Wanted Chinese tycoon defiant against $88 million US lawsuit, threatens to expose corruption of Chinese officials

5 June 2017 1:07pm

🔊 Podcast

Listen to MLex Senior Correspondent Toh Han Shih talk with MLex Managing Editor, Asia, David Plott about this insight and related anti-bribery and related new developments in the first episode of The Best of MLex podcast.

26 April 2017. By Toh Han Shih.

A US-based Chinese tycoon wanted by the Chinese government has tweeted defiantly about an $88 million lawsuit against him in a New York City court, suggesting the suit is an indirect effort to retaliate against him for public allegations he has made about corruption among high-ranking Chinese officials. Guo Wengui, also called Miles Kwok, has made fresh but unproven allegations against top Chinese officials, their relatives and Chinese companies, and threatened to make more allegations public, as the conflict between the 50-year old tycoon and the Chinese government escalates.

During a Chinese Foreign Ministry press conference on April 19, a ministry spokesman confirmed that Interpol, at the request of the Chinese government, has issued a red notice on Guo, who now lives in New York City. An Interpol red notice is a request to a country such as the US to arrest and extradite a suspect, but it cannot compel the country to do so.

On his Twitter account, Guo acknowledged yesterday that he was sued on April 18 for $88 million in a New York City court over his guarantee for a debt incurred by one of his companies. Nevertheless, Guo tweeted that he "need not repay this meaningless debt which had little to do with me."

A hedge fund, Pacific Alliance Asia Opportunity Fund, filed the suit against Guo in New York, as MLex reported last week. The hedge fund is domiciled in the Cayman Islands and managed by Pacific Alliance Investment Management, which has an office in Hong Kong.

In December 2007, the fund invested in HNA Airport Holding (Group), which is owned by HNA Group, a Chinese conglomerate, corporate documents show. HNA has been aggressively making overseas investments. HNA is in advanced talks to buy CWT Group, a logistics company owned by the Port of Singapore Authority. Earlier this year, HNA acquired a 3 percent stake in Deutsche Bank. Last year, HNA's overseas acquisitions included a 25 percent stake in US hotel group Hilton for $6.5 billion. HNA owns Hainan Airlines, a Chinese airline listed on the Shanghai Stock Exchange.

Today on Twitter, Guo repeated his earlier allegation that a relative of China's anti-corruption czar, Deputy Prime Minister Wang Qishan, has improper business dealings with Hainan Airlines. MLex is unable to verify Guo's allegations. HNA did not reply to MLex's questions.

Pacific Alliance Investment Management repeatedly declined to comment.

In a separate chain of developments that Guo suggests is also related to his claim that he is being targeted for his allegations of corruption by Chinese officials, a court in Tianxin district in Changsha, the capital of Hunan Province, recently rejected a lawsuit by Beijing Zenith Holdings, a Chinese property firm controlled by Guo. In May 2015, Zenith sued Founder Securities, a Chinese brokerage listed on the Shanghai Stock Exchange, seeking to revoke the appointment of He Qicong as chairman of Founder Securities in March 2015, Founder Securities announced on the website of the Shanghai Stock Exchange yesterday. Zenith, the second largest shareholder of Founder Securities, was locked in an acrimonious dispute with Founder Securities' biggest shareholder, Founder Group, a Chinese state-owned firm. In March 2015, three directors of Founder Securities who were nominated by Zenith voted against He's appointment as chairman but were overruled.

Last week, a mainland Chinese newspaper reported that two executives affiliated with Guo's company Zenith — Xu Angyang and Ma Nan — have been detained by Chinese authorities on suspicion of bribery and falsifying documents. Xu and Ma were nominated by Zenith to the board of Founder Securities. Today on Twitter, Guo acknowledged that Xu and Ma were recently detained by Chinese authorities, and alleged this is part of a concerted set of actions against him by the Chinese authorities, including the Interpol red notice.

Last Friday, Founder Securities announced that its director Xu and its supervisor Ma had not attended board meetings since January and the company was unable to obtain any information on their whereabouts. Founder Securities neither confirmed nor denied the report that Xu and Ma had been detained by Chinese authorities.

Yesterday, Guo tweeted he will expose "a huge scandal" involving two Chinese banks. He has also threatened to make more allegations public in the future. On Sunday, he tweeted, "Since I decided to make these revelations, I never thought of hiding and I am not afraid. I don't care whether I live or die."

By publicly making allegations against top Chinese officials and their families, Guo is hoping to protect himself, MLex was told. After drawing attention to himself in such a manner, if something happens to him, it is likely to attract widespread international attention, which Guo hopes would deter the Chinese authorities from acting against him, it is understood.

In the US, where he currently resides, Guo has bodyguards.

While it is difficult to ascertain the veracity of any of the allegations that Guo has made, the general picture his case highlights, where some high-ranking Chinese officials and their families use businessmen in exchanges of power for money, is credible, said Willy Lam Wo-lap, adjunct professor at the Centre for China Studies at the Chinese University of Hong Kong.

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