China's top anti-graft watchdog joins probe into SOEs' links with Ant Group

Asian Tech Press (Apr. 14) -- China's top anti-graft watchdog joined a recent probe into links between Jack Ma's Ant Group and the country's state-owned enterprises (SOEs).

The Central Commission for Discipline Inspection (CCDI) was among the agencies involved in the recent investigation into Ant Group, increasing the risk to China's best-known tech tycoon and his Internet empire, according to Bloomberg, citing sources familiar with the matter.

The anti-graft watchdog is seeking to understand the influence of Jack Ma's fintech empire and the extent of its transactions with state-owned banks and companies, said the report, adding that the agency's involvement had not previously been disclosed.

One of the people familiar with the matter said the CCDI, which is in charge of corruption investigations of top Communist Party officials, was involved in inquiries sent to state-owned companies in February about their exposure as part of a probe into former Hangzhou party chief Zhou Jiangyong. Both Ant Group and Alibaba Group are based in Hangzhou.

In late February it was reported that several Chinese authorities, including banking regulator CBIRC, asked institutions under their supervision to scrutinize all their exposures to Ant Group, its subsidiaries, and even its shareholders as of January.

The people said it was the most thorough and wide-ranging investigation to date into sanctions with Ant Group, led by the National Audit Office, and that the institutions involved were told they must report their findings back as soon as possible.

On Jan. 26 this year, the CCDI announced that Zhou Jiangyong had been expelled from the Communist Party and dismissed from public office for serious disciplinary violations. In the notification, the top anti-graft watchdog said that Zhou "colluded with capital and supported disorderly expansion of capital."

On April 11, a statement from the Supreme People's Procuratorate showed that Chinese prosecutors has accused Zhou Jiangyong of accepting "huge" bribes, thought it did not mention Ant Group or other companies.

In January, Zhou Jiangyong appeared in a state media feature film that mainly revealed two business owners and a partner who had colluded with Zhou's family. The documentary claimed the former party chief used his influence in the Chinese technology hub to help his younger brother's business.

Among the partnerships highlighted in the documentary is a joint venture by Zhou's younger brother, dubbed UCity United Information Technology Development Co., Ltd., a high-tech company claiming to focus on "Metro Internet+", with Alibaba, Tencent and UnionPay as its strategic partners and technical partners.

And Shanghai Yunxin Venture Capital Co Ltd, a wholly-owned subsidiary of Ant Group, is one of the shareholders of UCity United, contributing 1,666,700 yuan ($261,689), or a 14.28% stake.

Zhou's younger brother once said in an interview that UCity United and its investor Alibaba "work together to deepen Ningbo, expand Zhejiang and go nationwide."

Neither Ant Group nor Jack Ma has been accused of wrongdoing in connection with the case following Zhou Jiangyong's arrest on bribery charges.

Ant Group's $35 billion IPO was urgently halted in November 2020 when Beijing demanded it overhaul its businesses, including lending, insurance and wealth management, and set up a financial holding company to be regulated like a bank.

Analysts believe the myriad restrictions mean Ant Group is worth a fraction of its former value as its growth prospects wane. Fidelity Investments cut its valuation for at least the second time last year to about $78 billion as of June 30.

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