Police in northeast China have arrested the chairman of a company that went bust trying to make an aphrodisiac tonic from ants after thousands of angry ant farmers demanded payment.

Wang Fengyou, chairman of the Liaoning Yilishen Tianxi Group, was in criminal custody on allegation of instigating social unrest, police said on Tuesday.

The company had organized thousands of ant farmers to supply it with insects on condition that they paid a contractual bond, said a police spokesman.

However, the firm stopped paying its suppliers last month and the angry ant farmers feared they would lose their bonds and payments due, a police spokesman said.

Thousands of ant farmers had gathered at the company offices to demand their money, but Wang allegedly paid 46 employees 1.03 million yuan (139,000 U.S. dollars) and company executives 160,000 yuan and 30,000 U.S. dollars to organize protests outside government buildings instead.

Thousands of investors besieged government offices and disrupted railway and highway traffic in Liaoning Province in late November, causing public unrest, the spokesman said.

Police are continuing their investigations into the case.

The Yilishen Tianxi Group started making the aphrodisiac tonic in 2001. However, it went into insolvency and filed for bankruptcy at the Shenyang Intermediate People's Court on Nov. 20.

The company is undergoing liquidation.

(Xinhua News Agency December 12, 2007)