An open letter issued in the name of HNA Group employees was recently circulated on the Internet in China, reporting Chairman Chen Feng’s illegal practices to the Chinese Communist Party’s Commission for Discipline Inspection, accusing him of operating in a black box and turning HNA into a family business. HNA Group has declared bankruptcy at the end of January.
According to a news report cited by the Central News Agency today, after the bankruptcy of China’s HNA, employees reported that the chairman turned the company into a family business. The source said an open letter from HNA employees circulated on the Internet in mainland China recently, reporting Chairman Chen Feng to the Communist Party’s Central Commission for Discipline Inspection for illegal activities, saying he was operating in a black box and trying to turn HNA into a family business. Chen Feng was defeated earlier this year as the new secretary of the group’s party committee and has been restricted by a court from spending money.
The report, which was consolidated by media sources, said that HNA Group declared bankruptcy on Jan. 29, after insiders said the group was seriously “insolvent,” and that Chen Feng, the former party secretary of HNA, was elected as the new party secretary on Jan. 22. On June 26, HNA Holdings Ltd. was restricted from spending money, with Chen Feng as the target. The letter was recently published by several media outlets on Chinese social media platform WeChat, with the whistleblower claiming to “represent more than 20,000 internal HNA employees and creditors,” but has not yet been reported by any local mainstream media.
The letter cites Chen Feng’s illegal facts, including: Between 2018 and 2020, the group has continuously disposed of more than 300 billion yuan of fixed assets to resolve the internal liquidity crisis, but Chen Feng used his authority to privately use nearly 10 billion yuan of funds to prioritize the payment of principal and interest on the capital-raising products purchased by himself, his friends and relatives, and some senior executives, without disclosure or justice.
The letter also alleges that Chen Feng’s son Chen Xiaofeng and his nephew bought luxury cars and other luxury goods without any legal compliance with HNA’s board of directors. The letter alleges that Chen Feng’s delusional attempt to turn HNA into his own family business has accelerated the group’s path to bankruptcy and pushed it further into the abyss.
According to the letter, HNA raised capital from its employees and launched capital-raising products with different revenue distribution ratios, but for the same project, the senior executives bought capital-raising products with a return of more than 30%, while ordinary employees only received 8-11%, and such information was never released publicly, without the employees’ knowledge, which seems to be fraudulent behavior of Chen Feng Group. The whistle-blowing letter asked the Central Commission for Discipline Inspection to thoroughly investigate Chen Feng.
HNA Group’s financial report showed that as of the first half of 2019, the company’s total assets were 980.621 billion yuan, down 8% compared to the end of 2018, and total liabilities were 706.726 billion yuan, down 6% compared to the end of 2018, with a 72.07% gearing ratio, the Central News Agency said.