Shanghai Land Holdings' woes deepened yesterday as the locally listed flagship of mainland businessman Chau Ching-ngai revealed that two of its Shanghai subsidiaries had been involved in 'unorthodox loan transactions' worth 650 million yuan (HK$612 million). The amount in question represents about 25.9 per cent of Shanghai Land's unaudited net assets at the end of last year. Chau and Mo Yuk-ping - his wife and business partner - were also the subjects of a writ filed by broker Sun Hung Kai Investment Services, which is seeking to recover a $35.7 million loan guaranteed by them. Chau has been detained by mainland investigators, while Mo was arrested last week in Hong Kong by the Independent Commission Against Corruption (ICAC). The writ says the two failed to repay the loan principal plus interest of $736,438 despite repeated demands. 'The board ... considers that the recent reported arrest of Mr Chau, the investigation conducted by ICAC on Madam Mo and the two unorthodox loan transactions engaged by the subsidiaries constitute an obvious damaging risk to the business of the group,' Shanghai Land said in an announcement. According to the announcement, the questionable loans involved Shanghai Yihe Longbai Hotel and Shanghai Wang Xin Property. The company's board added that it was only informed of the problem loans on Friday 'by the management of the group'. News of the apparent irregularities came as receivers were being called in to run Shanghai Land. Kenneth Yeo Boon-ann, managing director of receiver Ernst & Young Transactions, said the two firms had borrowed money from Shanghai financial institutions and then lent on the proceeds to two other 'mainland entities'. Mr Yeo said he had the names of the borrowers, but had yet to establish if they were connected to Shanghai Land, Chau or Mo. Receivers are attempting to locate and recoup the money. 'An announcement will be made ... on new findings of these two unorthodox loan transactions,' Shanghai Land said. Shanghai Land's management has told Mr Yeo that as of April, the company had about $2 billion worth of assets and liabilities of less than $1 million. Privately held New Nongkai Global Investment, through which Chau controlled Shanghai Land, has already been put into receivership at the request of BOC Hong Kong (Holdings). On Friday, the bank confirmed that it had extended a $1.77 billion loan to New Nongkai, of which $741 million was still outstanding. The bank also said in a statement issued late last night that its former chief executive, Liu Jinbao, who was suddenly transferred back to Beijing, was the subject of a central government investigation into loans made by Bank of China's Shanghai branch. But the bank stopped short of connecting its unravelling scandal to that now enveloping Chau. According to mainland reports, Chau owes various Shanghai banks as much as 10 billion yuan, and his bank accounts there have been frozen. Shares in Shanghai Land and sister firm Shanghai Merchants Holdings have been suspended from trading since June 3.