Putian Group chairman arrested

Ouyang Zhongmou is suspected by investigators of fraud involving about $937 million at CEIEC

Investigators have arrested the chairman of a major state IT company on suspicion of fraud involving nearly one billion yuan (HK$937 million) just after it cleared the first hurdle towards an overseas listing, an official newspaper reported yesterday.

Ouyang Zhongmou, 60, is chairman of the Putian Group, a vast and sprawling state company, whose assets included 16 factories, five listed companies, more than 10 directly owned subsidiaries and 20 joint ventures, with partners such as Nokia and Matsushita, the Economic Observer said.

Since he took over as chairman in May 2000, Mr Ouyang has aimed at listing the group abroad and on June 28 received approval from the State Assets Management Commission (SAMC) to set up China Putian Shareholding, the listing vehicle, which he wanted to take to market in the fourth quarter.

The crimes for which Mr Ouyang is being investigated relate to the period from 1987 to 1995 when he was general manager of China Electronics Import and Export Corporation (CEIEC).

In a report to the standing committee of the National People's Congress on June 25, Auditor-General Li Jinhua said that 984 million yuan was found to be missing from the CEIEC.

Between October 1994 and February 1995, the firm illegally provided guarantees to a Beijing and Shandong company for non-existent trade transactions, for which state banks transferred offshore the equivalent of 776 million yuan. All has been lost.