Prominent Tycoon Entangled in Chinese Investigation
Commenting on Fosun Chairman Guo Guangchang’s detention by mainland police for an investigation, Prof. Tianyu Zhang says in an interview with The Associated Press that many entrepreneurs in China make deals with officials or state industry managers to gain advantages, and get into trouble once the government puts in force an anti-corruption campaign.
Fosun International, China’s biggest privately owned conglomerate released a statement through Hong Kong’s stock exchange on 11 December, 2015 evening after Chinese business magazine Caixin reported company employees were unable to contact chairman Guo Guangchang. The statement said the company understands Guo is “currently assisting in certain investigations carried out by mainland judiciary authorities.” This shows a possible sign that an anti-corruption campaign is widening beyond state companies.
China is in the midst of a 3-year-old anti-graft crackdown led by President Xi Jinping. The campaign has snared dozens of executives at state-owned companies in oil and other industries. A court cited Guo in August as being linked to a supermarket chain chairman who was jailed for corruption.
In an interview with The Associated Press, Tianyu Zhang, Associate Professor of School of Accountancy and Associate Director of Centre for Institutions and Governance at The Chinese University of Hong Kong Business School says that in China’s state-dominated economy, many entrepreneurs make deals with officials or state industry managers to gain government licenses, contracts or financing. “This is how some entrepreneurs get into trouble once they have an anti-corruption campaign,” Prof. Zhang adds.
Prof. Zhang points out that in a series of deals in Shanghai, Fosun has bought stakes of less than 50 percent in state-owned companies but gained management control. He also says that unusually favorable arrangement reduced the amount of capital Fosun had to tie up in the company while making it a partner of state managers. “What we guess is that someone should be helping him to make these transactions. Without more evidence, we don’t know who this is. A politician, or maybe a group of people,” Prof. Zhang states… Read More (PDF)
The Associated Press story has also generated a handful of reprints to date by influential media outlets such as ABC News, CBS News (PDF), The Huffington Post, The New York Times and more.
Source: The Associated Press
Date published: 11 December, 2015
Photo: BRENT LEWIN/BLOOMBERG/GETTY IMAGES