Exclusive | Guosheng puts CEFC under state ward as crackdown intensifies on freewheeling private businesses
Wu Qing, a Shanghai vice mayor and former stock exchange chairman, is overseeing the coordination between Guosheng and CEFC, two sources said
China’s government, fresh on the heels of putting insurer Anbang Group under state ward, is seizing control of the management of the country’s largest non-state oil conglomerate, as a crackdown intensifies on private entrepreneurs and their freewheeling financing.
Wu Qing, a vice mayor in the Shanghai government and a former chairman of the city’s stock exchange, is overseeing the coordination between Guosheng and CEFC, two other financial industry sources said separately, declining to be named.
Appointed chairman of the Shanghai Stock Exchange in May 2016, Wu was credited with a strong and efficient oversight of the market during his tenure at the Shanghai bourse. He could not be reached for comment.
In Shanghai, Guosheng’s officials declined to comment.
CEFC, which has lavished as much as US$4.9 billion since July 2015 on acquisitions from Chad to Romania, appears to be the latest target in the Chinese government’s cross hairs.
Founded by Ye in 2002 when he was in his mid-twenties, CEFC had grown into a conglomerate with 263 billion yuan (US$41 billion) in revenue by 2015, before he even turned 40. From there, he began a series of acquisitions around the world, from finance and media businesses in the Czech Republic, to a bank in Georgia, to oil and gas assets in Chad and the United Arab Emirates.
Most of CEFC’s acquisitions were funded by China’s state banks, and in particular the China Development Bank. The Beijing-based state lender, established with the charter of financing projects in line with China’s state policies, provided CEFC with as much as 32.3 billion yuan of loans, or 87.5 of total borrowings, according to the September 2016 bond prospectus of the group’s principal subsidiary CEFC Shanghai International Group.
Ye may also have been caught up in the ongoing investigation of Hong Kong’s former Home Secretary Patrick Ho Chi-ping, who heads a think tank that’s fully funded by CEFC. Ho was arrested on November 21 in New York on charges of routing bribes for African government officials through US financial institutions.
Ho and Senegal’s former foreign minister Cheikh Gadio operated “an international corruption scheme that spanned the globe” since 2014, according to a November 20 statement by the US Department of Justice.
The two men allegedly offered a US$2 million bribe to Chad’s President Idriss Deby in exchange for “valuable oil rights,” and another US$500,000 to Uganda’s Foreign Affairs Minister Sam Kutesa.
With additional reporting by Eric Ng in Hong Kong, Daniel Ren in Shanghai.