First detained for a month by the Beijing Municipal Public Security Bureau, Liu was formally arrested with the approval of the Second Branch of the Beijing Municipal People's Procuratorate on July 24.

Walking out of her over 500-square-metre villa in Beijing Rose Garden accompanied by officials from the local public security bureau, Liu seemed exceptionally calm, though 1.96 million yuan (US$220,000) in funds from her company account has been frozen.

But the figure of her evading taxes hit over 10 millions yuan (US$1.2 million). Insiders said a big part of her private property had been transferred to France and Canada.

Liu started her acting career in an army modern drama troupe in Chengdu, capital of her home province of Sichuan, after graduating from the middle school affiliated to Sichuan Conservatory of Music in 1970. Years later, she made her way into films and finally was recruited by Beijing Film Studio.

Liu distinguished herself with a vivid, touching and natural performance as Qing Dynasty Empress Dowager Ci Xi in the film "The Reign Behind the Curtain", which finally made her China's movie "queen". Liu is the only Chinese actress to have won the top movie award three times.

Liu began to seek new challenges and opportunities in the business world in 1990s. As the founder as well as the legal representative of Beijing Xiaoqing Cultural and Arts Co Ltd, Liu failed to rival her screen performance.

Investigations by the public security and taxation department show that Liu's company is suspected of tax evasion. Company general manager (Liu's brother-in-law) and the company's former accountant were arrested in April and Liu's younger sister was arrested in May.

Liu's lawyer Yao said as the director, producer and heroine of the TV series, Liu was too occupied to spare time for administrative management, which resulted in her negligence of duty.

"Anyway, Liu is absolutely an optimist, and she will always sleep well no matter what happens," said Yao.

But the report from the media said Liu's mental outlook is not so good. In the Qincheng Prison where she was jailed, Liu sometimes is very hysterical and even knocked her head into the wall, Shanghai Wednesday reported. The hair of the 50-year-old woman is also whitening almost overnight without the help of hair dyeing.

Liu's friend Mr Chen who used to labour together in the countryside said Liu seemingly had the premonition. She told Chen that if she was put into prison, she would do three things: "I will learn English first. My English won't be worse than my performing skills after I am released," she said, "Second I will do exercises to keep my spirits high. The third is reading."

Insiders said that the arrest of Liu is just the start of the investigation of the entertainment circle, Hunan based Xiaoxiang Morning Post reported. A insider surnamed Zhang said seven entertainment companies were in the list to be investigated by a certain government department.

Since the government seriously punished another famous singer Mao Amin who evaded taxes about 10 years ago, there has been no serious action against celebrities. Liu becomes the first celebrity to be arrested for huge amount of tax invasion.

(Shanghai Star August 1, 2002)