CHANGSHA - Four high-ranking executives of Taizinai, a leading Chinese fermented yoghurt producer, have been arrested for illegal fund raising, police in central China's Hunan province said Tuesday.
Beginning in February 2008, Taizinai raised more than 137 million yuan ($21 million) in a desperate bid to pull the company out of its financial problems, said officials with the public security bureau of Hunan's Zhuzhou city where Taizinai is based.
The funds were illegally collected from the company' s distributors, employees, and the public, though the company failed to repay most of the money, said the statement.
Li Tuchun, the founder of the company, was among those arrested, it was reported.
Rapid expansion in recent years resulted in the company taking on a debt of over 2 billion yuan. Its overseas debtors included Morgan Stanley, Actis Capital, and Goldman Sachs.
In July this year, the local court in Zhuzhou said it had accepted a bankruptcy lawsuit against Taizinai and ordered the company to reorganize.
