Fund manager held in Shanghai probe - sources

SHANGHAI, Oct 16 (Reuters) One of China's top fund managers has been detained for questioning in an investigation of corruption involving Shanghai's social security system, two sources familiar with the situation said today.

Han Fanghe, general manager of Huaan Fund Management Co, was removed from his position in the company after government investigators detained him over the weekend, the sources told Reuters.

More than 100 investigators from Beijing are in Shanghai to probe suspicions that money has been siphoned off from the city's social security system, which manages over 10 billion yuan, through illicit loans and investments.

Huaan, one of China's largest and oldest fund management companies, declined to comment. A spokesman for the Shanghai city government said he had not heard of the detention.

The sources said Huaan executives were meeting to discuss the situation and were expected to make an announcement on Tuesday morning.

The social security scandal, described by official media as Shanghai's biggest since economic reforms began in the 1980s, has implicated well over half a dozen senior city government officials and executives in the past several months.

''Han was detained in relation to the city's social security fund scandal. He is no longer the general manager of Huaan Fund as of today,'' a source close to Han said on condition of anonymity.

The city's most powerful official, Shanghai Communist Party secretary Chen Liangyu, was dismissed late last month on suspicion of a severe breach of party discipline.

Government official-turned-businessman Han joined Huaan from Shanghai International Trust&Investment Co (SITICO), an investment arm of the city government. SITICO owns 20 percent of Huaan Fund.

The sources said investigators had detained a number of other executives in Shanghai's banking, fund management and brokerage industries over the past few days. Their identities could not immediately be established.

REUTERS SSC BS1703