A former top official with a Beijing-funded state firm in Hong Kong has been arrested and charged with corruption on the mainland, Xinhua said yesterday. Li Yaoqi, former president of Gang Ao International (Holding), was being held by state prosecutors. Gang Ao was an investment company set up by former Xinhua director Xu Jiatun in 1984. It was later taken over by the Bank of China when it failed to repay its debts. Mr Xu shocked Beijing leaders in 1990 when he defected to the US amid accusations that he sympathised with Beijing students demonstrating for democracy in 1989. Quoting information provided by the Central Commission for Discipline Inspection and the Ministry of Supervision, Xinhua said Li had been 'stripped of his party membership and sacked'. His case was being handled by the Judiciary, it said. The news agency claimed Li had personally embezzled 12.4 million yuan (HK$11.6 million) and $1.37 million, and misappropriated $4.9 million of public funds. He was also accused of colluding with other suspects and embezzling another 49 million yuan of public funds. Xinhua did not name the other suspects. The agency also said Li 'had committed serious mistakes when he was in his official position and was responsible for the company's serious losses'. 'He violated company rules and obtained bonuses issued by companies under his command,' Xinhua said. 'Moreover, he lived a decadent life and had kept a mistress.' An official in charge of the Central Commission for Discipline Inspection was quoted as saying that Li's case had 'created a bad influence'.