The investigation is also believed to be related to disgraced former vice-minister of state security Ma Jian, who came under suspicion of violating Communist Party discipline – a euphemism for corruption – earlier that year.
Xiao's company took out a full-page advertisement in a Chinese-language newspaper yesterday, reprinting a statement it released a day earlier claiming he was "receiving treatment overseas".
Xiao claimed in the newspaper ad to be a Canadian passport holder, although this has not been confirmed. He has also claimed to have a diplomatic passport. Antigua and Barbuda named him ambassador-at-large in 2015, according to a report on news portal Caribbean360.
A source close to the tycoon said Xiao was currently on the mainland and could communicate directly with his family.
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Another source said the actions of Xiao, whose Tomorrow Group is behind many large merger and acquisition deals, have had a "significant impact" on the mainland economy.
Sources told the Post earlier Xiao, 46, left the hotel on Friday. Police officers examined the hotel's CCTV footage which did not show any scuffles involving Xiao and his two women bodyguards. The hotel refused to comment, citing an active police investigation.
Xiao was regarded as having close ties to families and relatives of mainland political heavyweights, which helped him amass billions of yuan through deals.
Beijing launched a massive crackdown on corruption and economic crimes more than four years ago, and more recently has sent agents abroad to bring suspects back to the mainland.
Hong Kong police on Wednesday said reports that it was involved in the operation on Friday were "purely speculative and carried no truth". The Security Bureau said earlier the Basic Law authorized only local authorities to carry out law enforcement in the city. A bureau spokesman said police had contacted mainland authorities for information.