According to the Financial Times, China’s state broadcaster has implicated Jack Mas Ant Group in a corruption scandal, increasing pressure on the billionaire following a crackdown that has wiped billions of dollars from his internet empire.
According to a documentary aired on state-run China Central Television, private companies made “unreasonably high payments” to the brother of the former Chinese Communist Party head of Hangzhou, an eastern city that is home to Ant Group’s headquarters, in exchange for government policy incentives and assistance in purchasing real estate.
According to public records and two sources close to the transactions, an Ant Group unit purchased two plots of land at a discount in Hangzhou in 2019 after investing in two mobile payment businesses owned by the party secretary’s younger brother, which were mentioned in the documentary.
While the documentary did not name Jack Ma’s company, according to public records, the Ant unit was the only external corporate investor in one of these businesses and one of three corporate investors in the other.
“The nature of such a transfer of interests is an exchange of power and capital,” said the documentary, produced by the Communist Party’s Central Commission for Discipline Inspection. Material aired by China’s state broadcaster represents the official party line, FT reported.
The programme has increased pressure on Ant, as the fintech company with over 1 billion users struggles to overhaul its business in order to meet the demands of the authorities.
Chinese regulators halted the company’s planned $37 billion initial public offering in 2020, forcing it to restructure. Ant’s government-led reform efforts were hampered last week when a state-owned asset manager withdrew from a deal to invest in the fintech’s lending arm without explanation, according to the Financial Times.
According to the documentary, Zhou Jiangyong, a former Hangzhou party secretary who was arrested in August for corruption, assisted unidentified companies in obtaining cheap land and preferential policies after they purchased shares in firms controlled by the senior official’s younger brother, Zhou Jianyong.
According to public records, Shanghai Yunxin Venture Capital Management Co, a subsidiary of Ant, paid $268,000 in March 2019 for a 14.3 percent stake and a board seat in Youcheng United (Ningbo).