May.23, 2010, 11:59AM

Chinese authorities are investigating whether millions of dollars, embezzled by a former rail company executive, has been laundered through New Zealand, a report said Sunday.

Liu Guiting, the former head of China's first publicly listed rail company, gained New Zealand residency in 2002 and bought property through companies belonging to his wife and daughter.

He was jailed for life in China last year on a raft of charges including misappropriating 100 million yuan ($A18.14) million), taking 500,000 yuan in bribes and paying millions more under the table to government officials.

But Chinese government documents show the total amount misappropriated is thought to be several hundred million dollars more, the Sunday Star-Times reported.

Liu's wife, Yang Limin, and daughter, Jasmine Liu, live in New Zealand and are under investigation for suspected money laundering, according to Chinese justice ministry documents.

Yang appeared in the High Court at Auckland on Friday in an ongoing civil case she has brought against Paul Chen, a former business partner she says breached fiduciary duty and misappropriated assets of her companies.

Chen is being held in China as a witness against Liu.

A Chinese government lawyer sat in on the hearing and confirmed that his government was interested in learning what happened to the stolen rail company money.

Up to $US13 million may have been invested in New Zealand, the newspaper report said.

In court, Yang confirmed her husband had transferred money to New Zealand to buy property, but she said she did not know exactly where the money came from.

She said that when she first arrived in New Zealand in 2002, she regularly travelled to China to visit her husband, but had not returned since his arrest in 2006.

An affidavit to the court says that the Chinese justice ministry wished to interview Yang and her daughter "over the evidence which has been uncovered, linking them to the movement and control of the missing money".

They were "named in evidence as being accomplices involved in receiving misappropriated money as well as being implicated in ... laundering the money out of China and thereafter from country to country and bank account to bank account," the affidavit said.

China's President Hu Jintao has warned that graft threatens to undermine the ruling communist party's legitimacy and, in recent months, has repeatedly called for a continued crackdown on corruption.