BEIJING - The Confucius Peace Prize, which started last year and was widely heralded as China's Nobel Peace Prize, faces the prospect of cancellation this year, as an official group reportedly behind it has denied any ties with the award.

When the prize was announced on Sept 17 last year, one of the organizers was Wang Shenggui, a division chief for the Beijing-based Association of Chinese Local Art.

However, according to a recent statement, the group said Wang was acting outside of his official capacity, and that plans to start the award were never discussed with association heads, who answer directly to the Ministry of Culture.

"Wang didn't tell us anything about the prize," said Zhang Houbang, the association's standing vice-president.

The group only became aware of it through media reports, he said, adding that the ministry called him on Sept 19 to demand an explanation.

Zhang stressed that the association's focus is limited to promoting Chinese art, and that Wang's involvement in the prize was not allowed.

Wang was subsequently dismissed for violating the rules, while his division, which focused on the preservation of traditional culture, was scrapped, said the statement.

The news could now derail efforts by the prize organizers to stage the second annual ceremony this year.

Liu Haofeng, executive chairman of the award committee, said he did not know about the association's statement until informed about it by China Daily on Thursday.

"We will consider the next steps for the Confucius Peace Prize," he said, adding only that Wang was one of the consultants for the award.

Wang has only become more defiant. He said he will continue to participate in the prize, despite being deprived of his position.

"I've set up my own firm and I can use it to support the prize," he said.

According to registration details, his company has just 30,000 yuan ($4,700) in capital and is aimed at promoting and preserving Chinese culture through exhibitions and shows.

The nomination list for last year's Confucius Peace Prize included Yuan Longping, an agriculturalist known as the father of hybrid rice.

The winner last year went to Lien Chan, the former "vice-president" of Taiwan.

Candidates for this year's Confucius prize include Russian Prime Minister Vladimir Putin, German Chancellor Angela Merkel, South African President Jacob Zuma, Microsoft co-founder Bill Gates and former United Nations secretary-general Kofi Annan.

Liu, who also sits on the award's jury, said the panel has yet to decide when the 2011 winner will be announced.