A pedestrian walks past an outlet of NVC Lighting Holding in Yichang, Central China's Hubei Province. Photo: IC

NVC Lighting Holding, China's leading lighting manufacturer, said its former chief executive Wu Changjiang and employees of four leading Chinese banks are under police investigation for allegedly helping to divert company funds.

NVC suspects Wu of either embezzling or falsely obtaining loan guarantees totaling 623 million yuan ($101.71 million) without the knowledge of the company's current board.

The transactions were arranged by Bank of China (BOC), China Minsheng Banking Corp, China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC), NVC executives said.

"This is a huge international scandal," NVC's Chief Executive Wang Donglei, who took charge of the company after expelling Wu in August, told reporters on a conference call on Monday. "These banks misled the company and investors with false information."

The investigation casts greater uncertainty over the future of the lighting manufacturer. NVC, whose shareholders include private equity firm SAIF Partners and French electrical systems supplier Schneider Electric SE, has lost about 60 percent in market value since its peak in November 2010. The company's stock in Hong Kong has been suspended since August 11.

Wang said the diversion of funds had halted plans to merge the LED unit of Elec-Tech International Co into NVC. Elec-Tech, controlled by Wang, is NVC's top shareholder.

It is unfair to other shareholders if the merger took place now, he said.

NVC founder and former chief executive Wu was expelled from the firm in August, following accusations that he secretly signed licensing agreements on behalf of a company subsidiary.

NVC said in earlier November that company funds totaling 448 million yuan had been withdrawn from three unnamed banks without board notification.

An estimated 230 million yuan was withdrawn from one of the banks at the end of August, after Wu signed three pledge agreements on behalf of NVC China, the company said in a filing with the Hong Kong Stock Exchange on November 6.

Wu could not be reached by telephone for comment, while shareholder SAIF Partners declined to comment.

Wang said employees at BOC, Minsheng, CCB and ICBC who "conspired in the crime of diverting and defrauding" the company's funds are also being investigated by the police.

BOC declined to comment immediately while spokesmen for Minsheng Bank and ICBC said they had not heard of the case.