Chinese authorities open probe into troubled shadow bank Zhongzhi, detain suspects

Police in Beijing have imposed ‘criminal compulsory measures’ against several suspects at Zhongzhi Enterprise Group

The shadow bank, one of China’s largest, reported an asset shortfall of US$36 billion earlier this week

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Zhongrong is a subsidiary of Zhongzhi Enterprise Group, one of China’s top private wealth managers. Photo: Bloomberg

Published: 1:12pm, 26 Nov 2023Updated: 8:32pm, 26 Nov 2023

Authorities have opened an investigation into Zhongzhi Enterprise Group and detained several suspects days after the shadow bank, one of mainland China’s largest, revealed a staggering US$36 billion shortfall that could threaten the stability of the country’s financial system.

Police in Beijing have imposed “criminal compulsory measures” against several suspects, including an individual surnamed Xie, according to a statement on WeChat on Saturday. Investors should actively cooperate with the police investigation and evidence collection, the statement added.

Xie Zhikun, the founder of Zhongzhi, died of a heart attack in 2021, but many of his relatives hold key executive positions in the company. The authorities did not elaborate on the measures that have been taken against the suspects.

The opaque term, similar to past cases against high-profile figures like China Evergrande Group founder’s Hui Ka-yin, can indicate possible house arrest in local regulatory parlance.

Xie Zhikun, the founder of Zhongzhi Enterprise Group, died of a heart attack in 2021. Photo: Weibo

Zhongzhi did not immediately reply to an email from the Post seeking comment on Sunday. A phone call to the company went unanswered.