[Epoch Times September 30, 2021]This autumn was really an eventful period. A few days ago, HNA Chairman Chen Feng and CEO Tan Xiangdong were suddenly arrested. The current situation of HNA’s bankruptcy and reorganization is: The second meeting of creditors has ended. Liaoning Fangda Group will inject 38 billion yuan and become the new owner of HNA’s aviation sector. The new owner of HNA’s airport sector is determined to be Hainan Holdings, a state-owned enterprise.
On the surface, the HNA crisis has been resolved, but the arrests of Chen Feng and Tan Xiangdong seem to herald the beginning of a new round of turmoil, because recently too many business bosses and financial executives have been arrested. Moreover, in this tense atmosphere, the state media also reported that the eighth round of the central government’s inspections will target 25 financial institutions including the People’s Bank of China, and that financial corruption and financial risks have been specifically mentioned.
So, what is the connection behind this series of events? It is also said that the large-scale arrest of private enterprises will begin, so who will be next? Let’s talk about these topics today.
The reason why Chen Feng was arrested
We see that when the world is paying attention to the Evergrande crisis, it was unexpected that a thunderstorm landed on HNA. On September 24, HNA issued a notice stating that Chen Feng and Tan Xiangdong were taken coercive measures for suspected crimes.
So far, the two chairman of HNA, one Wang Jian, fell to death in France three years ago, and the other Chen Feng is now imprisoned. Some people say that the CCP arrested Chen Feng to warn Xu Jiayin. We will talk about this later. Let’s take a look at the reasons for the arrest of Chen Feng and Tan Xiangdong.
On the day when the news of the arrest of the two men was announced, Gu Gang, the head of the HNA working group, issued a letter to all employees. The letter mentioned that “when ambitions and desires send the group into the abyss, they can neither clearly understand themselves nor seize the opportunity, nor have the courage to tell the truth, nor the courage to give and take responsibility… even to the country. Hundreds of billions of dollars of huge losses have been caused. At this time, many things are really doomed.”
From Gu Gang’s letter, it can be roughly guessed that the two of them concealed something and shirked something during the reorganization of HNA, and caused the authorities to pay a huge price.
Later, an article on Caixin.com revealed a detail. One of HNA’s most difficult issues in the process of bankruptcy and reorganization is the repayment of HNA’s personal wealth management products. The scale of claims exceeds RMB 30 billion and the number of people involved is as many as 60,000, of which approximately 23,000 are ” Internal employees of the “HNA Department”. How to dispose of these personal financial products fairly and properly has been a major hurdle that has blocked the reorganization of HNA Group in the past few months.
The HNA working group had hoped that Chen Feng would use the assets of the Hainan Cihang Charity Foundation to repay these financial products in order to alleviate the urgent need, but Chen Feng refused. Public information shows that the foundation’s net assets are 1 billion yuan.
In fact, there was a warning before Chen Feng was arrested. On September 18, Gu Gang mentioned at the HNA regular meeting that all the rights and interests of the old shareholder team and the Cihang Foundation in the HNA Group and member companies will be cleared.
According to the previously disclosed shareholding structure of HNA Group, Cihang Foundation and Cihang Foundation, both domestic and overseas, own more than 50% of the shares of HNA Group, and 12 natural-person shareholders hold 47.5% of the shares, of which Chen Feng and Wang Jian each hold 14.98 shares. %, is the largest natural person shareholder.
The clearing of the equity means that Chen Feng and others will officially withdraw from the HNA Group and all of its companies from the law. At the same time, the mysterious Cihang Foundation no longer has any relationship with HNA.
As you all know, HNA’s equity is notoriously complicated, and it involves the interests of many powerful families. People like Chen Feng, Xu Jiayin, or Xiao Jianhua are just the “white gloves” behind the powerful and powerful, and the shares they hold may not be their own. In 2000, Chen Feng said that no one in China could understand HNA.
The forces behind HNA
After Chen Feng was arrested, the mainland Caixin website published a special article on September 24-“The Nepotism Transaction of the HNA Executive Family”.
