US judge at Hong Kong's request.

Ms Martin said Fung had been attending a postgraduate course in business and public relations. He remains in custody pending an extradition hearing on Wednesday.

Assistant US Attorney Victor Wild said Fung had been charged in Hong Kong with stealing more than HK$26 million from Climax International Company Limited.

At a court hearing on Friday, prosecutors said Fung illegally diverted 12 company cheques and engaged in illegal accounting practices to try to conceal his scheme.

He is charged with 12 counts of theft and seven counts of falsifying accounting records. If convicted, Fung could face up to 10 years' jail on each count.

Fung, 34, has been wanted by the Commercial Crime Bureau since Climax complained in late 1998 about irregularities in its balance sheet.

They included an overvaluation by $88.49 million of semi-finished products, $48.25 million in non-existent transactions and $31.2 million of questionable cheques. The irregularities caused Climax to revise its 1997 year-end financial statements.

Fung, who holds a business degree from Columbia University, New York, and a master's in management science from Stanford, took over Climax in 1993 from his uncle, Fung Kwong-fat, in a board election he won by just one vote.

He was born in Hong Kong to a working-class family that came from the mainland in the 1950s. Fung Kwong-fat and his brother Kwong-yan, Kenneth Fung's father, established Climax in 1955. It went on to become a dominant force in stationery products in Asia.



Fugitive businessman held in US