China Evergrande Group, the world’s most heavily indebted property developer, finds itself under increased scrutiny as staff from its wealth management unit have been detained by the police in southern China.
Shenzhen City Police said in a social media statement on Saturday night that public security organs took criminal compulsory measures against China Evergrande general manager Du Liang and other suspected criminals at Evergrande Financial Wealth Management Co. Details regarding the number of individuals apprehended and the charges brought against them were not specified.
According to the reports of protests by investors at China Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified by staff as the general manager and legal representative of the wealth management division. It remains uncertain if Du is among those who were arrested.
When contacted, China Evergrande did not respond immediately for a comment. The police stated that the investigation is still ongoing and encouraged investors to report any additional financial crimes.
China Evergrande is at the heart of a crisis in China’s property sector, which has witnessed a slew of debt defaults since late 2021. This has significantly slowed down the growth of the world’s second-largest economy.
The beleaguered group, currently amid a drawn-out debt restructuring, has been selling off a variety of assets. On Friday, it announced that the decision on offshore debt restructuring, due in September, has been postponed to next month.
The company’s stock trading was halted for 17 months until August 28. Moody’s, the rating agency, downgraded the outlook for China’s property sector from stable to negative on Thursday. It cited economic challenges that would likely dampen sales despite government support, reports Bangkok Post.
A few weeks ago, Chinese developer, Country Garden narrowly dodged a potential default by securing creditor approval to postpone a critical bond repayment deadline. The developer has approximately US$187 billion in total liabilities.
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