Vivaki Exchange CEO Warren Hui, GM Ye Peng Tao leave the agency as Chinese authorities probe corruption scandal

The two senior executives were removed from their offices last week and have relinquished all responsibilities at the agency, Vivaki has confirmed.

"As far as I know, Vivaki is now investigating this so there is no official announcement yet," said Tan Chen, a representative of MS&L, Vivaki's public relations agency.

Campaign China understands that Hui and Ye were both interviewed by Chinese police on 4 September. They were held for 48 hours before being released. While neither Hui or Ye have been formerly charged, it is believed that China’s border immigration offices have been informed to stop them from leaving the country.

Li Yifei, Vivaki Greater China's chair, is currently at the Summer Davos Forum in Tianjin, and declined to comment on the news.

Vivaki Exchange, formerly known as China Media Exchange (CMX), is the media buying arm of Publicis Groupe media agencies Starcom and ZenithOptimedia in China. Hui was promoted to China CEO in November last year. He was previously the MD at CMX.

It is understood that CMX was formally introduced to Huayu in 2008, following which a strategic alliance was formed between the two companies. CMX worked with Huayu in China's Southwestern markets, which include Chongqing, Yunnan and Sichuan.

In July, Zeng Zhiqiang, the owner of Huayu, was arrested as part of a long-running sweep against corruption in the southwestern Chinese city of Chongqing.

Police raided the Diamond Dynasty night club - owned by Zeng - in the basement of the Hilton hotel on 21 June, charging 22 people with offences relating to running a prostitution ring. Zeng was said to have used Huayu to launder money from the night club business.

The investigation on Huayu was extended to all of its suppliers, with CMX believed to be among the companies implicated.

"The buying arrangement between Huayu and CMX was unusual. The arrangement actually ended up with the broker owing money to CMX, while it should be the other way around because CMX outsourced their Southwestern markets buying to Huayu... It seems that Huayu owed CMX more than Rmb100 million, this will be impossible to settle now given the scandal," said an undisclosed source.

Go to En.campaignchina.com for more developments on this story.