SHANGHAI: Chinese authorities arrested Lai Xiaomin, who once oversaw more than US$280bil in assets in his role as chairman of China Huarong Asset Management Co.
Lai was expelled from the Chinese Communist Party last month after being placed under investigation for graft in April.
Huarong, the biggest of China’s four state-run bad-loan managers which rose to prominence through debt-fuelled expansion, has lost 60% of its market value this year.
President Xi Jinping has pushed an anti-corruption campaign that has nabbed more than 1.5 million Communist Party cadres.
The effort has recently reached into corporate boardrooms to help halt the debt-fuelled expansion of China’s biggest businesses, and financial regulators have also highlighted their determination to stamp out wrongdoing in the capital markets.
The Communist Party’s disciplinary committee said last month that Lai violated the central government’s financial policy and “blindly” pushed forward an expansion that deviated from the bad-debt manager’s main business.
Lai also took bribes and squandered state assets, according to the committee. Investigators found 270 million yuan (US$39mil) of cash stashed at one of Lai’s properties, and 300 million yuan of deposits at the bank account owned by Lai’s mother, Caixin reported earlier this year.
Huarong withdrew plans for a listing in China in September after reporting a 95% plunge in first-half profit. S&P Global Ratings downgraded the firm to BBB+ from A- in August.
David Webb, the Hong Kong-based activist investor, last month published a list of 26 stocks “not to own” due to links with Huarong.
The list centred around Beijing-based Huarong and China Minsheng Banking Corp, two companies that helped finance a “complex web of dealings” in 24 other publicly-traded firms, Webb wrote. — Bloomberg