Jack Ma’s Ant Group is once again in the spotlight after being implicated by Chinese state media over an alleged corruption scandal involving a former senior official in Hangzhou.
State-owned China Central Television (CCTV) recently broadcasted a documentary claiming that the brother of the former Chinese Communist party head of Hangzhou – an eastern city and home of Ant Group’s headquarters – had received payments in exchange for policy incentives and discounted real estate.
Zhou Jianyong, younger brother of ex-state official Zhou Jiangyong who was arrested in August over corruption claims, allegedly received «unreasonably high payments» from private companies, including Ant Group, which were followed up by a return of incentives.
Ant Buys Stakes
According to public records, Ant subsidiary Shanghai Yunxin Venture Capital Management Co paid 1.6 million yuan ($268,000) in March 2019 for a 14.3 percent stake and board seat in Youcheng United (Ningbo) Information Technology Development Co.
Youcheng United (Ningbo) was founded by the younger Zhou in 2016 and won contracts to build subway mobile payment systems in Ningbo and Wenzhou at the same time his older brother was party secretary of these cities.
And later in 2019, Shanghai Yuxin paid 1.4 million yuan for a 13.5 percent stake in a Hangzhou-based subway payment provider also owned by Zhou.
Discounted Land
Following the deals, Ant Group bought two plots of land in Hangzhou at a discount, according to public records.
Ant won an auction for a plot in Hangzhou as the only qualified bidder for 5,194 yuan per square meter, according to land auction records.
Average home prices exceeded 45,000 yuan per square meter, according to real estate websites.
Self Admission
In addition to public records, the CCTV documentary also featured both the Zhou brothers admitting to the business and political links.
«He won the business because I was a government official,» said the older Zhou about his younger brother in the documentary.
«You of course know I am Zhou Jiangyong’s brother,» added the younger Zhou when explaining the high prices charged for investments in his companies. «You can imagine the price I raised. You want to take advantage of me. Shouldn’t I do the same to you?»
While Ant was not explicitly named in the documentary, it was the sole corporate investor in one of the two deals with the younger Zhou’s firms.
Continued Crackdown
The state broadcast of the documentary signals the likelihood of a continued crackdown on the technology sector.
Following a plenary session last week, the Central Commission for Discipline Inspection (CCDI) – China’s top anti-graft body and also the producer of the documentary alleging close links between Ant and Hangzhou officials – issued a statement vowing to curb the influence of tech firms.
«Efforts will be made to investigate and punish corrupt behaviors behind the disorderly expansion of capital and platform monopolies, and cut off the link between power and capital,» the CCDI said in the statement.
«Show no mercy to those who engage in political gangs, small circles, and interest groups within the party, and strictly educate, manage and supervise young cadres.»
