BEIJING (BLOOMBERG) - The chairman and chief executive of China's HNA Group have been detained by police, the latest twist in the saga of the once high-flying conglomerate whose debt-fuelled acquisitions became an early symbol of the corporate excess now firmly in Beijing's sights.

Chairman Chen Feng and CEO Tan Xiangdong were detained by police in China's southern province of Hainan for suspected crimes, the company said in a statement late on Friday (Sept 24), without providing details of the alleged offences, in the latest setback for a firm that is being managed by the government.

Tan, who also goes by the name Adam Tan, is a US citizen, according to a US Securities and Exchange Commission filing.

The operations of HNA Group, which has largely been managed by the Hainan government since early 2020, are unaffected, the statement added. The group's restructuring is moving forward smoothly.

Once a prominent investor in firms like Hilton Worldwide Holdings and Deutsche Bank, HNA is the embodiment of a short-lived era when Chinese conglomerates expanded aggressively with global acquisitions fuelled by significant borrowing. That era ended in about 2018 as China ramped up capital controls, and the government has since been working to sort through the financial dealings of firms like HNA.

Three listed companies under the group said in February that shareholders and affiliates misappropriated at least 63 billion yuan (S$13 billion) of funds.

The detentions come a day after China sentenced the former chairman of liquor giant Kweichow Moutai, Yuan Renguo, to life in prison for taking millions in bribes, and as Chinese President Xi Jinping extends his crackdown on the nation's tycoons and business landscape.

Mr Xi has been clamping down on China's tech giants and the use of cryptocurrency as part of a sweeping plan to remake the world's second-largest economy with an emphasis on "common prosperity".

In an open letter to HNA staff posted on WeChat, Hainan Development Holdings chairman Gu Gang said the company is seeing the light at the end of the tunnel after a challenging 18 months.

He said the wrongdoers should be responsible for their mistakes and asked staff to work together to support the company's future development.

Scores of related-party transactions, some of which were linked to HNA Group's overseas acquisitions, were not fully disclosed in the conglomerate's regulatory filings, according to a Caixin investigation published on Saturday.

A study of the company's filings and interviews with multiple former and current executives found that Chen, along with now deceased co-founder Wang Jian and several senior executives, owned companies that were controlled or invested in by family members that conducted business with HNA, Caixin said.

The complex network of related-party dealing meant HNA might have paid as much as 50 per cent more than competitors for aviation materials and 10 per cent more for aircraft, a former HNA executive who was not identified was quoted by Caixin as saying.

A representative for HNA declined to comment.

For HNA, which was weighed down by more than US$75 billion (S$101.5 billion) of debt even after shedding assets, the Covid-19 pandemic marked the real beginning of the end as its core aviation business was hit by the shutdown of travel.

That saw the government of Hainan take charge in February last year, and since then the focus has been on restructuring the company and prioritising its assets. Once the reorganisation is completed, HNA will be restructured into four separate units, a publication run by China's aviation regulator said last weekend.

A key Communist Party-led committee at HNA left Chen, its founder, off a list of members earlier this year, signalling he was being sidelined. The party committee was taken over by Mr Gu, leader of a government-appointed working group overseeing the company's liquidity risk.

HNA was founded as an airline in the 1990s by Chen and his partner Wang. Wang died in 2018 in a mysterious accident in France. The French daily Liberation reported in early 2019 that Wang committed suicide, citing a witness.