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

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The newsroom of Phoenix Television Corporation in Tai Po Industrial Estate on March 28, 2011. Photo: Handout

Published: 3:12pm, 6 May 2021Updated: 10:30pm, 6 May 2021

He Xin, the son-in-law of Phoenix Media Investment Holdings Limited’s founder Liu Changle, has been detained by Chinese police in Hainan province for his role in a collapsed peer-to-peer lending platform.

He, the controlling shareholder of Phoenix Zhixin Information Technology (Haikou) was detained, as he was suspected of illegally accepting deposits from the public, according to a May 5 announcement by the Hainan provincial capital’s police, which identified him only by his surname. 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, where Phoenix Media’s shares are listed.

The detention of the executive – part of a broader crackdown by Chinese regulators on the peer-to-peer lending industry – is a bookend in the disposal of Liu’s controlling interests in one of the world’s largest Chinese-language broadcasters, via two deals less than a month ago worth HK$1.156 billion (US$149.2 million). The government had whittled more than 6,000 peer-to-peer lenders in China to fewer than three dozens in a push to instil financial discipline and ring-fence risks amid slower economic growth and a coronavirus pandemic.

He Xin, the son-in-law of Hong Kong-based Chinese broadcaster Phoenix Media Investment founder Liu Changle. Photo: Xinhua

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.

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