Earlier, on June 20 Liu was detained by the Beijing Municipal Public Security Bureau.

As proven by public security and taxation departments' investigations, she is suspected of tax evasion, as Liu is the legal representative of the companies she runs.

The public security and taxation department are currently further investigating her case.

Relevant sources said that the No.1 Inspection Sub-bureau of the Beijing Local Taxation Bureau on April 2 filed the cases of tax evasion for investigation and prosecution with regard to the Beijing Xiaoqing Culture and Arts Ltd. Co., Beijing Liu Xiaoqing Business Development Company and Beijing Xiaoqing Classic Advertisement Company.

The bureau has so far found the Beijing Xiaoqing Culture and Arts Co., Ltd. evaded paying large amounts of tax by practicing accounting irregularities. The company falsified its accounts, resorting to such methods as reporting a far higher expenditure and much lower income since 1996.

The actress was detained by the Beijing Public Security Bureau on June 20, nearly two months after the detention on April 24 of company general manager Jin Jun (the husband of her younger sister) and former chief accountant Fang Li, based on evidence obtained. Jin and Fang were arrested on May 30, with the approval of the Second Branch of the Beijing Municipal Procuratorate.

Ran Yihong (also named Liu Xiaohong, the actress' sister) was also taken into criminal custody on June 18.

The companies' bank deposits of 1.96 million yuan (US$236,000) were confiscated by the Beijing Local Taxation Bureau according to law on May 9. Taxation and public security departments are working to recover the amount involved in tax evasion that has been investigated and proven, to hand over to the state treasury.

(Xinhua News Agency July 26, 2002)