Huarong Asset Management boss faces probe


Thu, Apr 19, 2018 - Page 10

China Huarong Asset Management Co (中國華融資產管理) chairman Lai Xiaomin (賴小民) is under investigation for graft, as the government’s anti-corruption campaign spreads deeper into the finance industry.

Shares in the state-controlled asset manager were yesterday suspended from trading in Hong Kong. The spread on the company’s 2027 dollar bond reached the widest since its issue in October last year.

Lai is under investigation for alleged disciplinary and legal violations, the Chinese Central Commission for Discipline Inspection said in a statement. That language is typically used by Chinese courts in corruption cases.

Wang Zhanfeng (王占峰), a former head of the China Banking Regulatory Commission’s Guangdong branch, might be named as Huarong’s chairman after already becoming party chief at the company, the 21st Century Business Herald reported.

The investigation of Lai comes weeks after Anbang Insurance Group Co (安邦保險集團) founder and former chairman Wu Xiaohui (吳小暉) was tried for fraud after the government carried out an unprecedented seizure of the company in February.

After the Anbang takeover, Ye Jianming (葉簡明), a globe-trotting tycoon who runs the conglomerate CEFC China Energy Co (華信能源), was placed under investigation, according to people with knowledge of the situation.

Links have emerged between Huarong and CEFC, and the energy company’s efforts to take a 14 percent stake in Rosneft PJSC, the Russian oil giant.

Beijing News reported in December last year that a unit of Huarong took a stake in the CEFC unit that planned the US$9 billion purchase of the Rosneft stake.

The day after the investigation of Ye was revealed, CEFC was taken over by an arm of the Shanghai government, the South China Morning Post reported on March 2.

Part of the reason for the corporate crackdown is economic. A decade ago, authorities were more willing to overlook bribes, risky loans and dodgy transactions as they sought to stoke growth in the world’s second-biggest economy. Now, the focus has shifted to reducing the country’s mammoth debt load and curbing financial risks that threaten to weigh on growth.

Huarong, one of China’s biggest asset management firms, was one of four companies set up by the government in 1999 to help clean up a banking system riddled with bad debt.

The state-owned enterprise held a US$2.5 billion initial share sale in 2015 that gave it a market value of more than US$15 billion.

Huarong was worth US$16.4 billion before the suspension. The company had planned to list shares in China this year.