Li Tuchun, founder of Chinese dairy drink company Taizinai, has reportedly been detained under suspicion of embezzlement. The company, which saw investments from Actis, Morgan Stanley and Goldman Sachs, is currently undergoing a comprehensive restructuring.
Li Tuchun, the founder of former Actis portfolio company Taizinai, has been detained by Chinese authorities according to a report in the South China Morning Post.
Li is being held on suspicion of embezzling government funds, said the Chinese daily, although it is not clear how the accusations relate to his activities at Taizinai.
The news comes on the heels of media reports in April stating that the Hunan-based yoghurt drink manufacturer was entering provisional liquidation after racking up debts of more than RMB3 billion (€320 million; $440 million) to creditors which reportedly included the Royal Bank of Scotland, Singapore’s DBS group and Citigroup.
Since April, the company has rejected a Cayman Islands court order to wind-up operations, according to media reports. Despite being registered in the Cayman Islands. the company had reportedly claimed that it did not fall under foreign jurisdiction. In May, a 2008 Deloitte due-diligence report used as main evidence in the Cayman Islands court ruling was declared legally invalid by the global auditor since it was a draft provided only as reference.
The news did nothing to slow liquidation proceedings, however, as also in May court-appointed liquidator Borelli Walsh said in a statement that it had taken control of Taizinai assets and would be beginning the judicial re-organisation of the company. The statement also noted that Li no longer owned shares in Taizinai, nor held any position at the company.
In January 2007, London-based Actis led a $73 million investment in the Chinese dairy company which included commitments from Goldman Sachs and Morgan Stanley. The emerging markets specialist invested $40 million and Morgan Stanley and Goldman Sachs invested $18 million and $15 million respectively. The trio acquired a 31 percent stake in the company in total.