by Staff Writers
Hong Kong (AFP) Feb 2, 2017
A Chinese billionaire who went missing from Hong Kong and is said to have been abducted by mainland security agents is reportedly under investigation in connection with China's 2015 stocks crash.
Local media say financier Xiao Jianhua was last seen at his apartment in Hong Kong's harbourfront Four Seasons hotel.
He was taken by mainland security agents last week, according to overseas Chinese-language media.
It is illegal for mainland agents to operate in semi-autonomous Hong Kong and the case has sparked new fears its freedoms are under threat from Beijing.
Three statements purportedly from Xiao -- a Canadian citizen -- denying he has been kidnapped have appeared on his company's WeChat account and on the front page of a Hong Kong newspaper.
The Canadian consulate confirmed to AFP Thursday Xiao was a citizen and said its officials were in contact with authorities to "gather additional information and provide assistance".
According to the South China Morning Post, Xiao, founder of Beijing-based Tomorrow Group, is in mainland China and "assisting investigations" into the stock market turmoil of 2015.
The Shanghai stock index tumbled nearly 40 percent over a period of little more than two months after peaking in mid-June that year.
Authorities helped inflate the bubble by encouraging investments. But when it burst, officials sought to pin blame on market manipulators.
It is unclear how Xiao is being linked to the crash, but mainland investigators have targeted several investment executives on suspicion of insider trading since the stocks rout.
Last week former star hedge-fund manager Xu Xiang was sentenced to more than five years in prison for market manipulation.
Xiao's company said late Thursday all was "normal" in his business empire but did not address his reported abduction.
"Production and operations of Tomorrow Holdings Ltd and its related companies are all normal," it said in a brief statement.
It also gave "thanks for the concern and kindness" expressed over Xiao and his companies, without elaborating.
The reason for the statement was not clear, but Friday will see trading resume on China's stock exchanges after a week-long holiday break, including shares of Tomorrow-linked companies.
- 'Corruption target' -
The investigation into Xiao is also linked to China's disgraced ex-spymaster Ma Jian, the SCMP said.
Ma was former deputy head of China's ministry of state security and was expelled from the ruling Communist Party in December on suspicion of taking bribes and "abusing power".
There has been widespread speculation that Xiao's disappearance was part of Chinese President Xi Jinping's ongoing anti-corruption drive, which some critics believe has been used to target his political opponents.
The campaign was launched after Xi took power in 2012 and has brought down government officials and corporate executives.
Xiao is said to have acted as a broker for the Chinese leadership, including for Xi's family -- but there were also reports he could be connected to members of rival political clans.
One US-based China-watcher said he believed Xiao was being targeted by Xi "to use him as a source to extract information on his enemies".
Another source who said he had met Xiao at the Four Seasons described him as a "powerful deal broker" in China.
"He's low-key, but he's very high-flying amongst Chinese bankers in Hong Kong," he told AFP.
Hong Kong news site Initium reported Xiao had wanted to move some of his companies to Japan as he no longer felt secure in the city.
Taiwan's Business Today magazine reported in 2009 that Xiao was courting connections there out of the safety concerns, citing people familiar with Xiao.
Analyst Ma Ngok said the case could encourage other big Chinese businessmen to leave Hong Kong.
"They just don't have the confidence that if something happens in Hong Kong the government or the police is going to help out," said Ma, professor at Chinese University of Hong Kong.
Xiao's case has echoes of the disappearance in 2015 of five booksellers known for publishing salacious titles about Beijing's leadership.
One of the men, Lee Bo, a British citizen, vanished from Hong Kong, triggering international condemnation and local protests.
All five booksellers resurfaced in mainland China.
An annual report by US think tank Freedom House said Wednesday Hong Kong's freedoms had dipped "due to Beijing's encroachment," citing the bookseller detentions and shrinking journalistic and academic independence.
China News from SinoDaily.com
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