Beijing Newspaper Investigated for Links to Tycoon
(Beijing) – The head of a state-backed securities industry newspaper is under investigation for links to controversial financial tycoon Xiao Jianhua, several sources close to the matter told Caixin.
Xie Zhenjiang, 63, has been removed from his post as the president of Beijing-based Securities Daily and chairman of Securities Daily Media Co., the newspaper’s business arm listed on the New Third Board for small- and medium-sized enterprises, sources said. Xie has been expelled from the Communist Party for serious disciplinary violations, they added.
The newspaper has been ordered to undergo a two-month “rectification” for various business issues, sources said. It is unclear what the rectification is about and whether the company’s normal operations would be disrupted.
The shakeup at Securities Daily is linked to Xiao Jianhua, one of the richest businesspeople in China and founder of the conglomerate Tomorrow Holdings Group Ltd., separate sources told Caixin.
Xiao and Tomorrow Group have been under a spotlight since late January after several overseas media outlets reported that Xiao, who has spent most of his time in Hong Kong since 2014, has been assisting mainland authorities with unspecified investigations.
A staffer at Securities Daily, who asked not to be named, told Caixin that Tomorrow Group had obtained absolute control over the newspaper’s business operations and intervened on editorial issues over the years through various affiliates that are among Securities Daily Media’s shareholders.
“We have been controlled by Tomorrow Group for many years. It is an open secret at the newspaper,” said the source, adding the newspaper’s business head has always been appointed by Tomorrow Group.
Another source from the Securities Daily said by controlling the business side, Tomorrow Group has constantly intervened the newspaper’s editorial decisions. It has forced the newspaper to made public apologies to some companies for negative reports and sent a list of firms to the editorial team asking them not to criticize them. Most companies on the list are subsidiaries and affiliates of Tomorrow Group, said the source.
In July 2013, the China Securities Regulatory Commission launched inspections into Hengtai Securities, in which Tomorrow Group held a 17% stake as of June 30, 2016, and criticized it for using clients’ wealth management funds to finance deals with connected parties. But Securities Daily published a report applauding Hengtai’s wealth management business at that time.
Securities Daily was established in 2000 by party-backed newspaper Economic Daily. It is one of the four official media designated by the CSRC, the China Banking Regulatory Commission and the China Insurance Regulatory Commission for information disclosure. A company applying to the CSRC for an initial public offering, for example, must publicize its prospectus through at least one of those outlets. Xie has been the newspaper’s president and chairman of the listed company since 2008.
Business registration records showed that the second, third and seventh-largest shareholders of Securities Daily Media are controlled by Tomorrow Group. The three shareholders owned a combined over 36% stake in the company as of June 2016, compared with 23% owned by the editorial team as the largest shareholder, the company’s financial reports showed.
On Dec. 30, Securities Daily Media said in a statement that Xie has stepped down as the company’s chairman and board director. The company’s shares were suspended from trading beginning on Jan.4.
Xiao, 46, was listed by the 2016 Hurun Chinese rich list as the 32nd-richest person in China with a net worth of $6 billion. He established Tomorrow Group in 1999. It later expanded into a wide range of businesses including real estate, coal, chemicals, insurance, securities and banking. It owns stakes in a number of listed firms and financial institutions.
Along with several other companies and financial institutions controlled by Xiao, the group of companies has been involved in many high-profile acquisitions in recent years, including the 2006 privatization deal of state-owned power company Shandong Luneng Group, a deal worth 3.7 billion yuan, or about $470 million at the time; and Thailand’s Charoen Pokphand Group’s (CP Group) purchase of a stake in Ping An Insurance in 2013. But some of the deals have been questioned for the widespread use of shell companies and complicated transactions among interconnected companies.
Contact reporter Han Wei (firstname.lastname@example.org)