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Way back in 2019, long before Alibaba founder Jack Ma’s falling out with the CCP (or, we should say, when the strains in their relationship were far less visible in the business press), we reported the following prediction from Hayman Capital’s Kyle Bass: That Jack Ma would be “jailed, or disappeared” shortly after stepping down as Alibaba’s chairman.

When Ma abruptly disappeared after the CCP sabotaged the (Ma-led) IPO for Ant Group, Alibaba’s financial arm that had become widely used within the Chinese market, we feared the worst.

And even though Ma eventually resurfaced, things have never been the same for a man who was once China’s wealthiest man. What’s worse is that it marked the beginning of a CCP crackdown on China’s burgeoning tech industry that continues to this day.

While shares of Alibaba have staged a modest comeback off their lows, Ma has unfortunately bounced from one troubling allegation to the next. The latest has arrived courtesy of Chinese state broadcaster CCTV, which has published a report implicating Ma’s Ant Group in a wide-ranging corruption scandal – a charge that has been known to carry the death penalty in the PRC.

The documentary didn’t name Ant, but it alluded to the company, which was founded in Hangzhou. But it did further implicate a family member of a high-ranking CCP official, who was arrested back in August.  As a result, Ant Group received “discounts” on plots of real-estate and other “government policy” support.

Here’s more from the FT, which published its own report on the CCTV documentary:

A documentary on state-run China Central Television alleged that private companies made “unreasonably high payments” to the brother of the former Chinese Communist party head of Hangzhou, an eastern city that is home to Ant Group’s headquarters, in return for government policy incentives and support with buying real estate.

According to public records and two sources close to the deals, a unit of Ant Group bought two plots of land at a discount in Hangzhou in 2019 after taking stakes in two mobile payment businesses owned by the party secretary’s younger brother that were named in the documentary.

While the documentary did not name Jack Ma’s company, the Ant unit was the only external corporate investor in one of these businesses, according to the public records, and was among three corporate investors in the second.

“The nature of such a transfer of interests is an exchange of power and capital,” said the documentary, produced by the Communist party’s Central Commission for Discipline Inspection. Material aired by China’s state broadcaster represents the official party line.

The news comes one week after a state-owned asset manager pulled out of a deal to invest in Ant. In hindsight, such a rejection by a state-controlled entity was probably a harbinger of what was to come.

The name of the now-imprisoned CCP official is Zhou Jiangyong, a former party secretary of Hangzhou. Many of the allegations involve his brother, whom he helped to obtain lucrative contracts with local government entities.

The younger Zhou, a former business school professor, launched Youcheng United (Ningbo) Information Technology Development Co in 2016, winning contracts to build subway mobile payment systems in the coastal hubs of Ningbo and Wenzhou, according to the documentary. At the time, his brother was the party secretary of these cities. “He won the business because I was a government official,” said Zhou, the former party secretary, about his brother in the documentary.

Ant entered into a series of deals with the younger Zhou. Public records show Shanghai Yunxin Venture Capital Management Co, a subsidiary of Ant, paid Rmb1.7m ($268,000) for a 14.3 per cent stake and a board seat in Youcheng United (Ningbo) in March 2019.

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“He won the business because I was a government official,” said Zhou, the former party secretary, about his brother in the documentary.

One source close to Ant Group told the FT that it might be time for Ant to “pay the price” for the corrupt government favors that helped it along during the early years of its development. After the documentary aired, the CCP’s anti-graft commission said it would step up oversight of tech companies to “cut off the link between power and capital.”

“The rise of Ant has a lot to do with its ability to curry favour from local officials,” said a person close to the fintech group. “It may now pay a price for that.”

An academic at a university in Beijing added that “the rise and fall of Ant epitomizes the unequal relationship between business and politics” in China.

Alibaba shares slumped on the news, as investors interpreted the report as a sign that Beijing would likely further its crackdown on the company.

As for Ma, there has been only radio silence since the charges were reported. But if he is still free, he likely won’t remain so for long.

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