China probes debt-ridden financial giant

BEIJING: Chinese police have opened an investigation into Zhongzhi Enterprise Group after the debt-ridden financial giant declared itself insolvent.

Police in Beijing, where the group is headquartered, said late Saturday they had opened an investigation into unspecified “alleged offenses,” adding that they had taken measures against several suspects.

Zhongzhi declared itself insolvent on Wednesday with its arrears estimated at nearly $66 billion, according to a letter to investors cited by local media.

During China’s real estate boom, many developers used Zhongzhi to finance their projects.

The company managed assets worth more than one trillion yuan ($141 billion), according to investment bank Nomura.

But the group has been caught up in China’s real estate crisis, leaving it now unable to repay investors.

Zhongzhi’s bankruptcy raises fears of far-reaching consequences for China’s financial system following the downward spiral of property developer Evergrande, whose troubles continue to take a toll on the country’s real estate sector and the economy.