THE shares and bonds of Suning Appliance Group took a dive today as suspicions of money laundering fell on the home appliances retail giant’s  purchase of Italian football club Inter Milan, South China Morning Post reported today.

Government mouthpiece China Central Television yesterday brought into question Suning’s rationale for its purchase of a football club that had been steadily losing money.

“This famous club (Inter Milan) has been making a loss for five years, with total losses amounting to 275.9 million euros. For what purpose would a Chinese company take over it?” asked the host of a TV show on the state-owned channel.

“Some companies are already highly indebted at home, yet they spend lavishly with bank loans abroad ... I think many overseas acquisition deals have a low chance generating cash flow, and I cannot exclude the possibility of money laundering,” said Yin Zhongli, a researcher with the Chinese Academy of Social Sciences on the same show.

Suning Commerce Group, the group’s Shenzhen-listed arm fell 6.5% to a near seven-week low of 10.22 yuan in the morning, before recovering slightly to close at 10.63 yuan at the end of the trading day. Bonds also fell slightly, as “12 Suning 01” traded in Shenzhen fell 0.42% to 99.87 yuan.

Suning is among the Chinese companies who have spent tens of billions of euros on buying into the world’s most glamorous football clubs int he last three years.

Suning last year paid 270 million euros (RM1.4 billion) for a 70% stake in Inter Milan, while Chinese businessman Li Yonghong in April went into a 300 million euro debt to complete a 740 million euro buyout of the other famous Milan football club, AC Milan.

Such deals have been interpreted as a means for the Chinese buyers to move their assets out of the country.

Suspicion of “assets transfer”, or loss of national wealth to the government, is reason for an investigation in China.

In March, China’s top foreign-exchange regulator head, Pan Gongsheng, accused Chinese firms of “moving assets overseas under the cover of deals that don’t make good business sense”, singling out the acquisitions of foreign football eams.

China last year began tightening approvals for overseas mergers and acquisitions, particularly those in sports and entertainment sectors. On Monday, it ordered a block on bank loans for companies who have embarked on shopping sprees abroad, such as Dalian Wanda Group, which has spent more than US$5 billion in recent years on US acquisitions that included cinema chains and a Hollywood movie studio. – July 19, 2017.