Police are investigating whether unauthorised foreign exchange deals that have cost Citic Pacific more than HK$18 billion involved criminal activity. A well-placed source close to the investigation told the Sunday Morning Post that the commercial crime bureau had begun examining the circumstances in which the unauthorised bets on the Australian dollar were made, and the reasons for a six-week delay in disclosing the potential losses. The source said the investigation into the Beijing-backed conglomerate was at an early stage and no individuals were being targeted. Investigators had been briefed by the Department of Justice about possible areas of criminality, including fraud, that should be examined, the source said. Police would neither confirm nor deny that an investigation was under way. Previously they had said no complaint had been received. Citic Pacific issued a brief statement last night in response to inquiries from the Sunday Morning Post. 'Neither the company nor management have been approached by the police in connection with these matters,' it said. The Securities and Futures Commission confirmed on Friday that it was still investigating the delay in disclosing the transactions. The listed-companies regulator said it could not comment on whether it had been asked to assist in any criminal investigation regarding Citic Pacific. A spokesman confirmed the SFC was committed to co-operating with fellow enforcement agencies on issues of mutual interest. Citic Pacific managers have been roundly criticised for not making shareholders aware of the losses as soon as they learned of them. The paper losses, which stood at HK$18.6 billion on November 26, were incurred through the use of what are known as 'foreign exchange accumulator' contracts. The contracts obliged Citic Pacific to buy Australian dollars at a fixed price over a specified period. The steep drop in the Australian dollar in recent months has meant the company is now paying far more than market value for the currency, resulting in massive paper losses. It is liable for 24 contracts entered into with 13 banks. The company has sacked group finance director Leslie Chang Li-hsien and financial controller Chau Chi-yin for their parts in the scandal. Shares in the Hong Kong-listed arm of the mainland's biggest state-owned investment company have fallen 53 per cent since it announced the potential losses on October 20.