Shanghai tycoon Zhou's brother-in-law, nephew formally arrested

SHANGHAI, Aug 14 (AFP) - The chairman of Fuyou Securities Mao Heping has been arrested for the alleged misuse of funds, in a case apparently linked to Shanghai property tycoon Zhou Zhengyi, China's state press reported Thursday.

Mao, who is also Zhou's brother-in-law and a director of Zhou's troubled Shanghai Nongkai Development Group, has been formally charged by authorities after being detained last month, the China Securities Journal reported.

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Zhou Zhengyi's nephew, Zhou Weiyan, a director of Nongkai Development, has also been arrested along with another unnamed company director, it said.

The arrested men's families are preparing to retain attorneys, the report said.

Nongkai Development is estimated to owe several domestic banks about 4.5 billion yuan (540 million dollars) in principal plus interest.

Zhou Zhengyi, a Shanghai property developer and one of China's richest entreprenuers, was reported detained at the end of May for his role in alleged fraudulent loans of 1.5 to 1.7 billion yuan from the Bank of China.

Zhou allegedly used the loans to buy shares in the listed Hong Kong firms, Shanghai Land and Shanghai Merchants, two companies under his effective control.

Chinese authorities have only acknowledged that Zhou's flagship company Nongkai is under official investigation, and have not formally charged Zhou.

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