The report had sent the share price of Midas, listed on the Singapore Exchange, plunging 22.3 per cent on Thursday despite a denial by Midas late in the day. The stock recovered nearly half its losses yesterday.

Mr Chen, 48, a Singapore permanent resident, said he has never set foot in a police station and does not have a criminal record.

Speaking to The Straits Times within hours of arriving in Singapore from China yesterday, Mr Chen said in Mandarin: 'The report is ridiculous. They made something out of nothing.'

He also disclosed that he was briefly questioned on the telephone last month by the Chinese authorities over a separate reported scandal involving a former Midas director.

'That was in connection with Zhang Xingbo. They wanted to find out my relationship with him,' he said.

Zhang, a former Midas independent director and the former chairman of Jilin Province Trust and Investment, was reportedly arrested in May after being accused of taking bribes from China companies seeking to sell stocks in Singapore.

This Zhang is not the Zhang Xingbo who was appointed deputy general manager of Singapore-listed China Aviation Oil last month.

The Zhang report was carried in leading China financial magazine Caijing - the same magazine that reported Mr Chen's supposed arrest.

The article about Mr Chen has since been removed from the magazine's website.

Zhang resigned as a Midas director on April 26. However, nothing more is known about the status of any China probe into the reported allegations.

Mr Chen, who owns about 24 per cent of Midas, said yesterday: 'I've never been to a police station and do not have a criminal record.

'I'm a good citizen.'

Said Midas chief executive Patrick Chew: 'It's impossible that Mr Chen was arrested. We had just met in Changchun on Wednesday.'

Asked if he intends to pursue legal action against Caijing, Mr Chen said: 'I'll look into that when I return to China.'

Midas, which makes parts for train carriages, has been one of the star performers on the Singapore bourse in recent years.

Its stock rose from an adjusted initial public offering price of 11.5 cents in February 2004 to a high of $2.31 last month.

Last year, Midas received the green light to take part more directly in China's rail and subway boom.

Yesterday, Midas shares rebounded after Thursday's plunge. The counter, which closed at $1.43 on Thursday, opened at $1.52 yesterday and hit an intra-day high of $1.65.

It closed up 17 cents at $1.60 on a heavy volume of 106.22 million - the fourth most traded stock yesterday.

Midas is expected to announce its corporate results in the second week of next month.

Mr Chen, who will be in Singapore for about four days, said: 'I'm healthy and happy, and I'm here to meet friends and business contacts.

'(I'm) just not perfectly happy because of the Caijing report.'

alfoo@sph.com.sg

GOOD CITIZEN

'I've never been to a police station, and do not have a criminal record. I'm a good citizen.'
MR CHEN, saying that the report by the leading China financial magazine Caijing is ridiculous and that it has made something out of nothing