Chinese authorities have detained employees from the wealth management division of China Evergrande Group (OTC:EGRNF) after the company failed to repay investors. This is the first criminal investigation initiated against the troubled property developer since its debt crisis in 2021.
The detentions suggest a potential new investigation that could worsen the company’s existing problems.
During protests by investors at Evergrande’s Shenzhen headquarters in 2021, Du Liang was identified as the general manager and legal representative of Evergrande’s wealth management division.
The police in Shenzhen announced on social media that they had taken “criminal compulsory measures” against Du and other suspected individuals associated with Evergrande Financial Wealth Management Co.
However, it is unknown whether Du was among those detained, as the police statement did not provide details such as the number of arrests, charges, or the date of detention.
Local police in Shenzhen revealed that they recently arrested several employees from Evergrande Wealth, a division established in 2015 to raise funds for the parent company from individual and corporate investors.
This operation falls under China’s “shadow banking” sector, which operates with relatively light regulation outside the conventional banking system and plays a significant role in the country’s financial sector by channeling funds into high-yield investments.
Evergrande’s current valuation is approximately HK$ 8.2 billion, a significant decline from its peak valuation of nearly HK$ 420 billion in 2017.
