Soho China hit by Gong money laundering scandal
Investors pull out after media reports link property developer to money-laundering scandal involving a Shanxi banking official
Shares in mainland developer Soho China have fallen by 11 per cent after media reports that most of the 41 properties bought for one billion yuan (HK$1.23 billion) by former Shanxi banking official Gong Aiai were sold to her by Soho.
Before the reports on Wednesday, Soho shares traded as high as HK$7.05 on Monday.
On the day the reports appeared the shares declined to HK$6.32, and yesterday they fell further to close at HK$6.27.
The drop in the share price came as investors sold their Soho shares despite denials from the developer that it was involved in any wrongdoing in the sale of properties to Gong, a former deputy manager of the Xingcheng branch of Shenmu Rural Commercial Bank, who is suspected of money laundering on a massive scale.
Xinhua reported that Gong has been arrested by police on suspicion of using multiple identities to buy the properties in Beijing.
On Wednesday, amid the controversy over how Gong acquired the 41 properties, Soho China, which is the largest developer on the mainland, released a statement in response to the media reports. It denied the allegations of any illegal conduct.
