Chinese-owned vineyards worth US$64 million seized by French police in tax fraud investigation

Wineries owned by the conglomerate Haichang are suspected of tax fraud and other crimes

PUBLISHED : Saturday, 30 June, 2018, 5:29am
UPDATED : Saturday, 30 June, 2018, 10:02pm

French financial police have seized 10 wineries in the Bordeaux area that are owned by Chinese conglomerate Haichang over suspicions of tax fraud, a police source said on Friday.

Haichang Group, based in the northeastern port city of Dalian, is the biggest of numerous Chinese investors that have bought into one of France’s most famous wine-growing regions in recent years.

It spent an estimated €55 million (US$64 million) to acquire 24 estates producing an array of brand-name wines.

But the group’s purchases have been under investigation by financial prosecutors for several years.

“For 10 chateaux, we discovered a certain number of tax crimes: laundering of the proceeds of tax fraud, forgery, use of forgery, etc,” a police source said, confirming a report by France 2 television.

“In the second quarter of the year, we seized those that were acquired fraudulently,” the source said.

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Investigators found evidence of transactions between French and offshore companies with no business links, and a €30 million ($US35 million) loan by the Chinese bank ICBC in Paris based on falsified notary statements.

“We have filed an appeal against the seizure order, which only aims to prevent any sale and does not imply any guilt,” said a lawyer for Haichang in Paris, Maxime Delhomme.

Chinese buyers have purchased about 160 estates in the Bordeaux area in the past several years, accounting for some 3 per cent of the region’s vineyard acreage.

Most of them, including the 10 seized from Haichang, are not among the region’s most prestigious brands, but that hasn’t dented the enthusiasm of the new owners.

In 2016, Jack Ma – the billionaire founder of the e-commerce giant Alibaba, which owns the South China Morning Post – bought Chateau de Sours, a little-known estate that nonetheless boasts an 18th century castle and produces 500,000 bottles a year.

The investments reflect a surge in demand from China’s emerging middle class that has been a boon for French vineyards.

But in 2013 Paris’s anti-money laundering agency, Tracfin, raised the alarm about Chinese investments in the French wine industry, calling for “increased vigilance.”

Investigators began looking into Haichang after reports in the French press that the group had been named in a report by a Chinese state auditor in 2014.

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China’s National Audit Office (NAO) said in its annual report that Haichang had been granted public money by state authorities to buy foreign technology, but had instead purchased vineyards in France.

Controlled by 56-year-old businessman Naijie Qu, Haichang is a trading and shipping company that also has interests in property, tourism and agriculture.

In 2012 he organised a wine fair in Dalian in partnership with the Bordeaux Chamber of Commerce.