The article mentioned that the arrested HNA chairman Chen Feng, as well as the late former chairman Wang Jian and many other HNA executives, all have companies controlled or participated in by their relatives. They have undertaken a large amount of HNA’s business and purchases and obtained HNA’s financial support and commercial contracts cover HNA’s aircraft and aviation material procurement, real estate development, information engineering, advertising, insurance and other businesses. Some of these related-party transactions between HNA Group and the company’s executives began as early as 2000, and some extended to HNA’s overseas mergers and acquisitions, and they were not fully disclosed.
Cai Shenkun, a mainland writer who wrote “How Far Can HNA Fly”, believes that it is not surprising that HNA has come to this day. For an enterprise with trillions of debts in a short period of time, the flow of its huge funds has always been a mystery. Now, although the enterprise is bankrupt, the huge amount of funds flowing to the unknown must be accounted for.
But can you explain it clearly? Looking at the rapid development history of HNA, one can understand how much power and interests are intertwined behind HNA.
In 2015, HNA Group entered the world‘s top 500 for the first time, ranking 464th. After that, HNA started an aggressive buying-buying rhythm. It acquired a large number of shares in companies such as Hilton Hotels and Deutsche Bank. In its heyday, it employed 400,000 employees worldwide. From the beginning of 2015 to the end of 2017, in less than 3 years, HNA’s M&A investment scale was close to 50 billion U.S. dollars, and its ranking in the world‘s top 500 also rose rapidly to 170.
In 2017, the liquidity crisis of HNA Group was completely exposed. However, the risk control of major banks actually ignored HNA’s debt ratio and still helped increase the expansion of highly leveraged financing. At that time, the headlines of the financial news also reported that “the heads of the eight major banks, including the China Development Bank and the Bank of China, have unanimously expressed their support for the development of the HNA Group.” The total amount of syndicated credits obtained by HNA exceeded RMB 800 billion.
In 2018, eight state-owned and commercial banks including Postal Savings Bank of China took the lead in subscribing. HNA Holdings, a listed company of HNA, successfully issued RMB 1 billion bonds. In 2019, with the China Development Bank as the lead bank and correspondent bank, HNA received another RMB 4 billion “blood transfusion” from the eight major banks.
As of the second quarter of 2019, HNA Group’s total liabilities have reached 706.7 billion yuan, with a debt-to-asset ratio of 72%.
As you can see, it is very obvious that both HNA and Evergrande, which just exploded, are the products of collusion between mainland officials and businessmen. There are heavy shady behind them, and few people can snoop into the real core, just like Chen Feng said. , It is indeed “incomprehensible” for people.
Xi Jinping inspects 25 financial institutions
We can see that these large companies that have been involved in recent incidents have basically made their fortunes through capital operations, and many state-owned banks have also been involved. For example, Evergrande’s liabilities involve more than 128 banks and more than 121 non-bank institutions.
Take China CITIC Bank as an example. In the past few years, CITIC Bank has supported Evergrande through funds, reaching more than 50 billion yuan. A person in the banking industry disclosed that if daily mortgage loans and credit loans are added, the financial support Evergrande Group will receive from China CITIC Bank should be between 70 and 100 billion.
Obviously, this series of financial incidents not only exposed the shady interests of political and business collusion, but also made the CCP’s senior officials feel like they were sitting on the crater. On September 25, the official website of the Central Commission for Discipline Inspection issued a document “Preventing Leading Cadres from Being Kidnapped by Interest Groups.” Everyone knows that Xiao Jianhua, the boss of the Tomorrow Department, has always been considered the “white glove” of the Zeng Qinghong family.
On the following 26th, the Central Commission for Discipline Inspection announced that it would conduct “inspections” on the “party organizations” of 25 financial institutions including the Central Bank, China Banking Regulatory Commission, and China Securities Regulatory Commission.
It can be seen that in the past two months, especially in September, many senior executives of financial institutions at the central level have been investigated and dealt with, including Cai Esheng, former vice chairman of the China Banking Regulatory Commission, and former vice president of the China Development Bank. He Xingxiang, Yang Bailu, former vice president of Henan Branch of Agricultural Development Bank of China, Yu Huayuan, former vice president of Liaoning Branch of Bank of Communications, etc…
Today, the CCP has conducted inspections of 25 financial institutions for the first time. It is believed that Xi Jinping’s purge of the financial system has entered a white-hot stage. It can be predicted that in the next period of time, Beijing may have more actions, and it is very likely that more “financial tigers” will fall.
