Police arrested both a chairman and CEO of a top Chinese airline group for undisclosed crimes.

China’s HNA Group announced in a Sept. 24 statement that its chairman Chen Feng had been taken into custody for criminal allegations. Its CEO Tan Xiangdong was also taken away.

Communist Party liaison and head of a joint workgroup of HNA, Gu Gang, issued an urgent email to all employees overnight, providing hints about the incident. He claimed they were held responsible for the “loss of hundreds of billions of yuan for the country.” However, neither the group nor the Party boss spoke of their specific criminal offenses.

Cai Shenkun, a U.S.-based China commentator and expert at NBD Think Tank, told The Epoch Times on the same day that the downfall of the chairman came as no surprise. He had anticipated the result years ago, saying that the arrest comes as a result of long-term collusion.

“Either HNA or the embattled Evergrande Group is the outgrowth of collusion between Chinese officials and businessmen,” said Cai. “But such enterprises aren’t sustainable because the price of the alliance is so costly that they’ll lose balance.”

“Although it’s hard to verify countless rumors about the group,” the expert admitted, “it’s positive that HNA couldn’t have gained such savage growth without seeking influence with powerful political figures.” Cai added the same went for large loans that the company previously landed.

Public information shows Chen had a strong official background working for the Civil Aviation Administration of China and the government of southern China’s Hainan Province before he and his business partner Wang Jian created Hainan Airlines, the predecessor of HNA Group, in 1993.

HNA Group is a Chinese conglomerate headquartered in Haikou city, Hainan Province. It covers services in aviation, real estate, finance, tourism, logistics, and more.

With the support of state-run banks and local authorities, the group expanded rapidly. It also harvested foreign acquisitions in quick succession from 2015 to 2017, including California-based tech firm Ingram Micro Inc. for $6 billion and Carlson Hotels for an undisclosed sum.

However, its spending spree drew scrutiny from the Chinese regime and overseas regulators in 2017. China’s new measures prohibited state-owned banks from lending money to private companies, which dealt a heavy blow to HNA. Mounting liquidity risks began to surface and pose a threat.

On Jan. 29, 2021, HNA Group declared bankruptcy. Currently, Hainan Airlines—always its core subsidiary—keeps normal operations. The group is waiting for the assessment result of its restructuring plan, which is due on Sept. 30. If it fails to get approved, the company will eventually undergo liquidation.

Luo Ya contributed to this report.

Frank Yue
Frank Yue is a Canada-based journalist for The Epoch Times who covers China-related news. He also holds an M.A. in English language and literature from Tianjin Foreign Studies University, China.

September 27, 2021 9:42 pm

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