Wanda Group, a prominent name in China's real estate and investment sectors, is facing intense scrutiny as its Senior Vice President, Liu Haibo, comes under investigation for significant internal corruption. This development adds to an already challenging year for the conglomerate, marked by liquidity issues and a turbulent bond market.
Liu, a graduate of Beijing University of Aeronautics and Astronautics, has been with Wanda since 2010, climbing the corporate ladder to oversee the company's vast investment operations. His arrest on August 8, as reported by sources and later confirmed by insiders, has sent ripples through the business community. His involvement in corruption within the corporation, though not detailed, is alleged to be substantial.
Before his arrest, Liu was actively engaged in the company's operations, attending a meeting with the Datong city government in Shanxi province alongside Wanda's Chairman, Wang Jianlin, and other top executives. This meeting, aimed at discussing project developments and potential collaborations, underscores Wanda's influential role in China's commercial and cultural tourism sectors.
Tianyan Check App reveals Liu's association with five enterprises, with his most significant role in Dalian Wanda Wentai Management Consulting Partnership, where Wang Jianlin holds the majority stake. His other corporate ties, mostly revoked or inactive, reflect a long history in the real estate industry.
Wanda's anti-corruption stance, as emphasized by Wang Jianlin in his book "Wanda Philosophy," highlights the company's commitment to transparency and accountability. However, despite these internal measures, Wanda's challenges are predominantly external. The company has been grappling with a series of financial woes, including liquidity tests, plummeting U.S. bond prices, frozen shares, business contractions, and layoffs.
A financial dispute with another real estate giant, Vanke, over a joint project in Changchun, exacerbated these challenges. The disagreement led to Vanke freezing a substantial portion of Wanda's shares, worth 19.8 billion yuan, significantly more than the disputed 10 billion yuan, stalling Wanda's IPO process. Although both companies reached a settlement in July, the exact terms remain undisclosed.
The stakes are high for Wanda. If its subsidiary, Zhuhai Wanda, fails to go public as planned, the company faces the daunting task of paying 30 billion yuan for stock repurchase and settling at least 1.3 billion USD in overseas syndicated loans. To maintain investor confidence and ensure a successful IPO, Wanda has been actively engaging with overseas creditors and made a last-minute payment of a $400 million bond.
The unfolding investigation into Liu Haibo's alleged corruption, combined with Wanda's financial struggles, paints a picture of a corporate giant at a crossroads. As the company navigates through these tumultuous times, the industry and investors alike are watching closely to see how one of China's most influential conglomerates will weather this storm.
