BNR – Several employees of the wealth management unit in Evergrande have been apprehended by the police in Shenzhen, China.
This development follows a call from the authorities on social media urging people to report any instances of suspected fraud.
The Shenzhen Nanshan District Police Bureau acted against individuals suspected of criminal activity at Evergrande Financial Wealth Management.
The statement did not state detailed information about the number of people detained or who they are. However, it mentioned an individual named Du, but did not disclose the charges they might face.
Authorities Take Action
The case is still under investigation, with investors being encouraged to file complaints to the concerned authorities.
Evergrande Financial Wealth Management is a subsidiary of Evergrande and has been operational for nearly eight years. Additionally, the establishment’s headquarters is in Shenzhen.
Du Liang, according to a LinkedIn profile, serves as the general manager of Evergrande Financial Wealth Management. However, it couldn’t be verified if he was among those detained.
In a related context, China’s National Administration of Financial Regulation (NAFR) revealed that the assets and liabilities of Evergrande Life Assurance would be transferred to the state-owned Haigang Life Insurance Co. Ltd.
Evergrande Stock Plummets
The news had an impact on Evergrande’s stock performance, with shares declining by approximately 3% during Monday’s midday trading session. Furthermore, the stock price was already recovering from an initial 25% loss.
Ever since 2020, Beijing has been tightening the screws on property developers’ access to credit.
Previously one of China’s largest corporations, Evergrande had amassed a colossal debt exceeding $300 billion as it rapidly expanded.
Currently, the company is in the midst of restructuring its operations after defaulting on its debts and incurring substantial losses.
The crisis engulfing China’s real estate industry has also impacted other prominent property developers, including Country Garden and Sino-Ocean.
Given the significance of China’s real estate sector in the world’s second-largest economy, experts have raised concerns that the crisis could pose risks to economic stability.
Additionally, Beijing has been conducting a crackdown on alleged financial sector corruption, resulting in severe penalties for top executives.