For many years, China’s financial system has been controlled by Jiang’s anti-Xi forces. After Xi Jinping came to power at the 18th National Congress of the Communist Party of China, in order to fight for the right to speak in finance, he eliminated many “financial tigers” in the anti-corruption storm.
Lai Xiaomin, who has embezzled money and goods totaling more than 1.8 billion yuan, was executed on January 29 this year. On the same day, the official Xinhua website of the Communist Party of China issued an article “Lai Xiaomin surrenders the law, there is no “gold medal to avoid death” for corruption! “The article said that when financial “experts” degenerate into “inner ghosts”, corruption in the financial sector is often intertwined with market risks and political risks, which can easily lead to systemic risks.
The article also emphasized that corruption has never been “free of death”! There is no outsider, and no right to the law. Lai Xiaomin has already broken the law, but “the fight against corruption is always on the road.”
Many analysts believe that the execution of Zeng Qinghong’s confidant Lai Xiaomin was one of the landmark events of the open split between Xi Jinping, Jiang Zemin and Zeng Qinghong. However, the corruption that the official media shouted is not “free from death” and obviously has the meaning of knocking the mountain and shaking the tiger.
Capture Chen Feng and kill a hundred people
This time the HNA reorganization, I believe that the fighting behind it will be very fierce. Until Chen Feng is arrested, the reorganization can only continue. On the same day that Chen Feng was announced, the Chinese Communist Party’s official media also reported a piece of news, Guizhou. Yuan Renguo, the former chairman of the Maotai Group, was sentenced to life imprisonment for taking bribes of more than 100 million yuan.
Reminiscent of the current Evergrande crisis, some analysts believe that Xu Jiayin may also be in danger next. Because the CCP does not want the market to be “big to fail”, nor can it cause financial crisis and social instability due to the collapse of Evergrande. Therefore, severely punishing Xu Jiayin, or even throwing him into prison, may become an option for the CCP.
Everyone knows that when the Communist Party does things, it often means killing a hundred people, and it doesn’t matter what crimes are used in the process, because the CCP can always find out the reasons easily.
Just now, we mentioned that many senior executives in the financial industry were arrested. In fact, during this period, the capital market was not peaceful, and many corporate bosses were arrested. Lu Media reported that on September 18, the chairman of Huayu Software Shao Xue was arrested on suspicion of bribery; on the 24th, Changhang Phoenix’s controlling shareholder Li Jianming was arrested on suspicion of criminal cases; on the 26th, Tianfang Technology’s chairman Wang Tian was detained on suspicion of “serious violation of discipline and law”; On the 27th, the general manager and deputy general managers of Jinchuang Group received a notice from the China Securities Regulatory Commission for filing a case because of suspected manipulation of the securities market. On the 29th, Wu Gang, chairman of Jiuding Group, had another accident.
We have seen that a new round of cleanup in the financial and capital markets has begun intensively. This may be closely related to the current political and economic environment in China. One is that Xi Jinping wants to clear the obstacles for next year’s 20th National Congress. Therefore, Xi has been fighting against his opponents, not only grabbing their money but also restricting their rights. Therefore, the “white gloves” of the Jiang Zeng family continue to have troubles; another On the one hand, Xi Jinping will also need to expand capital and attract funds to aid the declining Chinese economy. The Beijing authorities have been forcibly adjusting the financial and capital markets. Of course, those corporate bosses who have cheated and hollowed out listed companies have become the targets of the crackdown. The authorities selectively grasped some typical models in order to give confidence to outside capital and continue to invest in China.
However, under the CCP system that has been so bad from top to bottom, can Xi Jinping’s wishes come true?
Institute of Finance and Economics
Planning: Yu Wenming
Written by: Chen Siyu
Editor: Wei Ran, Yu Wenming
Editing: Songs
Producer: Wen Jing
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Editor in charge: Lian Shuhua
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