Orient Group owner says payment by Zurich Insurance was no bribe

The owner of Orient Group yesterday denied allegations that an offshore account worth nearly US$17 million had been used to bribe high-level Chinese officials, and also said the daughter of Li Peng, the former premier, had never had business dealings with the company.

Zhang Hongwei, the chairman of the Shanghai-listed conglomerate, said in a statement that his group's Hong Kong branch once helped Zurich Insurance develop its presence in China, for which it was paid US$16.9 million, but that it was "normal business behaviour".

In the statement, posted on the company's website, Zhang also denied that Orient Group had sold a stake in New China Life to Zurich Insurance, nor did his company have business dealings with "a woman surnamed Li". Zhang could not be reached for comment yesterday.

The statement was made in response to a report in British newspaper The Daily Telegraph that Li Xiaolin , daughter of Li Peng, had brokered a deal by helping Zurich buy a stake in New China Life, the country's largest private insurance company, in 1995, before foreign firms could invest in the sector.

The report, citing court documents and transcripts, said Zurich paid US$16.9 million through an offshore account as a "good faith fee". In return, New China Life agreed to sell Zurich almost a quarter of the company.

Orient Group used the money to bribe several high-ranking Communist Party officials and their relatives when they visited the US, the report claimed. It named as beneficiaries the daughter of the former finance minister Xiang Huaicheng, the former land and resources minister Tian Fengshan and Huang Mengfu, a vice- chairman of the Chinese People's Political Consultative Committee until this year.