Alibaba (BABA) Stock Slips on Ant Group's Links to Corruption Scandals

January 21, 2022 8:30 AM EST

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Alibaba’s (NYSE: BABA) Ant Group has been reported to be connected to a corruption scandal that involved the former party secretary of Chinese technology hub Hangzhou, according to the report by Financial Times.

Citing public records and two sources familiar with the matter, the FT reported that an Ant Group’s unit, Shanghai Yunxin Venture Capital Management Co, acquired two plots of land at reduced cost in Hangzhou in 2019.

This happened after the unit purchased stakes in two mobile payment companies whose owner is the younger brother of the party secretary, Zhou Jiangyong.

On Wednesday, the China Central Television (CCTV) said the two mobile payment businesses were associated with the ongoing corruption probe into Zhou, who first came under investigation by China's Central Commission for Discipline Inspection (CDDI) in August.

In its documentary show, CCTV said that Zhou helped the two private businesses to buy the land at a discount and enjoy privileged policies after they acquired stakes in these companies controlled by the party secretary.

Moreover, CCTV alleged that the two companies were allegedly making "unreasonably high payments" to Zhou in order to gain certain government incentives, in addition to land purchases.

And Group is the financial arm of the Chinese e-commerce behemoth Alibaba Group, with both companies holding headquarters in Hangzhou.

By Senad Karaahmetovic | [email protected]

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Senad Karaahmetovic