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China Gas says executives under investigation

Trading in China Gas has been halted since Dec. 20.

January 4, 2011 2:15 by

Two executives from China Gas Holdings Ltd , a natural gas distributor, have been detained for investigation by China’s police, the company said on Tuesday.

Managing and Executive Director Liu Ming Hui and Executive President Huang Yong had been detained by police in China’s southern boomtown of Shenzhen since Dec 18 for suspected “embezzlement of the assets of an organisation in which they have duties,” it said in a filing to the Hong Kong stock exchange.

China Gas, 9.7 percent owned by South Korea’s SK Group, the parent of SK Holdings , said it found no indication of any noticeable irregularities involving recent material movement of cash or funds after a preliminary internal review.

Trading in China Gas has been halted since Dec. 20 and will remain suspended, it said. The company has 114 gas projects in China.

The stock was last traded at HK$3.39 on Dec 17 and lost 20 percent last year.

“No records or files of the Group have been confiscated and none of the members of the group have been investigated or notified of any investigation by any governmental authorities in the PRC (People’s Republic of China) in relation to such matter,” China Gas said.

China Gas, whose shareholders also include state-owned Sinopec , Indian state gas firm GAIL (India) Ltd. and the Oman Oil Company, raised about HK$3.1 billion ($399 million) via a share placement in October to cut debt.

The net proceeds received from the placings have not yet been utilised and are currently being held in the company’s bank accounts in Hong Kong, China Gas said in the statement.

It was also granted a $200 million credit facilities by Asian Development Bank for new project development purpose in October.

The debt-laden company had bank loans and other loans amounting to HK$14.7 billion at the end of September 2010.

“Since the Shenzhen PSB (pubilc security bureau) has not permitted the Chinese legal counsel to make contact with Mr. Liu or Mr. Huang, the Company is unable to obtain further information directly from Mr. Liu and Mr. Huang about the Incident,” it said.

(Reporting by Alison Leung; Editing by Anshuman Daga)

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