A Chinese real-estate tycoon has said that relatives of Chinese President Xi Jinping (習近平) sold their shares in his company two months before its initial public offering, missing out on a “fortune” in capital gains and, he said, proving there was no corruption involved.
The remarks by the tycoon, Wang Jianlin (王健林), at Harvard University on Thursday were his first public response to a New York Times investigation published in April that documented his company’s financial ties to business associates and relatives of top Chinese leaders.
The article said that the elder sister and brother-in-law of Xi had acquired large stakes in Wang’s flagship company, Dalian Wanda Commercial Properties (大連萬達商業地產), before it went public. The shares they purchased through a holding company for US$28.6 million in 2009 are now worth US$201 million.
However, at Harvard, Wang said that Xi’s sister, Qi Qiaoqiao (齊橋橋), and her husband, Deng Jiagui (鄧家貴), had sold their shares before the initial public offering and rejected insinuations that his business success had anything to do with his political ties.
“Deng Jiagui gave up huge gains,” he said, according to a report on the speech by Caixin, a Chinese news magazine.
“The investment endured for six years, and in the blink of an eye he could make a huge fortune, but he did not,” Wang said.
“This actually proves that it is not corruption, but that President Xi Jinping governs the country strictly, and he manages his family even more strictly,” he added.
It is extremely rare for Chinese business executives to comment on the financial holdings of the country’s top leaders, and Caixin’s account of Wang’s remarks was taken off the Internet several hours after it was posted.
Wanda Group subsequently sent reporters an English-language transcript of the remarks, confirming them.
In defending the company’s ties with Xi’s relatives, Wang might have inadvertently drawn attention to a common practice among wealthy and powerful Chinese: the transfer of shares, sometimes to distant relatives or business associates, to mask business interests.
Corporate records show that Qi and Deng transferred ownership of the holding company to an employee in October 2013. Wang said they had sold their stake two months before the initial public offering, which would have been October last year.
If true, his statement suggested that Qi and Deng still somehow owned the shares after they had, on paper, been transferred to the employee.
Wanda’s pre-intial public offering documents show that the holding company, Qinchuan Dadi Investment, held shares in Wanda as of mid-August last year.
It is not clear from available public records whether the holding company sold the shares. At the end of 2013, the holding company listed three companies that it held stakes in, including Dalian Wanda Group Co (大連萬達集團). In its annual report last year, the company did not list any investments.
The holding company was still listed on Friday as being owned by the employee, Xu Zaisheng (徐再勝).
Deng and Qi did not respond to a request for comment faxed to their office in the southern city of Shenzhen.
Wanda spokesman David Connolly in Beijing said that his connection was bad and that he could not hear a reporter’s questions.
When property is transferred on paper to hide its ownership, the new putative owner is known in China as a “white glove.”
So-called white gloves have bedeviled the work of China’s own corruption investigators as they seek to document the wealth of Chinese Communist Party members suspected of graft, according to the party’s Central Commission for Discipline Inspection.
“White gloves are accompanied by power’s black hands,” the commission wrote in a report in May.
In addition to the shares in Wanda held by Xi’s sister and brother-in-law, the New York Times article documented holdings in two of Wang’s companies by relatives and business associates of three other top Chinese leaders. The holdings tied to all four leaders’ families were valued at more than US$1.1 billion at the time the two companies held their share sales in December last year and January this year. The shares were worth US$1.25 billion during midday trading on Friday in Hong Kong and Shenzhen.
Wang did not discuss the holdings of the three other officials’ relatives and business associates.
In many instances, they appear to have made capital gains far in excess of those that Deng and Qi stood to make.
The family of Wang Zhaoguo (王兆國), who retired from the politburo in 2012, acquired a stake in a Wanda company in 2007 for less than US$500,000 that, by the time of the initial public offering, was worth more than US$500 million, a thousand-fold gain.
Business associates of relatives of former Chinese premier Wen Jiabao (溫家寶) and former Chinese Communist Party secretary Jia Qinglin (賈慶林) also held stakes worth more than US$200 million at the time of the initial public offering.
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