China police detain staff at Evergrande wealth unit

Image source, Reuters

  • Author, Peter Hoskins
  • Role, Business reporter

Staff of embattled property developer Evergrande's wealth management unit have been detained by police in Shenzhen, southern China.

police called on the public to report any cases of suspected fraud.

Meanwhile, the takeover of the firm's insurance arm by a newly created state-owned insurer was announced on Friday.

Evergrande is at the centre of a crisis that has engulfed China's real estate industry since 2021.

"Recently, public security organs took criminal compulsory measures against Du and other suspected criminals at Evergrande Financial Wealth Management Co," Shenzhen Nanshan District Police Bureau said on Saturday.

No further details were given on how many people were detained, their identities - except for the person identified only as Du - or what charges they could face.

Police also said the case is still under investigation and investors could file complaints to authorities.

Evergrande Financial Wealth Management Co. is a wholly-owned unit of Evergrande, which was established in 2015 and is based in Shenzhen.

According to his Linkedin profile, Du Liang is the general manager of Evergrande Financial Wealth Management. The 大象传媒 was unable to verify whether he was among those detained by police.

Evergrande did not immediately respond to a request for comment from the 大象传媒.

by China's National Administration of Financial Regulation (NAFR) Evergrande Life Assurance's assets and liabilities will be assumed by state-owned Haigang Life Insurance Co. Ltd.

Evergrande shares were trading flat on Monday afternoon after recovering from a loss of 25% earlier in the day.

Since 2020, Beijing has been making it increasingly difficult for property developers to get access to credit.

Once one of China's biggest companies, Evergrande had racked up debts of more than $300bn (拢242bn) as it expanded rapidly.

It is currently attempting to restructure its business after defaulting on its debts and making massive losses.

Other major Chinese property developers, including Country Garden and Sino-Ocean, have been struggling to meet debt repayments.

China's real estate industry is a key part of the world's second largest economy

Some experts fear the crisis in the sector could threaten to destabilise the economy and spill over into the global financial markets.

Beijing has also been conducting a crackdown on alleged corruption in the country's financial sector for more than two years.

Top executives have been hit with severe punishments, including the death penalty.