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About $1.5 Billion Missing at China’s 2nd-Largest State Automaker

Chairman resigns, over 100 senior managers under investigation.

by on Apr.15, 2013

The FAW scandal has touched the highest ranks of the company -- and beyond.

China’s endemic problem with corporate corruption appears to have caught up with the booming Asian nation’s second-largest state-owned automaker where as much as $1.5 billion may have been embezzled.

That has led the chairman of First Automobile Works Group, or FAW, to resign, while more than 100 senior managers have been questioned and some detained, according to reports out of China. The worsening scandal has also touched the ruling Communist Party, a deputy party secretary from Jilin province among those who have been grilled over the situation.

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The scandal has been rapidly escalating in recent days though it appears to have stemmed out of concerns first raised in late 2011 when reports surfaced of a number of bribes worth about $15 million allegedly handed out in connection with parts purchasing, plant upgrades and other projects.