Chinese Government Freezes $88 Million in Accounts Owned By Embattled Game Developer Boyaa
Posted on: September 3, 2019, 01:17h.
Last updated on: September 3, 2019, 02:01h.
The Chinese government is threatening to seize some $88 million in idle cash reserves belonging to social games developer Boyaa Interactive, the company said in a weekend filing to the Hong Kong Stock Exchange. The funds could be seized if they are determined to relate to criminal activity by the company’s former chairman.
The filing comes almost a year after Boyaa chairman and CEO Zhang Wei was sentenced to 12 months in prison after the Shenzen People’s Court found him guilty of “bribes by entities.”
Under Chinese law, this entails “paying bribes for the purpose of seeking improper benefits or offering kickbacks to state officials.”
While the specifics of Zhang’s crimes remain unclear, the timing of his arrest in April 2018 was significant. The arrest came just a week after Chinese state media announced a ban on precisely the kind of play money social poker and chess apps that were Boyaa’s specialty.
In its most recent filing, Boyaa referred to Zhang’s prosecution for “alleged illegal activities conducted through one of the company’s onshore online gaming platforms.”
According to Inside Asian Gaming, Boyaa also told investors that the frozen funds could ultimately be confiscated if Chinese authorities deem that “some or all” of the money is related to Zhang’s criminal activities.
Zhang resigned from all his executive positions within the company following his conviction.
The social poker ban hit Hong Kong-based Boyaa hard. The company operates the Boyaa Poker Tour (BPT), which relied almost completely on using its play-money poker app as a feeder for real-money live tournaments held in jurisdictions in East Asia where they were legal.
The tour was cancelled for 2018 but returned this year for just one event, in Taipei, Taiwan in late June.
The Chinese government claimed the apps were being used by gamblers to play for real money, by using the play money chips as markers before settling in cash at a later date. Meanwhile, the chatrooms had become a recruiting ground for illegal games, claimed the government.
Boyaa’s stock took a battering between the ban and the arrest of its chairman, and it took another one this week, plunging almost 10 percent in the wake of its weekend filing.
Landing Chairman Lost and Found
Zhang was not the only gaming company chairman detained by the Chinese government last year as part of President Xi Jinping’s interminable “anti-corruption” campaign.
In August 2018, the chairman of Hong Kong-based casino developer Landing International, Dr Yang Zhihui, was reported missing shortly after attending a groundbreaking ceremony for Landing’s proposed $1.5 billion integrated resort in the Philippines.
He resurfaced three months later to resume his duties. Landing explained in a filing to the Hong Kong Stock Exchange that Yang had been “assisting the relevant department of the People’s Republic of China with its investigation during the period of his absence.”
Bloomberg reported at the time that “at least” three chairmen of Chinese companies were missing and were also likely helping the Central Commission for Discipline Inspection (CCDI) with its inquiries.
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