Beijing, Sept 24 (AFP/APP):Chinese police have detained two top executives of the debt-laden conglomerate HNA Group on suspicion of “illegal crimes”, the group said late Friday, as the government in Beijing further cracks down on the country’s corporate sector.
Transport and logistics giant HNA Group said its chairman Chen Feng and CEO Tan Xiangdong have been detained by police in southern China’s Hainan island, where the firm is headquartered.
“Measures have been enforced against (Chen and Tan) in accordance with the law for suspected illegal crimes,” the group said in a statement, without elaborating on the alleged offences.
It added that the firm’s operations remain “stable” and “have not been impacted”.
The group — which owns Hainan Airlines, one of China’s biggest carriers, and is China’s largest private aviation conglomerate — filed for bankruptcy in January and is in the middle of a restructuring process overseen by the local government, after struggling to resolve a drawn-out cash crisis.
Chen founded Hainan Airlines in 1993, growing it from a regional airline into a sprawling conglomerate.
Once an aggressive dealmaker, HNA previously held stakes in the Hilton hotel group and Deutsche Bank, and had investments spanning the aviation, tourism, real estate and financial services sectors as part of an acquisition binge.
In 2017, the Chinese government cracked down on HNA’s aggressive global expansion, forcing it to slim down its assets to focus on its airline and tourism businesses.
Weighed down by billions of dollars of debt, the struggling conglomerate has since been trying to dispose of its assets.
The move comes as Chinese real estate behemoth Evergrande faces a potential collapse, with over $300 billion in liabilities — equivalent to two percent of China’s GDP. It is widely expected to default on bond payments due this week.
Like HNA, it expanded in recent years via aggressive borrowing but its accumulated mountain of debt poses looming risks to China’s financial system and social stability, leading to sustained protests from investors in recent weeks.
In addition, other “grey rhinos” — overleveraged Chinese corporate giants seen as risks — such as real estate empire Wanda, insurance provider Anbang and investment giant Fosun have all faced similar crackdowns to HNA in recent years.
HNA executive Gu Gang, head of the working group responsible for the firm’s restructuring process, announced news of the detentions Friday at a company meeting attended by more than 2,700 staff, the group said in a separate statement.
In a speech at the meeting, Gu emphasised the need for greater Communist Party oversight of the firm — a nod to the increased influence of authorities over its operations.
HNA did not immediately respond to a request for comment.
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