Officials investigating the former chairman of China’s largest state-owned asset management firm for bad loans have seized 270 million yuan (US$39.5 million) in cash from properties owned by the businessman, according to a mainland media report.

Lai Xiaomin, who led China Huarong Asset Management, was put under investigation for suspected “serious discipline violations”, a euphemism for corruption, in April. He resigned the same month.

Head of China’s biggest bad-debt manager Huarong under investigation for graft

Financial news portal Caixin on Friday quoted unnamed sources close to the investigation as saying that a total of “270 million yuan worth of Chinese and foreign currency had been uncovered at several residences in Beijing under the name of Lai Xiaomin”.

The money was found after Lai had been formally detained, the person said.

The report did not give a breakdown of the currencies or how much of each was discovered.

Set up in 1999 to handle distressed assets, Huarong is one of China’s big four “bad” banks, which between 1999 and 2005 soaked up non-performing loans worth 1.4 trillion yuan from state-owned banks.

It is also one of the most active bond issuers on the Hong Kong market and currently has more than 210 billion yuan worth of bonds set to mature in 2020, with a further 52.7 billion yuan between 2025 and 2027.

Huarong orders staff to divulge offshore ties as it braces for regulatory probes into operations

Huarong’s rapid expansion caught the attention of central authorities in Beijing several years ago, but came under closer scrutiny when President Xi Jinping, in his speech at the Communist Party’s national congress in October, made eliminating financial risk one of his top three priorities.

Earlier this year, Liu He, one of Xi’s closest aides, was appointed head of the new Financial Stability and Development Commission, which oversees the People’s Bank of China, and the country’s banking and insurance regulators. He has been tasked with tackling the “grey rhino” risks to the nation’s economy.

Staff cuts as Huarong continues to repair damage of corruption investigation

Despite the huge amount of cash reportedly found at Lai’s homes, Caixin said it might be just the tip of the iceberg. In an earlier report it alleged that over a period of many years, Lai had channelled billions of yuan in illicit funds to a private company based in northwest China’s Ningxia Hui autonomous region.

Huarong has provided funding for some of China’s biggest corporate borrowers, including conglomerate HNA Group, energy and financial giant CEFC China Energy, China Huishan Dairy Holdings, Hanergy Thin Film Power Group and Dandong Port Group.

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