The mainland's regulator is probing the chairman of Shenzhen-based developer Kaisa Group for possible violations in the sale of a trust company that he bought months before his property firm ran into financial trouble.
Kwok Ying-shing neglected to tell the China Banking Regulatory Commission about the sale of National Trust to Sino Life Insurance and sold it despite a CBRC rule requiring trust company shareholders to hold their shares for at least three years.
The CBRC might block the sale, the sources said. That would be another blow to Kwok, following Kaisa's default on close to US$52 million in US dollar bond interest payments last week.
Kwok bought National Trust for about three billion yuan (HK$3.7 billion) in mid-2014. Signs of trouble emerged at Kaisa in October after it denied rumours that Kwok was missing and unreachable. In January, sources said Kaisa was being investigated for links to a former Shenzhen official suspected of graft. The CBRC began looking into the National Trust sale after business news website Moneyweek reported it last month.
The people said Kwok controlled four companies that owned most of National Trust. He then transferred ownership of three of those companies to Sino Life chairman Jun Zhang or Sino Life employees, they said.
The move raised concerns at HSBC, which had a joint venture with National Trust. The sale meant National Trust's 50 per cent ownership of the venture was now controlled by an HSBC competitor, they said.