Inter President Steven Zhang risks a three-month prison sentence for unpaid debts of €300m owed to China Construction Bank (Asia) Corporation. A detailed report from football finance website Calcio e Finanza outlines how Zhang has refused to pay more than $300m in loans.
China Construction Bank Asia (a subsidiary of one of the big four state-owned banks in China) claims that Zhang is refusing to repay more than $300 million he owes the bank, and are trying to prove that Zhang himself would be guilty of contempt of court in a Hong Kong court.
The bank is trying to get information about Inter’s relationship with Zhang from major Western financial institutions such as Goldman Sachs and Oaktree Capital Management. It has initiated legal proceedings in Italy and Hong Kong to collect what is owed, and on March 13 Zhang will be summoned again to testify in a Hong Kong court.
“Outside China, the Suning Group is perhaps best known for acquiring a 70 percent stake in F.C. Internazionale Milano S.p.A (“Inter Milan”), an Italian soccer team with a worldwide following based in Milan,” reads a document reported by Asia Sentinel.
“Zhang’s social media accounts show the immense wealth at his disposal, including photographs of at least three luxury sports cars with a total value of more than $8 million, as well as luxury watches with a total value of nearly $1.5 million. In addition, Zhang allegedly conducted his financial affairs in such a way that few assets were owned directly in his name, despite his ostentatious displays of wealth, in order to hinder his creditors,” it further reads.
Therefore, CCBA has asked the U.S. court for permission to serve subpoenas to several financial institutions with offices in New York, including Goldman Sachs, Oaktree Capital Management and Bain Capital. The state bank branch is seeking contact with these financial institutions because it believes they may have information about Inter Milan and its relationship with Zhang and the Suning Group.
Zhang owned a company that borrowed money from CCBA in 2020 to refinance debts incurred in 2019, when he acquired 65 percent of a Chinese company that operates thousands of convenience stores in China for $108.9 million. The acquisition was refinanced in 2020 with a loan totalling $165 million, plus bonds up to a maximum of $85 million, to be repaid by Sept. 10, 2021. Zhang personally guaranteed the debts, but refused to repay them, CCBA claims.
The failure to repay these debts was triggered by several defaults. Suning.com has defaulted on bank loans totalling $1.7 billion, according to its balance sheet as of May 12, 2021. On June 4, 2021, two related companies, Suning Appliance and Suning Zhiye Group, as well as Zhang Jindong were named debtors in a Chinese court case.
When Suning Appliance, Steven Zhang and his father Zhang Jindong failed to repay the debts as required by the CCBA, the bank filed a writ of summons against Zhang with the Hong Kong Court of First Instance on August 2, 2021. About three months later, CCBA applied to the Hong Kong court for a judgment against Zhang, who opposed the application. Zhang argued that he was not involved and had no knowledge of the refinancing transactions, and claimed that his signatures on the agreements were forged.
A Hong Kong judge, Anthony Chan, rejected Zhang’s arguments and ruled in favor of CCBA against Zhang on July 19, 2022, ordering the Inter president to repay $255 million plus interest to the China Construction Bank subsidiary. The CCBA said it intends to apply to have Zhang held in contempt of court in Hong Kong because of his false statements in the proceedings that led to the ruling.
