China launches criminal case against former exec at FAW, VW's China partner

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SHANGHAI (Reuters) -- Chinese prosecutors have launched a criminal bribery investigation into a former senior executive at FAW Group Corp., China's procurator said today.

State-owned FAW has a joint venture with Volkswagen. The joint venture is one of the two car-making ventures VW has in China.

The Jilin Provincial People's Procuratorate opened the case against An Dewu, who is suspected of accepting bribes, China's Supreme People's Procuratorate said in a statement.

The country's graft watchdog said last week that it was investigating An, a former deputy general manager of FAW, for "suspected serious violations of the law."

The involvement of state prosecutors means the probe has now escalated into a serious criminal case.

Efforts to reach An for comment were unsuccessful. FAW could not be reached for comment on Wednesday, but on Tuesday the company said it has punished eight managers for misusing company funds.

One of China's biggest automakers, FAW is among the latest batch of state-owned firms and government units being targeted by China's anti-graft body as President Xi Jinping vows to bring down "tigers and flies" in a deepening anti-corruption drive.

FAW-Volkswagen probe

The Central Commission for Discipline Inspection, China's corruption watchdog, launched a separate probe into FAW recently. It is investigating one former and one current executive at FAW-Volkswagen Automotive Co. Ltd., FAW's joint venture with Volkswagen for "seriously violating the law."

Analysts say Chinese carmakers like FAW have too much power over dealers who are often forced to compete fiercely for authorization to sell popular car models. This, in part, has made the industry a hotbed for corruption.

China's anti-trust regulator is also investigating foreign carmakers including Mercedes-Benz and Chrysler over pricing practices and possibly violating China's anti-monopoly law.

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