An internal investigation at S-Enjoy Service Group Co. Ltd. has uncovered about 7 billion yuan ($983 million) in undisclosed transfers to an affiliated developer, leading to the ouster of its chief operating officer.
The Hong Kong-listed property management firm launched the probe in late March. It has since delayed its 2024 earnings release and suspended trading of its shares, highlighting the governance risks and financial opacity plaguing China’s property sector.
In a statement Tuesday, S-Enjoy said the investigation found improper transactions between several of its subsidiaries and a unit of Seazen Holdings Co. Ltd. (601155.SH) totaling 1.8 billion yuan in 2023 and 5.17 billion yuan in 2024.
The funds were used to help Seazen Holdings repay maturing debt and cover construction fees to ensure the delivery of housing projects. Both S-Enjoy and Seazen Holdings are part of the Seazen conglomerate controlled by property tycoon Wang Zhenhua.
The investigation revealed how Yang Bo, S-Enjoy’s then-COO and an executive director, orchestrated the scheme. Yang instructed the general manager of the company’s finance management center to approve the transfers using paper-based forms rather than its internal applications system. Staff in the finance management center were later told to delete the bank transfer records from the system. The statement did not name the other individuals involved.
Because the Seazen subsidiary generally repaid the funds within the same month, no outstanding balances was recorded on S-Enjoy’s books at year-end, effectively hiding the activity from regular financial reports.
S-Enjoy’s statement laid out several motives for the misconduct. Developers across China have faced tightening cash flows since 2020, with 2023 proving particularly difficult. Tighter regulation of presale funds and delays in loan approvals left Seazen reliant on short-term loans to bridge funding gaps, the statement said.
S-Enjoy’s own revenue was closely tied to the affiliate’s financial health. Between 2022 and 2024, about 60% of its property management revenue came from Seazen Holdings. Any failure by the developer to deliver projects could have directly hit S-Enjoy’s business and, consequently, Yang’s performance evaluation, the company said.
S-Enjoy’s board removed Yang from his posts as executive director and COO on Tuesday. The investigation found no evidence of involvement by other directors, senior management or controlling shareholder Wang Zhenhua, who had no operational role in 2023 and 2024.
A source familiar with the conglomerate told Caixin that cash transfers between S-Enjoy and Seazen typically require approval from the chief financial officer or other senior executives overseeing finance.
“Yang Bo’s remit covered business operations, not financial or financing matters,” the source said.
At the time of the transfers, S-Enjoy’s CFO was Zuo Wei, who resigned in August 2024 due to “other work arrangements,” according to a company statement.
Yang has long-standing connections to Wang’s family and Seazen Holdings, Caixin has learned. After joining Seazen in 2008 and rising from a sales role, he was tapped in 2014 to lead a project where he built a close relationship with Wang Xiaosong, Wang Zhenhua’s son. The younger Wang at the time led a separate property firm that he merged with Seazen Holdings in 2015 and is now the developer’s chairman.
S-Enjoy’s statement also revealed that Wang Xiaosong had created a user account in the company’s applications system without proper authorization.
Contact reporter Wang Xintong (xintongwang@caixin.com) and editor Jonathan Breen (jonathanbreen@caixin.com)
