SHANGHAI, June 10 (Reuters) - China's Qingdao Port Authority and the city's police are investigating a private metals trading firm, Decheng Mining, over a suspected metal financing scam at the port, two police sources with direct knowledge of the matter said.
The probe at the port, the world's seventh largest, is examining whether warehouse receipts were duplicated so that a cargo of metal could be used multiple times to obtain financing.
The investigation has hit metal prices over fears that the investigation could spread to other ports and prompt a crackdown on using metal as collateral for finance.
"Decheng is under investigation for its financing activities at Qingdao Port," a police officer involved in the investigation told Reuters. The officer asked not to be identified as he was not authorised to speak to media.
A second police officer also said the company was being investigated over a fraud investigation.
Decheng Mining is a unit of Dezheng Resources Holding Co Ltd, a Qingdao-based firm whose chairman is Singaporean Chen Jihong.
Trading company sources and bankers who have previously dealt with Decheng said Chen had been detained by authorities since late April over the investigation. It was not known whether any charges had been laid or if other companies or individuals were also being investigated.
Singapore's Ministry of Foreign Affairs (MFA) declined to comment on whether Chen had been detained but said it was monitoring the situation.
"MFA is aware of the case and is rendering consular assistance to Mr Chen and his family," an MFA spokesman said.
Singapore-registered Zhong Jun Resources, an associate company of Decheng, did not respond to a series of calls requesting comment. Chen is a director of Zhong Jun.
According to Zhong Jun's website, Dezheng Resources specialises in mineral resources, as well as trading, production and processing of metals, including aluminium, copper and zinc.
A Reuters reporter at Decheng's office in Qingdao on Friday saw three uniformed police at the building, who spent about three hours looking at documents before leaving with a computer.
A staff member at Decheng Mining's Qingdao office, who would only give his surname as Liu, would not comment on the police investigation or Chen's whereabouts.
A woman, who said she was Chen's wife, said by telephone from the executive's house in Singapore that she had not heard from her husband in many weeks and did not know where he was. She also said she did not know if her husband had been detained. (Additional reporting by Polly Yam in HONG KONG, Melanie Burton in SYDNEY and Rachel Armstrong in SINGAPORE; Editing by Ed Davies and Amran Abocar)