The sale of Serbia's Vrsacki Vinogradi winery to Chinese firm Guan Nan is under investigation by the country's prosecutor's office.

An auction for Vrsacki Vinogradi, which is 59%-owned by Serbia's Privatization Agency, saw sole bidder Guan Nan line up the purchase for EUR5.3m (US$7m) late last month. However, the country's police director, Milorad Veljovic, has confirmed that the transaction is the subject of an investigation by both the criminal police directorate and the prosecutor’s office.

The Privatization Agency is suspected of allegedly conducting the process in a way that favours a pre-selected bidder.

Located in the north-east of the country, Vrsacki Vinogradi produced 5,982 tonnes of grapes, 38,899 hectolitres of wine and 576 hl of spirits last year. The company ended 2012 with an RSD149.92m loss (US$1.75m).

The second largest shareholder in the wine producer is the Belgrade Shareholder's Fund, with a 12.71% stake.

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