Zhao Shuangju, former director of the Beijing Power Supply Bureau, was arrested in connection to a US$55 million scandal.
He may face criminal charges, local media quoted sources with the Beijing High People's Court as saying.
Zhao, 64, who held the position for 13 years until 1999, faces charges in connection to the loss of 457 million yuan (US$55 million) from the state-owned Beijing Electric Power Corporation - the successor of the bureau after a restructuring earlier this year.
The missing funds were first revealed to the public in a report put forward by Auditor-General Li Jinhua to the Standing Committee of the 10th National People's Congress in June.
According to the audit report, Zhao provided guarantees to the Beijing-based Weikerui Wire and Cable Company of 1.1 billion yuan (US$133 million) from 1994-96.
Afterwards, as the company was on the verge of bankruptcy, a local court ordered the Beijing Electric Power Corporation to shoulder part of the compensation responsibilities.
That resulted in a loss of 457 million yuan (US$55 million).
It is said that the former municipal power supply bureau had close ties with the Weikerui company.
One of the three major investors of Weikerui was a sub-company affiliated to the bureau.
The sub-company invested 64 million yuan (US$7.7 million) as part of the total US$25 million registered capital of Weikerui when it was established in 1991.
The audit report shows that the 64 million yuan were misused from the special funds of the bureau for power supply subsidies.
Weikerui was once a pillar enterprise of Pinggu District.
The annual output value of Weikerui exceeded 200 million yuan (US$24 million) between 1998 and 2000, according to the district government.
However, the company has faced severe financial problems since 1994 and a US$115 million investment to expand its plant was borrowed from banks.
Zhao's case is just the tip of the iceberg in connection to capital losses at the National Power Company - the national power monopoly that was dismantled in late 2002.
The auditor-general's report revealed that a total of 631 projects invested by the National Power Company and its subsidiaries have lost money or left themselves open to potential losses.
These projects relate to a total investment of 7.8 billion yuan (US$948 million) and the mistakes caused heavy losses of capital.
The National Power Company may have also concealed how much money it earned between 1998 and 2002 - a total of 7.8 billion yuan (US$943 million) less than the true figure.
Besides, a dozen individual economic crimes were discovered, involving 1 billion yuan (US$120 million).
(China Daily November 26, 2004)
