(Yicai Global) Jan. 8 -- Huaxin Trust’s chairman has been taken into police custody after a hammer attack two day ago left the financial firm’s general manager with a damaged skull.

Dong Yongcheng, 64, struck Wang Jin with a hammer in an office elevator, causing her to bleed from the head and nose, a person familiar with the matter said. Wang was rushed to a hospital with 14 wounds and was diagnosed with first-degree light injuries. The 53-year-old underwent surgery yesterday, the person added.

A quarrel over the disposal of Huaxin’s non-performing assets or perhaps an attempt to cover up problems may have triggered the incident, China Business Journal reported yesterday, citing a market insider. The attack may also have stemmed from Wang coming clean to regulators about the Dalian-based firm’s illicit acts and regulatory violations, the source added.

China’s banking and insurance watchdog flagged Liaoning province’s sole trust management firm as one of six at high risk at the end of 2019. Regulators also sanctioned Huaxin after it bought its own products with corresponding trust funds by issuing trust loans. The authorities simultaneously halted the firm’s ‘capital pooling’ business last April.

Formed in 1981, Huaxin Trust had net assets of CNY12.3 billion (USD1.9 billion) at the end of 2019.

Financial Gap

The firm has more than 20 projects that have been postponed or are in the course of secondary delays, with a corresponding financial gap of about CNY7 billion (USD1.1 billion), so Huaxin is desperate to bail itself out by bringing investors onboard and increasing its capital.

Huaxin is said to be seeking to entice one or more strategic investors to pocket CNY3.4 billion (USD525.1 million) in investment.

“Huaxin Trust’s disposal of its non-performing assets, introduction of investors and capital increase may be shelved if Dong Yongcheng is criminally detained,” a senior executive at a trust management firm said.

Wang was deputy GM of Huaxin Trust from 2008 and was promoted to GM on Jan. 21 last year. Dong has been chairman since 2006 and is also chairman of Huaxin Huitong Group, which is the firm’s largest shareholder with a 56 percent stake, according to data from company registry platform Tianyancha.

Huaxin Trust announced the first delay in its projects in September with the result that its risks became manifest to the public. It then successively postponed 27 of its trust plans for the same reason that “trust products entered the postponement process per their contracts because the fundraiser [Huaxin Trust] was unable to repay principal and interest as scheduled.”

Huaxin Trust still has 23 pending projects that remain unpaid as of now, all of which have become mired in secondary delays as deadlines agreed to in earlier statements expired.

Editor: Ben Armour, Xiao Yi