Prosecutors in Hohhot, capital of North China's Inner Mongolia Autonomous Region have approved the arrest of two writers who wrote and spread a novel that defames giant Chinese dairy company Yili Group.
Liu Chengkun and Zou Guangxiang were arrested for alleged defamation and causing disturbance, and the Hothot procuratorate recently approved their arrest, the Xinhua News Agency reported on Monday.
Liu published fictional stories on WeChat in March about dairy company CEO Mr. Pan, who fled to the US and returned because authorities were investigating him.
Although no factual information was revealed, readers linked the articles to Pan Gang, Yili Group's CEO.
After reading Liu's article, Zou, a we-media owner, published an article on his account on March 26 saying that Pan was under investigation, even though Zhou himself contacted Yili and was told it was a rumor.
Pan reported to the police and issued a public statement to dismiss the rumor, but the rumor nevertheless spread.
Zou's articles received 5.74 million views, while Liu's had been read 10,993 times, Xinhua reported.
Milk farmers, cooperatives, employees and investors panicked about the information, and financial commentator Yu Fenghui said that Yili shares have slumped partly because of the rumor that Pan is under investigation.
The value of Yili shares dropped 6.07 billion yuan ($950 million) on March 26, compared to the previous day, Xinhua quoted the authority as saying.
Zou and Liu said they regret their actions.
I just want my we-media account to be famous, so I could be a celebrity and attract more investors, Liu said.