(Yicai) Dec. 21 -- Zhongbai Holdings Group’s shares fell after the biggest hypermarket chain operator in China's Hubei province said a worker at a unit embezzled about CNY219 million (USD30.7 million) and local regulators had upbraided it for disclosing the matter late.

After sliding by as much as 4.7 percent earlier today, Zhongbai [SHE: 000759] closed 1.5 percent down at CNY4.61 (65 US cents) a share. The broader Shenzhen market gained 1.1 percent. Zhongbai ended 5.3 percent lower yesterday. 

Zhongbai Warehouse suspected a member of its financial staff of having embezzled funds on July 22 and its parent company immediately reported the matter to the police, Zhongbai Holdings announced yesterday. The suspect, who had fled overseas, was arrested on Oct. 13, it said. 

In a separate statement on the same day, Zhongbai said that a number of executives at the Wuhan-based company had received a warning from the local securities regulator after the firm failed to disclose the incident on time. The employee involved in the case was not part of the management team, it pointed out.

The worker exploited loopholes in the supplier settlement system and the characterization of fresh food as non-standard products to defraud the company by fabricating acceptance receipts and adding non-existent suppliers, Zhongbai said. As a result, Zhongbai's profit will shrink by CNY50 million (USD7 million) this year, it added.

The unit immediately closed the loopholes, beefed up the internal control system for settlements, and reviewed and modified the permissions of the settlement and personnel systems, its parent said. The case did not have any other impact on the company's daily production and operations, which are normal, it added.

Zhongbai had a net loss of CNY43.7 billion (USD6.1 billion) in the first nine months of this year on revenue of CNY9.2 billion (USD1.3 billion) after a CNY320 million loss and CNY12.2 billion of revenue last year.

Zhongbai has a range of businesses, including supermarkets, convenience stores, shopping centers, electric appliances shops, and logistics. It ranked ninth among China's top 100 supermarket operators last year. Zhongbai Warehouse has more than 200 stores in Hubei and Chongqing. 

Editor: Martin Kadiev