Tao Shoulong, boss of one of the mainland's largest textile and dyeing companies, has been arrested on suspicion of illegally raising funds and destroying accounting documents.
Tao Shoulong [file photo]
Tao allegedly made employees of his firm, Zhejiang Jianglong Textile Printing & Dyeing Co Ltd, and friends borrow more than 80 million yuan ($11.7 million) on his behalf from individuals and companies in Shaoxing and Hangzhou at high interest rates. He has failed to repay nearly 70 million, the Xinhua News Agency said.
He fled with his wife Yan Qi, general manager of the company, at the end of September. They were arrested soon after while attempting to leave the country from Guangdong province.
The government of Shaoxing, Zhejiang province, has taken over temporary management of Tao's company and is in discussions with other companies about a takeover.
Zhejiang Jianlong listed on the Singapore stock market in 2006, the first Chinese textile company to do so.
In November of last year, Tao planned to list his company on the Nasdaq. For this, the firm had to show a profit of no less than 200 million yuan this year, and at least a 30 percent growth in the first and second quarters.
As Tao was not able to achieve this or borrow from the banks, he sought out individuals and companies December, agreeing to pay interest rates of between 6 and 9 percent on borrowings. By July, he had borrowed more than 80 million yuan.
In September, Tao and Yan made their employees destroy accounting documents to avoid showing the company was in financial trouble.
(China Daily November 26, 2008)