For­mer chair­man of bad-debt man­ager China Huarong ar­rested

The Star Malaysia - StarBiz - - Foreign News -

SHANG­HAI: Chi­nese au­thor­i­ties ar­rested Lai Xiaomin, who once over­saw more than US$280bil in as­sets in his role as chair­man of China Huarong As­set Man­age­ment Co.

Lai was ex­pelled from the Chi­nese Com­mu­nist Party last month af­ter be­ing placed un­der in­ves­ti­ga­tion for graft in April.

Huarong, the big­gest of China’s four staterun bad-loan man­agers which rose to promi­nence through debt-fu­elled ex­pan­sion, has lost 60% of its mar­ket value this year.

Pres­i­dent Xi Jin­ping has pushed an anti-cor­rup­tion cam­paign that has nabbed more than 1.5 mil­lion Com­mu­nist Party cadres.

The ef­fort has re­cently reached into cor­po­rate board­rooms to help halt the debt-fu­elled ex­pan­sion of China’s big­gest busi­nesses, and fi­nan­cial reg­u­la­tors have also high­lighted their de­ter­mi­na­tion to stamp out wrong­do­ing in the cap­i­tal mar­kets.

The Com­mu­nist Party’s dis­ci­plinary com­mit­tee said last month that Lai vi­o­lated the cen­tral gov­ern­ment’s fi­nan­cial pol­icy and “blindly” pushed for­ward an ex­pan­sion that de­vi­ated from the bad-debt man­ager’s main busi­ness.

Lai also took bribes and squan­dered state as­sets, ac­cord­ing to the com­mit­tee. In­ves­ti­ga­tors found 270 mil­lion yuan (US$39mil) of cash stashed at one of Lai’s prop­er­ties, and 300 mil­lion yuan of de­posits at the bank ac­count owned by Lai’s mother, Caixin re­ported ear­lier this year.

Huarong with­drew plans for a list­ing in China in Septem­ber af­ter re­port­ing a 95% plunge in first-half profit. S&P Global Rat­ings down­graded the firm to BBB+ from A- in Au­gust.

David Webb, the Hong Kong-based ac­tivist in­vestor, last month pub­lished a list of 26 stocks “not to own” due to links with Huarong.

The list cen­tred around Bei­jing-based Huarong and China Min­sheng Bank­ing Corp, two com­pa­nies that helped fi­nance a “com­plex web of deal­ings” in 24 other pub­licly-traded firms, Webb wrote.

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