(Yicai) April 10 -- Shares in China Vanke slumped today after the general manager of the debt-laden Chinese developer’s branch in Jinan, eastern Shandong province was detained by police and taken away for questioning.

Vanke’s share price [SHE:000002] closed down 5.1 percent at CNY7.58 (USD1). The stock has lost 27.5 percent of its value so far this year. While its Hong Kong-traded stock [HKG:2202] finished the day down 4.3 percent at HKD4.22 (USD0.54). It has lost 40 percent of its value this year.

Xiao Jin was taken away by Shandong police 48 hours ago for an investigation, financial media Jiemian reported at noon today. The reasons for the probe are unknown.

Xiao is co-operating with the investigation and he has been replaced by Jin Yabin, Vanke told Yicai. The Shenzhen-based company is operating as normal. Further details will be disclosed by the relevant government departments in due course, it added.

Earlier this month, a dispute broke out between Vanke’s branch in Yantai, a port city in Shandong province, and local business partner Bairun Real Estate which alleged that Vanke’s senior management were evading taxes, misappropriating funds and engaging in money laundering.

Vanke denied the accusation at the time and said that it will take legal action to protect its rights.

Xiao, who has been with Vanke for 15 years, served as deputy general manager of the Beijing branch and general manager of the Shenyang division in northeastern Liaoning province before he became general manager of the Jinan branch in 2019.

The Jinan branch performed well under Xiao, with Vanke ranking second in the city with sales of CNY9.5 billion (USD1.3 billion) last year, only behind China Overseas Real Estate's CNY13.5 billion, according to the China Index Research Institute. From 2016 to 2018, Vanke was the top-ranking real estate firm in Shenyang when Xiao was in charge.

Vanke is currently under huge pressure to repay its debts amid a sustained downturn in China’s real estate market. The firm said last month that it plans to cut interest-bearing debt by more than CNY100 billion (USD13.8 billion) in the next two years, accounting for about one third of the total.

Editors: Dou Shicong, Kim Taylor