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Last Updated: Monday, 2 June, 2003, 10:47 GMT 11:47 UK
China 'detains Shanghai magnate'
Shanghai stock market
China's 11th richest businessman Zhou Zhengyi has been detained in Shanghai as part of an investigation into suspect loans worth millions of dollars, the Chinese state press has reported.

His two biggest companies, Shanghai Land and Shanghai Merchants, both had their shares suspended in Hong Kong "pending clarification of certain press reports".

The newspapers in Hong Kong have been speculating for days that Mr Zhou is tied in some way to a loan scandal at the Bank of China, which may have led to the resignation of the chief executive of the Bank of China's Hong Kong arm.

And in Shanghai itself, a dispute is brewing between Mr Zhou and 10,000 residents who accuse him of cheating them over relocation costs from a city-sponsored redevelopment project.

Tangled web

It remains unclear exactly where Mr Zhou is.

The newspapers, including the China Business Post, say he is being questioned by the China Banking Regulatory Commission and the discipline committee of the Communist Party.

So far the authorities are refusing to confirm the reports, but the Reuters news agency reported that Mr Zhou's wife, Mo Yuk Ping, is also being questioned - this time by Hong Kong's anti-graft unit, the Independent Commission against Corruption (ICAC).

The interest in the case emanates both from Mr Zhou's wealth - Forbes magazine lists him as the 11th richest businessman in China - and from his alleged connections to the departure of Liu Jinbao from the Bank of China.

Although the official reason for Mr Liu's departure from the bank's top job in Hong Kong is that he was needed back in Beijing, state press reported that the real cause of his recall was the loan of 1.5-1.7bn yuan ($181m-205m; 111m-126m) that he awarded Mr Zhou to take control of Shanghai Land last year, which they reported was "against regulations".

If the reports prove true, Mr Zhou would be just the latest in a string of rich businessmen to face official ire.

Flower magnate Yang Bin, Forbes's number two in Chinese business, is facing tax, fraud and bribery charges which some believe may be related to his agreement to run a special economic zone for the North Koreans.

And Yang Rong, who ran the Brilliance auto company, has fled to the US to avoid the repercussions of a dispute over the ownership of the company.

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