HK's Citic Pacific chairman steps down amid probe

HONG KONG: The head of conglomerate Citic Pacific, the Hong Kong arm of a Chinese government investment company, stepped down on Wednesday amid a scandal over bad currency bets that may have cost the company nearly $2 billion.

Chairman and Director Larry Yung was resigning after Hong Kong police raided the company's office on Friday as part of a fraud investigation related to its foreign currency contracts, the company said. Managing Director Henry Fan was also leaving.

``Mr. Yung believed that his resignation would be in the best interests of the company,'' Citic Pacific, a vast conglomerate whose dealings run from airlines to mining and Wal-Mart stores, said in a statement to the Hong Kong stock exchange.

Citic Pacific stunned the market last year when it revealed massive losses from bad bets on leveraged foreign currency contracts, prompting the company to seek a $1.5 billion bailout from its Beijing-based affiliate company Citic Group.

The Hong Kong company last month said those bad bets had cost it about 14.6 billion Hong Kong dollars ($1.9 billion).

The losses triggered outrage among investors as well as a separate investigation from regulators.

The company named Chang Zhenming as Yung's replacement. Chang is vice chairman and president of Citic Group.

Yung has been listed among the richest people in greater China with a fortune estimated at some $3.7 billion by Forbes magazine in 2007.