Beijing police launches probe into wealth firm under debt-trapped Zhongzhi Enterprise Group
Published: Nov 27, 2023 07:16 AM
Photo shows a view of Chaoyang District in Beijing, capital of China, May 14, 2022. Photo:Xinhua

Photo shows a view of Chaoyang District in Beijing, capital of China, May 14, 2022. Photo:Xinhua

The Chaoyang Branch of the Beijing Municipal Public Security Bureau announced on Saturday evening the launch of an investigation into suspected illegal activities of the wealth company affiliated with the debt-ridden Zhongzhi Enterprise Group (ZEG), in accordance with the law, and took legal actions against corresponding suspects of the company. 

To thoroughly investigate the case, recover the stolen goods, and recoup losses, the Chaoyang District Police asked investors to report the case and provided detailed relevant reporting and registration channels. 

Authorities are currently making every effort to investigate the case. They request investors to actively cooperate with the police in investigating and collecting evidence and to safeguard their rights and interests through legal channels, the statement said. 

According to its official website, ZEG holds shares in or controls a number of licensed financial institutions, including Zhong Rong Trust, Hengqin Life, Hengbang Property Insurance Co, and Tang Wealth Investment Management Co. 

The statement by the local police bureau came just a few days after ZEG issued a statement to investors. 

The company wrote that the group's personnel tried to reverse the operating difficulties by adjusting the organizational structure and mechanisms and taking a series of self-rescue measures, but the results were not as good as expected. Consequently, related products have experienced substantial breaches of contract. 

According to the simulated merger standards of intermediaries, the book value of the group's total assets is estimated to be approximately 200 billion yuan. 

However, because the group's assets are concentrated in debt and equity investments, which are long-term and difficult to liquidate, the expected recoverable amount is low, liquidity is exhausted, and asset impairment is serious, the company said. 

After excluding the margin, the principal and interest scale of related liabilities is approximately 420-460 billion yuan. Preliminary due diligence showed that the group was seriously insolvent, the statement said. 

All employees of ZEG deeply apologize for the losses caused to investors. The group will, following the principles of marketization and the rule of law, strictly abide by legal regulations, actively cooperate with, and urge intermediaries to further deepen the work of asset clearance and capital verification, and accurately identify the details of assets and liabilities. 

According to information on the official website of ZEG, its predecessor, Heilongjiang Zhongzhi Enterprise Group Co, was founded in 1995. 

The company's early main businesses were in papermaking material operations and real estate development. In 1999, it underwent joint-stock restructuring and established ZEG. 

Since 2001, the group has entered the financial industry and has been developing its real estate business. In 2002, it began to develop trust business and is currently an asset management company with its headquarters in Beijing.