Beijing Centergate Tech (Holding) Co tumbled by the daily cap yesterday after it announced that Chairman and President Xu Zhongmin was being investigated in relation to economic crime.
The Shenzhen-listed company slumped 9.89 percent yesterday on the first trading day since it halted trading on November 24, a sharp contrast with the 2.83 percent daily gain of the Shenzhen Composite Index.
The company halted trading after its major shareholder Huang Guangyu, chairman of Gome Electrical Appliances Co, was detained over alleged economic crime and for reportedly manipulating Centergate's shares.
The impact on the company's business cannot be estimated. Xu has appointed Director Wei Qiuli and Vice President Zhou Ning to run the company during the investigation, the company said in a statement released on Sunday. Wei is also the vice president of Gome.
A spokesman for the China Securities Regulatory Commission confirmed last Friday that the inquiry into share trading by Sanlian Commercial Co and Centergate had found that the Beijing Pengrun Investment Co, owned by Huang, had acted suspiciously in restructuring listed companies and replacing assets. A large amount of money was involved.
Beijing Pengtai Investment Co, a unit of the Huang-controlled Pengrun Investment Co, attained 15 percent of Centergate for 78.6 million yuan in April 2006 and increased its stake by 22.75 percent for 155 million yuan three months later.
Xu was named director after Pengtai became the biggest shareholder.
Xu and Huang are both natives of Guangdong Province and are reportedly very close friends.
Another two companies were also involved in Huang's investigation. The Shandong Jintai Group Co, a drug manufacturer listed in Shanghai and believed to be controlled by Huang Junqin, brother of Huang Guangyu, stayed suspended while the Shanghai-listed Sanlian Commercial Co surged 3.45 percent to 3.60 yuan yesterday after it had plunged 26.43 percent last week.
Huang Guangyu is now under investigation for allegedly manipulating the price of Sanlian Commercial and Beijing Centergate, according to the securities watchdog.
(Shanghai Daily?December 2, 2008)
