Han Fanghe, the general manager of Shanghai-based Huaan Fund Management, the mainland's second-largest fund house, has been detained for personal violations of rules during the weekend, according to a company source. 'It is not officially confirmed whether his arrest is related with the misuse of the pension fund, but there is a big chance,' the source said. Shanghai's business and financial community has been shaken by a widening pension fund scandal that has in the past two months netted the city's top official, Communist Party secretary Chen Liangyu, and Zhu Junyi, the director of the municipal Labour and Social Security Bureau, and Zhang Rongkun, the country's 16th-richest man. They allegedly were involved in the illegal use of the city's more than 11 billion yuan corporate annuity. Several other executives in the city's banking, fund management and brokerage industries have also been detained in recent days in relation to the pension probe, according to Reuters. In addition to being detained and placed under investigation, Han was removed from his position leading the firm, which has more than 45 billion yuan under management and last month became the first to be allowed to invest overseas on behalf of local clients. Set up in 1998, Huaan is equally owned by the five Shanghai institutions, including one that is a subsidiary of the Zhang-controlled Fuxi Investment. The other four shareholders are city government-owned - Shanghai International Trust & Development, Shanghai SVA Group, Shanghai Industrial Investment, and Shanghai Electric, which itself has been embroiled in the scandal. '[The arrest of Han] will not have a big compact on the company, as the firm has a heavily regulated process on its day-to-day management,' the source said. The company, which declined to comment, has yet to nominate a new general manager. Last month, it received approval to sell the first qualified domestic institutional investors products to local investors. By October 13, it had received more than US$100 million in subscriptions. Huaan is expected to publish an announcement on Han's arrest today, while the board issues a letter in support of the company's continued operations.
