China’s HNA Group began with Hainan Airlines and then acquired brands like Radisson Hotels; airline caterer Gate Gourmet; 25% of Hilton; nearly 10% of Deutsche Bank; and 29% of NH Hotels. They acquired stakes in Red Lion Hotels; Virgin Australia; TAP Air Portugal: South Africa’s Comair; Azul Brazil and much more. The company’s corporate structure sometimes makes it difficult to discern what they own, what they’ve sold off, and what they’ve merely sold to themselves.

Before the pandemic they worked to reduce a debt load that exceeded $100 billion by selling off assets, but continued to face problems paying for fuel, problems paying employees, and problems paying investors. HNA even offered investors airline airline tickets in lieu of interest payments.

They even turned off inflight entertainment systems because they couldn’t pay licensing fees. Seven of their grounded planes were seized by Hong Kong airport over unpaid fees.

Still burdened by about $75 billion in debt they’re entering bankruptcy restructuring, or at least 500 of the 2300 companies they’re reported to own will be in bankruptcy. And it’s now come out that that $10 billion was embezzled from the company.

A total of 61.5 billion yuan ($9.57 billion) had been embezzled by shareholders and other related parties, Shanghai-listed Hainan Airlines Holding Co, HNA Infrastructure Investment Group Co and Shenzhen-listed CCOOP Group Co said late on Friday.

The identities of the shareholders were not disclosed in the statements.

The three companies and their subsidiaries had also provided non-compliant guarantees for 46.5 billion yuan in financing, according to the statements filed after creditors of their parent applied to a court for the conglomerate to be placed in bankruptcy and restructured.

Several aggressive companies using massive debt to acquire businesses abroad at inflated prices have collapsed, including Anbang Insurance which tried to buy Starwood hotels before Marriott emerged victorious. China’s belt and road initiative is faring poorly (expensive bad debt that’s turned out to be an inefficient means of buying influence). And even their much lauded vaccine diplomacy is sputtering with some vaccine candidates performing poorly in trials and others plagued with production challenges.

While China remains a formidable geopolitical foe, cracking down on liberties in Hong Kong and ratcheting up tensions with Taiwan, it’s also plagued with corruption and poor decision-making guided by political agendas and political connections. In other words, we tend to ascribe perfect strategy and competence to rivals when they’re at least as backward as we are.