China Detains Top Executives at a Debt-Laden Conglomerate

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BEIJING — The authorities in China have taken into custody the top two executives of a conglomerate that bought up businesses around the world before quickly collapsing under heavy debts, the latest move to discipline the country’s corporate leaders.

The conglomerate, a transportation and logistics company called HNA Group, said late on Friday that the police on Hainan Island, where it is based, had seized its chairman, Chen Feng, and chief executive, Tan Xiangdong.

Both men were detained “in accordance with the law for suspected crimes,” the company said in a statement, without specifying those offenses. HNA did not immediately respond to requests for comment.

The detention of the two men comes as global investors await the fate of another troubled Chinese corporate giant, China Evergrande Group. The company, which is struggling under more than $300 billion in debt, is widely seen as at risk of defaulting on its obligations. It isn’t clear yet whether it made a payment on $83 million in foreign debt that was due on Thursday.

The problems of Chinese companies with big ambitions but wasteful borrowing practices have come under a spotlight in Beijing. Chinese leaders increasingly see such debt-fueled corporate activity as counterproductive and have moved to tame those practices.

HNA became a symbol of the mercurial rise and profligate spending of China’s first wave of private conglomerates with strong political backing. It acquired large stakes in Hilton Hotels, Deutsche Bank, Virgin Australia and other businesses, and at its height employed 400,000 people around the world.

HNA struck 123 deals in three years, only to begin running into trouble in 2017 in repaying the debt incurred to pay for its acquisitions.

Mr. Chen’s co-chairman, Wang Jian, died in 2018 when he fell off a wall while sightseeing during a business trip to France. The death was ruled an accident.

HNA, Evergrande and other large, private Chinese companies that grew quickly only to face financial collapse in the last several years are often referred to in China as gray rhinos. The term refers to obvious dangers that are ignored until they suddenly become very dangerous, and had been taken up by Chinese officials.

Cao Li contributed research.

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