Investigations into corrupt real estate deals in the southern Chinese city of Shenzhen seem to have spread to a second major developer today, as the company behind the city’s tallest tower is said to be under investigation.
Shenzhen Kingkey Group, which developed the 100-storey KK100 tower (formerly known as the Kingkey 100) is reported to be under investigation for illicit land deals with government cadres. One of the officials said to be involved is the former head of the city’s Longgang District who was implicated in the troubles of fellow Shenzhen developer Kaisa Group Holdings.
Kingkey’s chairman, Chen Hua, is said to have been questioned repeatedly by Chinese authorities, although no charges have been brought against him yet. Authorities are also said to be interested in Chen’s links to other government officials, according to Bloomberg.
Kingkey Tied to Same Official as Kaisa
Kingkey Group has fallen under suspicion for what are said to be improper dealings with government officials, including Jiang Zunyu, according to an account today in Bloomberg. Jiang is the former head of Shenzhen’s Longgang district who was depicted as a central figure in the allegedly corrupt land deals which led to the government taking action against Kaisa Group Holdings last year.
In the Kaisa case, the Hong Kong-listed developer first announced to the stock exchange that sales at four of its projects had been frozen last year, and then in its recent negotiations with creditors, the developer admitted that authorities had locked down operations at 11 of its projects.
For Kingkey, the case appears to be less severe, with the government being said to have blocked sales of only 100 of the company’s residential units.
Trouble Ahead for Kingkey?
While no charges have yet been publicly filed against officers of Kingkey, the reported investigation could spell trouble for the Shenzhen developer.
Given how Kaisa was able to cover up the blocking of sales at seven projects until this month, its entirely possible that privately-held Kingkey is also not revealing the full extent of the pressure being put on it by Shenzhen authorities.