Shanghai Electric probes fraud claim

Power equipment maker investigates allegations of fund misappropriation

Shanghai Electric Group, one of China's largest maker of power generation equipment, is investigating allegations that one of its executive directors has misappropriated corporate funds and a non-executive director has illicitly borrowed 3.2 billion yuan to invest in a toll-road project.

Executive director Han Guozhang, 57, was detained on August 1 for investigation by the Communist Party's Central Disciplinary Committee, according to a memo from Hong Kong-based Information Centre for Human Rights and Democracy.

The centre, known for exposing human rights violations in China and central government investigations into economic crime, quoted an unnamed source as saying Mr Han had allegedly illegally siphoned funds from the company's employee insurance scheme. The memo did not indicate the value of funds involved.

A Shanghai Electric spokesperson said it was investigating the allegations, adding it should not affect the company as Mr Han was not responsible for its day-to-day operations.

'Shanghai Electric has not disclosed this information about Mr Han according to Hong Kong law,' the centre said. Listing rules state that companies are required to disclose price-sensitive information in a timely manner.