A court in Beijing has sentenced a former chairman of Zhongzhi Enterprise Group and several others to prison terms ranging from four-and-a-half to 14 years for illegally taking public deposits, Chinese state broadcaster CCTV reported on Tuesday.
The report identified the former chairman of the Chinese wealth management firm only by his surname, Gao. The executives were also fined, CCTV said, though the amounts were not disclosed.
The court found Gao and the other defendants had breached national financial management laws and disrupted financial order, according to the report.
Zhongzhi did not immediately respond to a Reuters request for comment.
In August 2024, Gao and 48 other Zhongzhi-related officials were formally charged with illegally taking public deposits.
Zhongzhi, which had sizeable exposure to China’s property sector, filed for bankruptcy in January 2024 as it grappled with a deepening downturn in the real estate market.
The collapse of Zhongzhi, once a major player in China’s $3 trillion shadow banking sector – roughly the size of the French economy, has added to worries that the country’s property debt crisis is spilling over into the broader financial sector.
Shadow banking-linked wealth managers in China typically operate outside many of the rules governing commercial banks and mainly channel the proceeds of wealth products sold to retail investors to real estate developers and other sectors.
Signs of Zhongzhi’s problem emerged in July 2023 when Zhongrong International Trust Co, a leading trust company controlled by Zhongzhi, missed payments on dozens of investment products.
Zhongzhi later apologised to its investors and said it was heavily insolvent with up to $64 billion in liabilities.
Police have been working to recover funds involved in the case, the CCTV report said.
Reuters
