Shanghai tycoon who made his fortune on highways has been arrested on suspicion of fraud, his lawyer said Wednesday, in the latest high-profile corruption case to hit China's economic hub.Liu Genshan, 51, one of China's richest men, was detained Saturday by police in eastern Zhejiang province on suspicion of taking money from a highway project there, his lawyer Wu Yanlei told AFP.The Yongjin highway was worth 7.5 billion yuan (1.1 billion dollars) according to previous state-run press reports.
Police were still investigating and prosecutors had yet to lay any charges, Wu said.Several state newspapers reported Liu was arrested on suspicion of money laundering and fraudulent bank loans worth over 600 million dollars, but Wu said he was only accused of taking money from the Yongjin project.
Liu, a philanthropist who was named one of China's 15 wealthiest men by Forbes magazine in 2003, is the latest in a long line of high-flying businessmen and politicians in Shanghai to be tarnished by corruption scandals.State media said Liu was a close associate of businessman Zhang Rongkun, who was sentenced in April to 19years in jail for bribery and his part in a massive pension fund scandal that rocked Shanghai in mid-2006.That scandal pulled down the city's former Communist Party chief Chen Liangyu, who was jailed for 18 years in April after being convicted of abuse of power and accepting bribes.
More than 20 officials and businessmen have since been convicted in connection with the pension fund scandal.According to his lawyer, police are investigating Liu's transactions in connection with the 185-kilometre (115-mile) Yongjin highway linking Ningbo and the cities of Shaoxing and Jinhua, which opened in 2005.
His business strategy was to buy highways using bank loans and turn them into listed companies, the Shanghai Daily said on Wednesday. He reportedly financed seven highways in Shanghai and neighbouring Zhejiang province.Hong Kong's Securities and Futures Commission noticed in 2005 that three billion yuan Liu brought to the territory from the mainland was not transferred through the proper channels, the newspaper sai
He allegedly used the money to buy a Hong Kong-listed company, which he renamed Maosheng Holdings, the report said.
The company was believed to be the biggest shareholder in a highway linking downtown Shanghai to industrial zones in suburban Qingpu, the report said.
Although the road cost 420 million yuan to build, the company's official investment was listed as more than eight times that -- at 3.5 billion yuan, the report said.
Investments in other projects were apparently similarly inflated while construction on two was halted due to a lack of funds, the newspaper said.
Liu was born in Shanghai but is officially a permanent resident of Hong Kong where he has 1.13 billion Hong Kong dollars (145 million US dollars) invested in a Hong Kong-listed real estate and hotel development company, the report said.
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