INVESTMENT

Alibaba says New York Times off base for linking buy-back deal to party elite

E-commerce giant says report about politically well-connected stakeholders is biased

PUBLISHED : Tuesday, 22 July, 2014, 5:12pm
UPDATED : Wednesday, 23 July, 2014, 10:39am

E-commerce giant Alibaba Group said the background of its investors mattered less to the company than the market, after an article in The New York Times revealed the political connections of some of its shareholders.

The Times' story, published on Monday, said three Chinese investment firms trying to finance a US$7.6 billion deal to help Alibaba buy back half of Yahoo's stake had connections with the Communist Party elite, and a fourth company, co-founded by the son of former premier Wen Jiabao , also had a stake.

The article did not say that the political elite had used their political influence to prop up Alibaba, which is due to make an initial public offering in New York later this year.

Alibaba said in a statement on Monday that the Times' article had "mistakenly described" its investors and made "clearly biased" conclusions about them.

"We understand it has been customary for some international media to doubt or pass judgment on Chinese society and companies," the Chinese-language statement said.

The company admitted three companies mentioned in the Times' article held stakes. Alibaba said Boyu Capital, Citic Capital Holdings and CDB Capital had acquired their stakes in 2012. It said Boyu held 0.55 per cent of the company's common shares; Citic, 1.1 per cent, and CDB 0.47 per cent at the end of June.

The Times reported earlier that Alvin Jiang Zhicheng, the grandson of former president Jiang Zemin , is a partner of Boyu. Liu Lefei, the son of China's propaganda tsar, Liu Yunshan , works for Citic; and He Jinlei , son of former discipline chief He Guoqiang , works for CDB.

"Such connections matter," the report said without providing any specific evidence. "They help secure deals, potentially giving companies an advantage in a highly competitive business environment."

The Securities and Exchange Commission investigators and US federal prosecutors are currently looking at whether JPMorgan, under its programme called Sons and Daughters, violated the Foreign Corrupt Practices Act when it hired relatives of members of the Chinese political elite, according to the Times.

Alibaba's listing could raise more than US$20 billion, the largest such offering in the US.

Bloomberg reported last week, citing an unnamed person, that Alibaba would wait until September for the IPO, as the company seeks US regulatory approval of its prospectus.

 

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