China Evergrande Group, the embattled property giant, is facing further troubles as some staff from its wealth management unit have been detained by police in southern China. The development raises concerns of a new investigation that could exacerbate Evergrande’s already dire situation.
The Shenzhen city police released a statement on social media, stating that “criminal compulsory measures” had been taken against Du and other suspected criminals at Evergrande Financial Wealth Management Co. Du Liang, who was identified by staff as the general manager and legal representative of Evergrande’s wealth management division, was involved in protests by disgruntled investors at Evergrande’s headquarters earlier this year.
The police statement did not reveal the number of people detained, the charges against them, or the date of their apprehension. Reuters was unable to confirm if Du himself was among those arrested. China Evergrande has yet to respond to the news.
China Evergrande, known for being the world’s most indebted property developer, has been at the center of a crisis in China’s property sector. Since late 2021, the sector has witnessed numerous debt defaults that have negatively impacted the country’s economy. Evergrande has been undergoing a debt restructuring process, which has involved selling off assets. On Friday, the company announced a delay in its decision on offshore debt restructuring until next month.
The trading of Evergrande’s stock had been suspended for 17 months until August 28. Moody’s, a credit rating agency, recently downgraded the outlook on China’s property sector to negative from stable, citing economic challenges that will likely dampen sales despite government support.
The detention of staff at Evergrande’s wealth management unit further compounds the company’s woes and adds to the uncertainty surrounding its future. Investors will be closely monitoring the situation as it continues to unfold.