Beijing (CNN Business) - Police in Shanghai have formally arrested Chinese real estate billionaire Wang Zhenhua on allegations of child molestation.
In a statement released Wednesday, police said they had taken statements from the victim, suspects and witnesses and concluded that Wang's behavior "constituted alleged child molestation."
In keeping with local practice, the police statement gave only Wang's surname. Chinese state media had previously identified the main suspect in the case as Wang Zhenhua, the founder of Future Land Development Holdings.
His detention by police last week wiped billions of dollars off the value of his real estate companies on the Shanghai and Hong Kong stock exchanges.
The police set up a special task force to investigate Wang and another suspect after allegations against them emerged earlier this month, according to Wednesday's statement. The arrest paves the way for them to be formally charged.
"Police adopt a 'zero tolerance' attitude toward crimes against minors and will severely crack down on such crimes in accordance with law," the statement said.
Wang, who founded Future Land in 1996, was first taken into custody a week ago. Reports of his detention sent stocks of his companies crashing, including Future Land, its subsidiary Seazen Holdings, and real estate management firm S-Enjoy.
The three companies have collectively lost more than $7 billion since Wang was detained, according to Refinitiv data.
Future Land issued a statement Wednesday following confirmation of his arrest.
"According to the notification from [Shanghai police], the arrest of Mr Wang Zhenhua, the controlling shareholder of the company, was approved on July 10, 2019 for an alleged crime," it said. "Mr. Wang currently does not hold any position in the company. The operations of the company remain normal."
CNN Business has been unable to contact a representative for Wang, and spokespeople for his companies have declined to comment beyond their official statements.
Future Land said in a stock exchange filing last week that it had removed Wang as chairman after being told he was detained in Shanghai for "personal reasons."
It released an open letter in Chinese last Friday in which it apologized for its founder's reported behavior and the "great suffering" he had caused the alleged victim and her family.
"We are deeply troubled, shocked and upset about the fact that it is our company's founder who caused this storm," the company said. "We, as well as the public, think juveniles are the future of society, and any behavior that harms them should be punished by the law."
Shanghai police had earlier confirmed the detention of a man with the surname Wang but would not provide any other details.
The Xinmin Evening News — a local newspaper run by state-owned Shanghai United Media Group — previously reported that two girls were brought to Wang in a Shanghai hotel on June 29. The mother of one of the girls reported the alleged incident to the police, the newspaper reported.
Wang's personal fortune has suffered a significant hit since news of his detention broke last week, shrinking by about $2 billion to around $4.5 billion, according to the Bloomberg Billionaires Index.