Chinese P2P executive disappears as company offices raided
Li Yonghui’s family believe he has been detained in latest sign of crackdown on sector Beijing, above, is just one of several cities where local governments in recent months have attempted to shut down the $77bn peer-to-peer lending business
Police have stormed the Beijing offices of a large, New York-listed peer-to-peer lending company and the group’s chairman has disappeared in the latest sign China has stepped up its crackdown on the internet loan industry. Local governments in several Chinese cities and provinces in recent months have attempted to shut down the $77bn peer-to-peer lending business, which connects lenders with borrowers over online platforms. Several prominent businessmen connected to P2P lending have been detained by police and accused of financial crimes such as illegal fundraising. In some cases, investors have lost billions of dollars as P2P businesses collapsed. Li Yonghui, the chairman and chief executive of Fincera, disappeared on Friday morning in the northern Chinese city of Shijiazhuang, his son Spencer told the Financial Times. Mr Li’s family believes he has been detained by authorities. About 20 plain-clothes police officers laid siege to Fincera’s Beijing offices on Friday. When the Financial Times arrived at the location at midday, many staff were still in the office alongside police. Employees said police arrived from Shijiazhuang in the early morning and that some employees had been detained. When asked if Mr Li had been arrested, one officer said all questions regarding the whereabouts of the businessman would need to be addressed to police in Shijiazhuang.
Mr Li’s whereabouts could not be verified on Friday and Shijiazhuang police did not respond to faxed questions on the matter. Fincera’s chief technology officer and a vice-president were detained by police at their homes in Beijing on Friday morning, according to Spencer Li. Recommended Special ReportInternational Governance Should poor countries welcome Beijing’s money? He said on Friday that he was barred from leaving China the previous evening and was told at Beijing Capital Airport that he could not leave the country because he was suspected of illegal fundraising. “I had no idea I wouldn’t be able to leave last night,” he told the Financial Times. The father and son are both Canadian citizens. Fincera, an over-the-counter stock that trades in New York, is based in Shijiazhuang, about 250km south-west of Beijing. The company specialises in lending to the transportation sector and, at its height, had about Rmb9bn in outstanding loans, making it the largest P2P company in Hebei province.
China’s P2P industry has been in a free fall this year. After allowing the industry to grow rapidly with little oversight for several years, authorities began cracking down on P2P lending in early 2018, adopting the view that the industry poses a threat to financial and social stability. Since May last year, outstanding loans have collapsed from a high of about Rmb1.06tn to about Rmb540bn in November. A number of prominent businessmen with links to P2P lending have been detained this year. In September, authorities said that Dai Zhikang, a billionaire property tycoon and prominent art collector, surrendered to police in Shanghai in connection with illegal fundraising activity. His P2P lending unit Laocaibao has ceased operations. In October, authorities in Shanghai told a number of the city’s largest P2P lenders, such as Lufax and Dianrong, to wind down their operations. Additional reporting by Xinning Liu in Beijing