It was a deal that sounded too good to be true. Under a 2016 accord, two subsidiaries of Shaanxi Financial Holding Group would simply guarantee a 350 million yuan ($50 million), 12-year loan to Xi’an International Trade & Logistics Park White Horse Wine Industrial Co. and in return would collect hundreds of thousands of yuan in annual fees.
White Horse Wine would use the loan from the Shaanxi branch of policy lender Export–Import Bank of China (Exim Bank) to develop a wine exchange. But the deal has since gone bad. Construction of the wine exchange has stalled, and White Horse Wine is mired in a number of loan default lawsuits, Caixin learned.
That has left Shaanxi Financial, a conglomerate owned by the Shaanxi government, on the hook for hundreds of millions of yuan of loan guarantees provided by the two subsidiaries. And while business registration records show the two units are 90% owned by Shaanxi Financial, people close to the matter said the state-owned financial company is only holding the stakes in the two companies on behalf of Zhang Wenwei, a fugitive businessman whom Shaanxi Financial has accused of fraud.
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