SHANGHAI (REUTERS) - Police in the Chinese city of Hangzhou are searching for the chairman of a wealth management firm who vanished with about 1 billion yuan (S$208.2 million) of investor funds, the official Xinhua News Agency reported on Sunday (April 24).
The case is the latest scandal to hit China's risk-laden shadow banking sector, which has seen a rise in fraud cases in the past few years as the economy slows and retail investors with limited options are lured into dodgy schemes by promises of high returns.
Police are searching for Yang Weiguo, the chairman of Wangzhou Group which is the parent company of asset management firm Wangzhou Fortune, Xinhua said. The state news agency quoted police as saying more than 20,000 people had invested some 2.2 billion yuan in Wangzhou Fortune, which has dozens of branches around China.
Investors had reported "problems with the company's cash flow" since last Monday, Xinhua said.
Wangzhou Group, the parent of Wangzhou Fortune, on Thursday confirmed that Yang had disappeared, Xinhua said.
Calls to the phone number for Wangzhou Group's Beijing headquarters listed on its website did not connect on Monday and calls to Wangzhou Fortune's Shanghai office were not answered.
To repay investors, Wangzhou Group plans to retrieve about 1 billion yuan in principal and interest payments on loans it has made and cover the additional 1.2 billion yuan shortfall by selling property, Xinhua quoted a company statement as saying.
Wangzhou Group also closed its shopping mall in Hangzhou, it said.
According to Xinhua, Wangzhou Group has more than 200 subsidiaries in commerce, automobiles, health and wealth management, including Wangzhou Fortune. It employs some 7,000 people in 70 cities.