HNA Group Chairman and CEO Chen Feng and Tan Xiangdong Arrested by Police in China

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In a brief statement on Friday, the ailing conglomerate said the two leaders had been “placed under compulsory measures” by the Hainan Provincial Police for alleged criminal offenses.

He did not specify which laws were suspected of having been broken. In the Chinese legal system, “mandatory action” by the police usually precedes formal arrests.

HNA Group is one of the most important companies in China, previously known for its aggressive transactions. In the statement posted on social media on Friday, he said the company and its subsidiaries “were operating in a stable and orderly manner, with restructuring work proceeding in accordance with the law.”

“Business operations were not affected in any way,” he added.

Tan, the managing director, is a U.S. citizen, according to a filing with the U.S. Securities and Exchange Commission in November 2018. The U.S. Embassy in Beijing declined to comment.
News of Tan’s detention came the same day it was announced that Huawei CFO Meng Wanzhou had reached a deal with the US Department of Justice and was allowed to return home from Canada, where she had spent nearly three years under house arrest.

Asked about the HNA executive At a press conference on Monday, a spokeswoman for the Chinese Foreign Ministry said she was not aware of Tan or his case.

Once one of China’s largest conglomerates, HNA Group went bankrupt earlier this year. The news marked a dramatic fall for one of the most important players in China’s private sector.

HNA started as an airline over two decades ago, but has rapidly grown into other lines of business over the years through acquisitions abroad, as well as investments in real estate and finance.

Starting in 2015, the group embarked on a $ 40 billion shopping spree that included investments in Hilton (HLT) and German Bank (Comics). At the end of 2017, HNA’s assets exceeded 1,200 billion yuan ($ 186 billion).
But these acquisitions were built on a mountain of debt, which reached 707 billion yuan ($ 110 billion) in June 2019. The company’s woes were exacerbated by the coronavirus pandemic, and in February 2020, the Hainan government officials took control.
HNA once wanted to rule the world.  Now he faces bankruptcy

At the request of the company, Provincial authorities have established a “task force” with other agencies with the aim of resolving the company’s financial crisis.

News of leadership issues this week is another big Chinese company is in the spotlight for its own debt crisis.
Investors have been waiting for weeks to find out what will happen to Chinese conglomerate Evergrande, as global markets are swayed by contagion fears.
The real estate developer is facing a massive cash flow crisis, which is seen as a major test for Beijing. Some analysts fear it will even become the Lehman Brothers moment in China, sending shock waves through the world’s second largest economy.
5 things to know about the Evergrande crisis: a simple failure
China is also in the midst of a sweeping crackdown on its private sector, with goals ranging from technology to finance.

However, even public entities have not been spared. These behemoths, along with other government entities, appear to be the latest targets of Beijing’s scrutiny of the financial sector.

The country’s top anti-corruption official on Sunday called for “a thorough disciplinary inspection of financial institutions,” according to the state-run Xinhua news agency.

The media outlet said that Zhao Leji, a senior politician and member of the Communist Party, urged financial institutions to take measures to better meet the needs of ordinary people and avoid systemic financial risks.

A new round of inspections has been approved by the ruling Communist Party’s anti-corruption watchdog, which will conduct audits of party organizations at 25 financial institutions, according to the Xinhua report, also posted on a website. of the government.

In China, it is common for large corporations to form internal organizations to ensure that their businesses stay in line with the Party.

Institutions under scrutiny include the country’s central bank, major financial regulators, the Shanghai Stock Exchange, and so-called “Big Four” state banks.

– CNN’s Beijing office, Laura He and Jill Disis contributed to this report.


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