Haikou police detain son-in-law of Phoenix Media’s founder Liu Changle for investigation into peer-to-peer lending
- He Xin was detained on suspicion of illegally accepting deposits from the public, according to a May 5 announcement by Haikou’s police
- He, who owns 70.8 per cent of Phoenix Financial, is Liu’s son-in-law, according to an April 29, 2020 filing to Hong Kong’s stock exchange
Phoenix Zhixin is the operating arm of Phoenix Financial, which was allegedly involved in a peer-to-peer lending scandal that saddled more than 70,000 depositors and investors with billions of yuan in losses. Phoenix Financial, which provides online loans, funds, overseas investment and wealth management, is a strategic investment by Phoenix Media, according to the 2020 annual report.
In an abrupt move in September 2020, Phoenix Financial removed online loans from its platform, causing payments on outstanding borrowings to stagnate while projects became overdue ever since, according to reports by Chinese media. In November, local authorities in Haikou summoned Phoenix Financial and instructed the company to get out of the business of providing online loans.
A management reshuffle kicked off in February, with Liu handing over his chief executive post to the Shanghai municipal government’s former spokesman Xu Wei.
Phoenix posted a net loss of HK$1.04 billion last year, including a HK$585.7 million write-down on its internet media investments. Its operating loss narrowed to HK$502 million last year from a loss of HK$728 million in 2019, due to cost cutting. Shares of the company fell 3.5 per cent to 82 Hong Kong cents in recent trading.