Chinese Police Hold Billionaire With Links to Fall of Zhou Yongkang

Liu Canglong's detention comes as banking regulators investigate Sichuan Trust Co., which he controls.
2021-06-09
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Chinese Police Hold Billionaire With Links to Fall of Zhou Yongkang Billionaire Liu Canglong (R), who was detained for illegally embezzling trust assets, and his cousin Liu Han (L), who was linked to the 2013 bribery and abuse of power case of jailed former head of Chinese law enforcement, Zhou Yongkang.
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Authorities in the southwestern province of Sichuan have detained a businessman with links to the family of jailed former head of Chinese law enforcement, Zhou Yongkang.

Liu Canglong was detained as part of ongoing investigations into the collapse of a Sichuan trust company, which was taken over by regulators last year with an estimated 25 billion yuan in debt.

Liu's companies hold a cumulative 54.2 percent stake in Sichuan Trust Co., and he is currently being held by police in the provincial capital Chengdu on suspicion of misappropriating trust funds, his Sichuan Hongda Co. said in a report to the Shanghai Stock Exchange on June 7.

Sources from the Sichuan Trust Investor Rights Protection Group said Kong Weiwen, who chaired Sichuan Trust’s supervisory board, vice president in charge of risk control Chen Hongliang and chief financial officer Hu Yingfu were detained at the same time.

But an industry insider told RFA that Liu's detention had deeper political motivations behind it, as his cousin Liu Han had been accused of involvement in the Zhou Yongkang bribery and abuse of power case in 2013.

"Everyone knows this only too well, but no one in China will say it openly," the industry insider said.

Liu, 66, controls mining-to-finance conglomerate Sichuan Hongda, which was named and shamed by banking regulators in May as having committed "significant violations of laws and regulations" as a shareholder. Similar accusations were leveled at a linked company, also controlled by Liu.

His cousins Liu Han and Liu Weiyin were sentenced to death in 2014 for multiple homicides in connection with the fall of jailed security czar Zhou Yongkang.

A Sichuan-based journalist who gave only a surname Wang said his detention comes after appeals, petitions and complaints from around 1,000 investors.

"The scale of the funding crisis has yet to be disclosed," Wang said. "I only know that it was the Tahoe Group ... that was the last straw for him."

Easy scapegoats

The Tahoe Group had borrowed around four billion yuan and had defaulted on a court order to repay the debt with interest in full, with as much as 200 billion yuan of its own debt.

Repeated calls to several different departments of the Sichuan Hongda Group rang unanswered during office hours on Wednesday.

Sources said Liu had been repeatedly hauled in for questioning by the authorities since Liu Han's detention in 2013, and has been incommunicado at times, once for more than a year.

He started to be seen more frequently in public in 2019, but soon ran into further problems with the seizure of Yunnan Jinding Zinc Industries by the Yunnan authorities, as well as being forcibly divested of assets in hydropower and liquor manufacturing.

Private billionnaires in China are generally tolerated by the ruling Chinese Communist Party (CCP) until they run into trouble, when they make easy scapegoats for Beijing's anti-corruption campaign, enabling the state to seize control of their assets and nip their power and influence in the bud.

Chengdu-based lawyer Ran Tong said Liu had kept a low profile for many years, before being detained.

"With the current economic situation ... private entrepreneurs who make a lot of money look like fat pigs," Ran said. "In hard times, they are turned into victims."

"The government will always pick on them first, as long as there is something [to charge them with]," he said.

Reported by Xiaoshan Huang and Chingman for RFA's Cantonese Service. Translated and edited by Luisetta Mudie.

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