China's troubled HNA group says Chairman, CEO detained by police

The chairman and CEO of the Chinese conglomerate HNA Group Co. have both been detained by police, the latest setback for a firm that is being managed by the government.

Chairman Chen Feng and CEO Tan Xiangdong were detained by police in the southern province of Hainan over suspected crimes, the company said in a statement late Friday, without providing details of what the alleged offenses were.

HNA Group’s operations are unaffected, the statement added, and its restructuring is moving forward smoothly.

Once a prominent shareholder of firms like Hilton Worldwide Holdings Inc. and Deutsche Bank AG, HNA is the embodiment of a short-lived era when Chinese conglomerates expanded aggressively with global acquisitions fueled by debt.

That era ended in about 2018 as China ramped up capital controls, and the government has since been working to sort through the financial dealings of firms like HNA. Three listed companies under the group said in February that shareholders and affiliates misappropriated at least 63 billion yuan (about $9.8 billion) of funds.

The detentions come a day after China sentenced the former chairman of liquor giant Kweichow Moutai Co., Yuan Renguo, to life in prison for taking millions in bribes, as Chinese President Xi Jinping extends his crackdown on the nation’s tycoons.

Weighed by more than $75 billion of debt even after shedding assets, HNA’s core aviation business suffered during the coronavirus pandemic, triggering the government of Hainan to take charge in February last year.

A key Communist Party-led committee at HNA left Chen, its founder, off a list of members earlier this year, signaling he was in trouble. The party committee was taken over by Gu Gang, leader of a government-appointed working group overseeing the company’s liquidity risk.

HNA was founded as an airline in the 1990s by Chen and his partner Wang Jian. Wang died in 2018 in a mysterious accident in France. The French daily Liberation reported in early 2019 that Wang committed suicide, citing a witness.