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China Investigates Ant Group and Public Officials for ‘Corruption’

Ant Group

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Bejing is investigating Ant Group, the financial technology firm created by Chinese billionaire Jack Ma, for the quick approval by financial authorities that would allow the group to conduct an initial public offering (IPO) to list on the Shanghai, Shenzhen and Hong Kong stock exchanges.

For Chinese authorities, Ma managed to push through Ant Group’s IPO in record time, which caught the attention of many figures at the top of the regime, who ordered a thorough investigation into the event.

In November 2020, the Chinese regime halted Ant Group’s IPO in a controversial move that caused Jack Ma to disappear from the public eye for a while. This was to be the largest IPO ever known for a company, aiming to raise more than $34.5 billion on the stock market.

The blocking of Ant Group’s IPO was not without its political tinge. Ma, the group’s largest shareholder and founder of Alibaba, was an opponent of Xi Jinping during his election as president of the Republic of China by Parliament. It was to be expected that the Chinese billionaire would be caught in the middle of the crusade against “corruption” led by Xi, who has condemned thousands of opponents to imprisonment and even disappearances.

The investigation by the Communist Party of China (CPC) regime will focus on the regulators who authorized Ant Group’s IPO, as well as on the large firms that allegedly lobbied for its approval. Ma’s relationships with state agents are also being investigated to determine how much he influenced public officials to authorize his company’s IPO.

Ant Group owns the largest payment platform in China, Alipay, which serves a user base of more than one billion people in China. (Image: EFE)

In the eyes of the CCP, Ant Group’s business model, in which loan approvals are based on the use of big data, jeopardizes the stability of the country’s financial system, in part because the company’s banking partners bear most of the risk on loans not Ant Group directly.

CCP leaders also want to find out who would benefit from what would have been the world’s largest IPO. According to Beijing there are well-connected individuals, state funds and some influential political families in China involved in the approval of Ant Group’s IPO.

Ant Group is currently undergoing a restructuring of its business model after being intervened by Chinese Central Bank officials, apparently officials will seek to restructure the group from operating as a financial technology company to operating as a mainstream commercial bank.

Ant Group owns the largest payment platform in China, Alipay, which serves a user base of more than one billion people in China. (Image: EFE)

Part of the attraction for Chinese authorities to heavily regulate and intervene Ant Group is the massive data it handles, with a user base exceeding 1 billion people in China, Ant Group is the largest provider of financial services in the country. From January to June 2020, this platform handled the equivalent of $17 trillion in transactions in mainland China.

Although on the surface Chinese regulators argue that the intervention in Ant Group is due to the company’s alleged monopolistic practices, which are detrimental to commercial banks, the truth is that China maintains tight control of its corporations and seeks to leverage their market advantages to meet its political objectives.

In this case, Ant Group’s massive database, with records of billions of financial transactions by millions of Chinese citizens and companies, will give the communist regime greater control over the population it already dominates.

Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica

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